Stocks Rebound After Huge Drop

Dungheap said:
But what effect does the bond insurers going under have on the overall economy? Municipal bonds, etc. . .
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Well, IF they were to go out of business, my guess is that the facilities will simply line up with other insurers and get new insurance. But for those that do not qualify for whatever reason....

1) they would be re-evalutated and the credit ratings on each facility would likely drop. This would cause the bonds values to drop... forcing the over all yield on the bonds to be equivalent to other bonds with similar ratings. This would be paper losses. It would then be up to the individual facilities. Most I imagine would continue making their interest payments and end up paying off their debt on schedule. The only difference would be the paper value of the bonds prior to maturity and the fact that the investor is without the safety net of the insurance.

2) It will create a confidence issue in bonds in general and the likely reaction of many bond holders would be to panic and sell their former AAA bonds. This would cause further drops in pricing and may induce panic in other investors. This snowball effect could crush the valuations in the short term, but the market would soon correct for the panic.

3) Overall, outside of the short term panic that might follow, it should not have a great effect on anyone other than the stockholders of the insurers and those that panic and sell.
 
I dollar cost average so unfortunatly no cash sitting around waiting for a drop.
This is not even a speen bump. AT 47, I always joke that I'm praying for a crach. Maybe I'll get it here. Why, so I can buy cheaper. I'm not selling even after retirement. So what if I go down to 9 or 800,000 now. I get more shares and in 2017 it's price is going to have little to do with this correction/Bear market of today.
 
Topspin said:
I dollar cost average so unfortunatly no cash sitting around waiting for a drop.
This is not even a speen bump. AT 47, I always joke that I'm praying for a crach. Maybe I'll get it here. Why, so I can buy cheaper. I'm not selling even after retirement. So what if I go down to 9 or 800,000 now. I get more shares and in 2017 it's price is going to have little to do with this correction/Bear market of today.
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we need the spinner rosetta stone for that one...
 
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