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Discussion Starter · #1 ·
Should the US not increase the debt limit, I wonder how much and for how long the markets (including the TSX) will be down. I'm making a list of stocks to buy and at what price.
 

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Such an event still seems inconceivable to me, but in that case, I would add to my existing holdings as I generally do anyway when markets dip above a certain %, and needless to say, I would also get in on a few missed opportunities.

I'm prepared for whatever comes, but let's hope for everyone's sake that there won't be a default.
 

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Discussion Starter · #3 ·
A great investing book is Charles D Ellis, Winning the Loser's Game.

My favorite passage is: "Therefore, if you are a saver and a buyer of shares your long term-term interest is, curiously, to have stock prices go down quite a lot and stay there so you can accumulate more shares at lower prices and therefore receive more dividends with the savings you invest."
 

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It won't happen.

If it does, Financials are going to be on sale like no tomorrow, and I would imagine commodities would be right up there with gold.

In which case, I'd buy falling financials and rising commodities.

But.... cannew;

If investors thought that the US was going to default, wouldn't you think the market would be a tad bit lower right now? :)
 

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It won't happen this time around.

In the future however it's a different story, they will either default or reduce the debt by cutting spending and increasing taxes, either scenario will produce great buying opportunities in the stock market.

Buying on credit can only go so long, after that it's time to pay one way or another.

Another question is what will China do, will the support the US because it's in their best interest as well, or the will say screw you and dump the Tbills taking a loss and becaming the only economy that really matters.
 

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It's the mere thought that it COULD happen that has me concerned. Should retired folks even have their hard-earned savings in the stock market where they could suddenly lose a substantial portion of their investments at the whims of politicians anywhere in the world? Our savings are currently in jeopardy at the hands of some hard-line, right wing, Tea Partiers who are putting principal ahead of the good of their nation. The current crisis may end up getting resolved--let's hope and pray--but the entire world financial situation will remain in perilous condition and that means that our life savings are in similar shape. It doesn't exactly fill one with a feeling of confidence.:eek:
 

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Failing to raise the debt ceiling would be irresponsible, reckless, and foolish...but politicians-almost by definition not sensible- are handling the negotiations. The "market" didn't price in bankruptcy (or near bankruptcy) for Lehman or Bear Stearns or a host of other financial institutions prior to the last downturn, so the market-as-oracle is a bit overrated. The Economist holds a daily debt ceiling update. The July 21st edition noted that Intrade, a prediction site, showed betting against a deal getting done. See www.economist.com/blogs/freeexchange/2011/07/americas-debt-ceiling-2

I still think it's unlikely both sides will be so irresponsible as to fail, but the outcome is no longer unthinkable. Let's speculate a bit. Some of the newest Republicans are Tea party ideologues opposed to big government. The U.S. has enough tax revenue to continue making interest payments but not enough to make interest payments and continue all its programs. Therefore, to maintain interest payments, the U.S. would have to cut services drastically - exactly what some of the newest Republicans want. I'm not saying I agree with the rationale. I'm saying that some of the politicians don't fear a default.
 

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The main job of the republicans is to disagree with democrats (just like it would be for democrats when republicans were in power) and make sure they can't get anything done regardless if it would be good or not, everything else is irrelevant.

Obama is such a convinient scape goat for everything wrong with US right now, the fact the irresponsible spending dates back to WW2 often goes unnoticed, hence the possibility of not extending the debt ceiling is unlikely, but not impossible.
 

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My favorite passage is: "Therefore, if you are a saver and a buyer of shares your long term-term interest is, curiously, to have stock prices go down quite a lot and stay there so you can accumulate more shares at lower prices and therefore receive more dividends with the savings you invest."
With all due respect to Charles Ellis, that statement is bogus, unless you have a magic wand.

So you want markets to be depressed and in recession for 30 years while you are investing, and then the year before you retire, by some divine magic, the market will rise 300% so that you can sell your portfolio and retire a millionaire!
 

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Should the US not increase the debt limit, I wonder how much and for how long the markets (including the TSX) will be down. I'm making a list of stocks to buy and at what price.
a hell of a lot of other people are too ... it could get very wild .... does anyone really watch the market anymore ? ... i thought we all watched the internet to see what the people that are watching the market are thinking ? :)
 

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a hell of a lot of other people are too ... it could get very wild .... does anyone really watch the market anymore ? ... i thought we all watched the internet to see what the people that are watching the market are thinking ? :)
What people don't realize is that supply and demand will negate most of the downside if everyone is rushing in to buy stocks.

I think the smart money is already planning for this in a way that will burn a lot of amateurs
 

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With all due respect to Charles Ellis, that statement is bogus, unless you have a magic wand.

So you want markets to be depressed and in recession for 30 years while you are investing, and then the year before you retire, by some divine magic, the market will rise 300% so that you can sell your portfolio and retire a millionaire!
Exactly ! :)

Those who wishes market depression just fooling themselves.
And what if during new recession they lose their job? (last recession unemployment rate jumped almost 3 times in US). During "buying opportunities" they will be buying from their EI?
 

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"WASHINGTON, July 23 | Sat Jul 23, 2011 12:21pm EDT

WASHINGTON, July 23 (Reuters) - Debt talks between President Barack Obama and congressional leaders on Saturday have ended, a White House official said.

There was no immediate indication if the White House or lawmakers would make any public statement on what progress, if any, had been made during their discussions toward lifting the U.S. debt ceiling before an Aug. 2 deadline to act.

The meeting ended at 11:58 am (1558 GMT), the official said, less than an hour after it began. (Reporting by Alister Bull and Steve Holland; Editing by Todd Eastham) "

What the hell will be on Monday? :confused:
 

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"Obama said he is willing to go along with a back-up plan proposed by the top Republican in the Senate, Mitch McConnell that would give Obama the power to raise the debt limit while allowing Republicans to vote against the increase. He said this would accomplish the minimum necessary of allowing the U.S. to keep paying its bills. But he said he preferred to also work on solving the problem of the enormous U.S. debt and deficit."

http://www.voanews.com/english/news...ders-After-Debt-Talks-Collapse-126055468.html

Can we call it a progress? :confused:
 

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Discussion Starter · #16 ·
During the recent downturn I got BMO dividend yield at 8%. Was not around when the yield hit 11%, but if I was able to get that I wouldn't worry if the market stayed down for years (as long as they held the dividend).
 

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During the recent downturn I got BMO dividend yield at 8%. Was not around when the yield hit 11%, but if I was able to get that I wouldn't worry if the market stayed down for years (as long as they held the dividend).
There are good reasons for getting in at that level, but I think I'm too chicken...If Nortel could be blown to smitherines by a stock crash, who's to say which of these companies or banks would even be around if the market suffers a large 80%+ loss a la 1929-1932 Dow Jones or 2000-2002 Nasdaq :confused:

I think I'll consider waiting till values start to pick up positive momentum, and perhaps eclipse key moving average milestones on the way back up.
 

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My prediction is a drop in the opening hours that will probably recover into the closing bell. Essentially a flat to a slightly negative day
 
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