Many people make the mistake of replacing bonds with preferred shares in their portfolio for the increase in yield, but as the charts above show that is a grave mistake as it exposes you to a lot more downside in
the event of a market drop.
Not exact matches
That's why during a recession, you want a lot
of cash, cash equivalents, or access to money in some way at your disposal in the
event that you lose your job, the stock
market crashes and you don't want to sell your shares at depressed prices, you suffer a pay cut
of some sort, are disabled, or you own a business and sales start to
drop.
If the
market was «certain to crash» in the
event that Bear Stearns failed, then the
market is certain to crash anyway, because Bear Stearns wasn't the last shoe to
drop - it was one
of the first.
But in the
event of a housing
market drop or crash, those who bought most recently with high - leveraged mortgages will be underwater quickly.
When stocks decline steeply with no related news
events to set - off the price -
drop — and when one
of the largest individual holders, Leon Cooperman, is unloading shares — it's the
market's way
of signalling problems not yet recognized by the peanut gallery.
We don't know whether this qualifies as a black swan
event, but a
drop of more than 4 % during a bull
market is indeed very rare.
Luckily for me, I honestly wasn't aware
of the
drop in the
market simply because my mind was to say the least preoccupied with other life
events, so when I opened up my brokerage account for the first time in weeks I was pretty surprised.
At a 13 June
event at AAAS headquarters in Washington D.C., experts described examples
of harmful drugs and devices that had reached the
market and suggested that the bar to public safety has
dropped below an acceptable level.
Indeed, Paramount just did the same thing with The Cloverfield Paradox, a film that was
dropped out
of the blue online after the SuperBowl, in a bravura piece
of event marketing by Netflix.
When you buy an individual stock, you put a relatively large chunk
of capital to work, which exposes you to the occasional bombshell, whether it's a bad earnings report, a big
drop in the
market or a random company - specific
event that brings out the sellers.
It seems like unfortunate timing that what should have been one
of the biggest news
events in the DIY investing space since the commission
drop by RBC Direct Investing in January
of 2014 actually got eclipsed by the major
market meltdowns.
The cause
of the massive stock
market drop can not be attributed to any single news
event because no major news
event was released the weekend preceding the crash.
For example, an adverse
event, such as an unfavorable earnings report, may depress the value
of equity securities
of an issuer held by the Fund; the price
of common stock
of an issuer may be particularly sensitive to general movements in the stock
market; or a
drop in the stock
market may depress the price
of most or all
of the common stocks and other equity securities held by the Fund.
If the
market was «certain to crash» in the
event that Bear Stearns failed, then the
market is certain to crash anyway, because Bear Stearns wasn't the last shoe to
drop - it was one
of the first.
While
of course a tragedy and sad
event, there were probably people who made money buying on the immediate
drop, because the
market did recover within a few weeks — back to old levels.
During a side
event of the Nintendo Gamers Summit, Vice President
of Marketing George Harrison commented on whether or not Nintendo would
drop the price
of the GameCube.
The news reports differ on what
events are emphasized depending on what coverage you look at (and if you look to John McAfee for causation, you'll note the
market drop was all because
of J.P. Morgan spiking fears about potential government bans).