Doesn't the stock market drop because of dumb people?

If people wouldn't panic and start selling all their stocks off, the market would not have dropped 777 points in a day. Chill out and keep your stocks.

yes. people are dumb. But the government allowed this behavior to happen. we have been living in a society, buy now, pay later.Greed and immediate gratification is the hub of the American economy.Leading to the the fall of another empire.

So what happens if you have a stock like wamu that is ready to go belly up. Then what smart a@#

Stocks took a dive becuase many people don't know how to live within their means. Hedge fund traders were given leverage over capital that is not backed by gold, thus our money is as worthless as the paper its printed on. Remember the dollar has deflated by 28% in the past seven years.

Maybe. But if one of your stocks are in a bankrupt company, what will you have?

Stocks have value because the corporations might pay dividends from their profits or repurchase the stocks.
When the corporations have no profits the shareholders do not expect dividends.
Also stocks go down when other corporations in the same industry fail to make profits.

When the market drops so much in such a short period of time. Then it usually means that some big institutional investors are selling a lot of their stocks. Because they are the ones who place the largest buy and sell orders. And their orders move the market the most.

Perhaps some of these institutional investors are dumb, as you say.

But one of the reasons why the market has dropped so much may be the ban on short-selling by SEC. Short-sellers usually buy stocks to cover their shorts and take profits in a declining market. Which creates resistance against further declines. And in absence of short-sellers there is no resistance on the downside.

Yes -- it was because of dumb people. However, the ones selling aren't necessarily the dumb ones. The dumb ones are in the White House.

Nope. Your answer is naive. You need to understand that most institutional buyers and individual people have stop orders in place to ensure they DON'T lose, or to ensure that they DON'T lose below a certain percent. Every time a stop order is engaged at its trigger price, the market makes a decision to buy at that price or go lower. In a heated period , successive stop orders are triggered, accelerating the drop in price, but preserving profits/preventing substantial loss for the investors.

Actually, what is DUMB, is people who allow their investments to drop below a 7 or 8% net loss, because 92% of the time over the last 50 years, when a stock drops more than that, it's not likely to return to peak in the near future, if at all. Example: Enron. Smart investors got out when the stock started to stutter at the top, and they sold. Dumb investors were buying those stocks at the top when the smartest were selling. The Dumbest investors watched their investments go down, down, down, believing they would come back (your advice) and watched their savings go to a 100% loss. That makes no sense at all - but people continue to do it, and to advise it, rather than think. A true trader or investor has to have a goal on the upside, and a stop out on the bottom side, or they'll never profit/recover.

Example: You lose 2500 of your 10,000 investment. That's a 25% loss, but it will require a 33% gain to restore you to break even. That won't work in any strategy - you'll be broke. But if you learn to pick good stocks, sell at goal, and limit your losses to never more than 7 or 8% when you pick a bad one - or the market surprises you, you can make a future for yourself. Remember, you can always buy it back for less. The goal is to buy low and sell high, not ride it down into the ground.

The biggest mistake uninformed people make is assuming that "the other side of the trade", or "market" is dumb. Once you think that way, you can be assured there is one dumb party, and that party is you. The other side of the trade is going to take your loss as a profit, and it will happen quick. Get educated

my thoughts exactly
people are just 2 freakin insecure

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