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Anticipating A Large Drop in the Stock Market From the US Losing the AAA Credit Rating

I’ve never heard of the US Credit Rating dropping from Triple A before, it’s a first in my lifetime.

I personally think that it’s the government’s fault for not being in touch with reality.  For instance, while I can see the benefits in the healthcare reform, it comes at a bad time.  In my opinion, it’s like throwing gasoline on a forest fire, obviously it’s not going to help and will definitely make matters worse. I also think it’s a bit silly to attack the restrict the banks.  The banks provide the blood lines for our country.  To attack them is like a dog biting the person feeding it.  Then we have all of those lovely layers upon layers of complex innovation-restricting compliance laws…  Like those are going to help, geez…  Even the politicians can’t keep them straight…

Then we have the war that was based on preventing Iraq’s former leader (Saddam Hussein) from developing WMD (weapsons of mass destruction).  It seems like we picked the one country that didn’t have such a program (but who really knows?).  Do we really believe that a true democratic society will stay in existence in Iraq?  Really?  Or eventually will a Muslim Theocracy or another dictator come into power and pretty much control things from that point on?  Democracy is like a plant than needs certain conditions to exists, and I don’t believe those conditions are in Iraq.  Hopefully I’m wrong, but…

To me, it seems like both the republican and the democrats are going after their own agendas and casting a blind eye to the real problems in the US, which is the inability of the US worker to compete and acquire jobs, and obviously control our own debt.

Instead of looking around and solving problems, they are looking at their own party agendas with a level of tunnel vision that I’ve never seen before.  The problem is that both parties represent different classes other than the middle class which seems to be getting a raw deal from both!

The government need to wake up and stop making excuses.  The parties need to stop following their party agendas and look around and come up with new, smarter ideas from a global perspective.  After all, the game has changed and both parties need to consider the up and comers like China and other emerging countries.

In the meant time, the US stock markets are going to get pummeled tomorrow (Monday).  I wonder how much the markets will retreat and what, if anything, will stop a long continuous decline?

Update (still Monday):  The market dropped as expected and surprisingly, I decided to buy some stocks.  While not a huge position, I have to wonder if I’m trying to catch a falling knife?…




12 Responses to Anticipating A Large Drop in the Stock Market From the US Losing the AAA Credit Rating

  1. Hey MR… I just found you through the Yakezie network. I read your most recent post and checked out your website. It looks great. One concern for you my friend… buying stocks before they are in a confirmed uptrend is perilous. Lots of people did that in 2008 only to see their 20% discounted stock turn into a 60% discounted stock. I’d encourage you to create a watch list… and in the meantime, profit from the trend by looking at positions like SH or PSQ, etc. I’ve written a few articles about this in the past 2 weeks!

    • Good point about pulling the trigger too early. I just took a small position in a Chinese stock that I follow.

      You’re right though, who wants to catch falling knives…

  2. Hey, consider your investment dollar-cost-averaging. We do it all the time with our retirement plans and such. You just actively decided to buy today.

    I am not sure when I will start buying again, but it may be pretty soon. We will see.

    • For this particular round of investments, I broke my money into 3 equal parts. So I’ll invest some now, some later and the last third I have no idea as to when I’ll plop it in the market.

      As for my 401k, I just let it ride (which will be painful for a while). 401k’s are the perfect investment instrument for dollar cost averaging.

  3. Hey, better buying today than last week, right? Even if prices decline further (which I think they probably will), you’re getting a discount from last week.

    As for this bigger problem we have, I think Washington has not performed well for us – their bosses! They work for us, yet seem to be spending far too much time on partisan politics and bickering, posturing, planning their own reelections, etc.

    • I agree! Washington isn’t doing any innovating, they are just doing the same old agenda that they always have done. They fooled me with their talk about change.

      We need new problems solving people in Washington, not career politicians…

  4. It’s a well deserved downgrade if you ask me. I would never in my right mind in a business who was run like this.

    Imagine the board of directors of a big company bickering and not being able to come to agreement on anything, spending without restraint and then hoping for success. What a recipe for disaster.

    • It’s funny how most of us financial bloggers see that problems and realize that what the government is doing isn’t working. I think we need more business experienced folks in government!

  5. At least you aren’t going all in. I do believe that you are trying to catch a falling knife. I believe the lows of 2008 will be re-tested. I could be wrong of course.

    Having some sort of plan is important.

    • Hmmm, the market didn’t do as I expected today. The small amount that I invested yesterday is up over 7% today vs sitting in cash. If it goes up to 10% or maybe 15% I’ll probably cash out.

      I’ve had some success with using 3 portions investing in a stock that I’m very familar with before. Just luck though…