Is the decline in the stock market due to investors using money for other means?

Many factors, like the fear factors investors pulling out their money from the stock markets just to keep it in safe

If you look at short-term treasury rates they have been steadily falling because people are in a "flight to quality" state. This means that the stock market is very volatile so people are moving their investments out of stocks and into government securities. As they do this the price of government securities rise and the rates fall. When people sell their stocks the price has to fall to a level that will entice others to to buy them. When there is a greater supply of stocks for sell, and less demand, the price must fall.

stocks go down for two reasons,, either people are selling lots of stocks and there arent many buyers or there arent enough buyers when a few people want to sell.. there doesnt necesarrily have to be people putting money other place,, but that is usually the case because most large investors want their money to be somewhere,, if you are looking for some good articles on investing and how things work on wall street you should check out www.thewallstreethunter.com they have some pretty good market update articles that are really good,,

Good luck

from 15 years of professional trader in the stock markets i will show you a few more reasons:
Since 2003 war in Iraq the stock market is rising, we know about the bubble in the real estate for 2 years but it happen now why ?
1. there is no more money to invest after people lost in real estate.
2. Stocks become very expensive compare to their profits.
3. End of a business cycle
4. fear and greed running the markets (now its fear)

There are actually a number of factors that investors consider when investing in the stock market, and whether to buy, sell or hold current stocks.

the main driving factors in the current decline (I believe) are as follows

1. The Housing Market

housing starts are a prime economic indicator, and those have been falling steadily over the last 2 years. Current housing starts are probably 1/4 what they were 2 years ago. I work in this field and I know there is a tremendous slump.
The value of current homes are also falling. I read an Associated Press article about 2 years ago, I actually did a paper for my economics class on the subject, but about 2 years ago, the value of existing homes also began to fall...and have fallen incrementally over the last several months.

2 The Subprime Disaster

many lenders were lending money to people in the subprime category, and just to get them qualified they were doing non-traditional loans like ARMS, these are adjsutable rate mortgages which remain stable for a while the adjsut. Millions of those people are losing their homes. There are excess foreclosures on the market, lending institutions are losing money, hence their stock is going down. many lenders have gone bankrupt because of this.

3. Unemplyment is Rising

there have been major layoffs in the building and mortgage industries among others, unemployment is also an economic indicator, and when unemployment goes up, chances are good that a recession will folllow.
its the threat of a recession that has investors worried, the last recession was in 2001 and lasted for about 6 months or so, many experts feel that if we go into a recession with the way things are right now, its not going to be an easy fix or a short term thing.

When all of these factors are combined it spells major trouble for the stock market, and the economy.

hope this helps

No its due to the banks lending out money to home builders and buyers recklessly

Enter Your Message or Comment

User Name:
User Email:
Post a comment:

Archive: Forum -Forum -Finance - Links - 1 - 2 - RSS - All RSS Feeds
The Causes and the Results. 0.034
Copyright (c) 2011 Financial Crisis Monday, May 28, 2012 - Terms of use - Privacy Policy