Why Have Stock Prices Dropped This Year (10 Points Best Answer)?

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Why Have Stock Prices Dropped This Year (10 Points Best Answer)?

Like Berkshire Hathaway..Is it the economic recession? Inflation? Funding for Iraq war?

Imaginary F

Mortgage crisis. Lots of people lost money in their homes. Lots of people lost their jobs. People thinking the prices will go lower so they wait till they think the market will go up.

SharpGuy

Banking failures which has locked down lending and causing companies to shut down because they can't continue to keep inventory, payroll, etc. Lehman brothers collapse and loss of billions in a 6 month span was the final straw for wall street.

madmoney

To put it very simplistic, investors think the underlying companies will perform worse in the future than they have in the past. Thus they sell stock to lock in their gains, and wait for the " bottom " to buy them back cheaper.

There is also the added pressure of Forced selling this year by hedge and mutual funds who have to sell stocks to pay for redemptions.

The Iraq war spending thing is a purely political point thrown in to make an ideological point. For instance, did you know it costs twice as much every single year ( since at least 1960 ) to fight the " War on Poverty " as does to fight the Iraqi war. And we all know which one will end first.

acablue

Simple suppy and demand. At the moment, there are more people that must sell or want to sell stocks than there are people who can buy and want to buy.

With the enormous borrowing that has taken place over the past 10 years many people are now seriously in debt and short of cash. That creates more people who must sell or want to sell and fewer people who can buy or who want to when stocks are still dropping.

If you subtract demand and increase supply, the market will drop every time until the two come into balance again.

northstar

the spending on the war overseas has consequences, both money and focus on leading edge military weaponry and the overall destruction. As billions have streamed out of the world's leading countries and we stop focusing on keeping our own economy things get stretched too thin and laws get overlooked. The stock market falling is a result of this...starting with over loaning and "helping" people to get into mortgages that they can't really afford. Someone has to foot the bill.

rajas203

Main cause is the hedge fund failures and other investment failures. Firms were forced to genearet cash by selling their positions. ALso the firm's future forecast became bad due to bad outlook. ALl contributed to the low price of stock.

MorboWillDestroyYou!

Its primarily because of the economic downturn, fuelled by the sub prime mortgage **** up.

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