The Latest Stock Market Plunge: August 2015 down 10%

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Did the stock market plunge again? Are your positions wiped out or are you relishing the opportunity to find new entry points?

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The 200 DMA crosses the 50 DMA: is that the death cross on 8/11? Updated

When I was a student in college many moons ago, I remember on Sunday outside chapel, and on selected weekdays, a seemingly old lady would parade up and down the street, offering pamphlets, protesting and trying to gain exposure for her world view that encompassed the imminent ending of the world…

A Brief Moment in 1987

And for one brief moment in 1987, the stock market plunge of October wiped out billions of dollars in a couple of sessions.

Just recently, if you’d been reading recent headlines on the Street, like this one, you’d be tempted to believe the same stock market plunge had just taken place again!

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But is it? Is the end nigh? Or shall we all live again to trade and make money? Well, if you haven’t already guessed, I tend to the latter point of view. We will always prevail, perhaps a little wiser, certainly a lot poorer.

But we will all be investing again one day in the not too distant future, once we’ve licked our wounds after the current stock market plunge. At that moment, it might be hard to imagine as you and I are likely sitting on huge losses on our portfolios (I was down over 50% in 2008!)

Long way to go up – or down?

We should never use the past to judge the future, but previous statistics can be informative. The two most serious downturns in the 20th century were quite severe. The second crisis was in 1970’s when the Dow Jones dropped and the stock market plunge wiped out nearly 50% of the market value but what is worth noting: the greatest point loss (by points) was in fact only #17 in the total percentage losses.

In 2008 we were approaching a 45% downturn, and things have recovered well since then in the markets. There were only a few buyers out in the markets at the time, but many sellers so sell-orders swamped buy orders as companies, institutions, and individuals tried to unwind their risky positions, and save their skin. An awful lot of ‘unwinding’ was done before a more orderly market returned and there was more of a balance between buyers and sellers.

800px-DJIA historical graph

But in each of the downturns that occurred, people got back to business (eventually) and those downturn periods can hardly be seen in the chart above. But with markets still prone and intervention seeming not to work, we just have to figure out how to get from here and now to then.

Are we at the bottom, in the middle or at the top?

Many pundits are suggesting that the bottom of the market is not yet near, but that it is coming. While no one is sure of the exact time frame, several writers talk extensively about ‘capitulation’ – the notion that the selling is exhausted, and buyers’ orders match sellers’.

Jeff Cox of CNBC, writes “…But while hedge funds and industrial investors have been bailed out of positions, individual retail investors have still not reached the severe panic point.”

It’s quite likely most of us willl be steamrollered by the market as we jostle our buy/sell orders. I know I have: I now know the meaning of trying to catch a falling knife! He goes onto say that heavy volume will indicate that the capitulation phase has started, unfortunately we’re just not seeing that yet.

Cramer’s opinion always tells you what he thinks, EXACTLY. But you should take those opinions with a large pinch of salt!

So what is an successful trader/investor to do?

This is what I’m doing these days as I try to make sense of what’s going on, how I’m being affected by the latest stock market plunge, and where I’ll be in 12 months time:…

1. Keep eyes on your cash! It’s YOUR CASH!

Really, it’s just survival out there, that’s the name of the game now. Making sure that your cash is as safe as you can – verify that you have cash in the bank, that your bank deposits are sufficiently insured or guaranteed.

I’m planning to separate my funds into two bank accounts in separate institutions. While my own government authority has guaranteed deposits until 2010, having no access to these funds even temporarily could cause some cashflow problems, so I’d rather not take the chance.

2. Be better informed! Read, read, read…

I’m sure this is one that should affect us all! Here we are fretting about problems and issues that we all know little about: WTF is a Credit Default Swap? Well, since people are taking such risks with their money (and ours!), it seems that we have to all become better informed about the systemic risks these people are taking without so much as consulting us. I, for one, will endeavor to be much better informed about these matters.

3. Pie in the sky: that’s all it can ever be!

Skepticism has always been one of my strong suits, but now I’m becoming skeptical of the truisms, investing group-think wisdom, and aphorisms passed from advisor to client all over the world. I just don’t see why we should all be told that we have to invest in the stock market, expect 9% returns, and take SO MUCH risk without any chance of reward. No businessperson worth their salt would invest in a business like that.

Yet that is what most ‘retail investors’ face everyday. Yet every day, that investor is told to live with the risk of a stock market plunge wiping out not just some of the portfolio, but a lot of it! There will always be the risk of a stock market plunge! …

I’ll be adding to this discussion shortly, but I wonder: how were you affected by the crash? What are you doing to protect your investments? How do you see things now in view of the possible double dip that a lot of people are talking about?

Money Saving Tips Businesses Can Use to Cut Shipping Costs

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I was wondering whether or not to start shipping coffee beans from a really good coffee roaster that I know. I haven’t worked out the shipping costs yet, so when this guest post came through, I read it eagerly for advice.

If you’re setting up an online store, I’d suggest working your way through this article, too.

Weather it’s a person selling on eBay or a business that runs a complex supply chain, shipping costs are a cause for concern because it can account for a large percentage of a business’s operational costs. While it’s impossible to cut out this expense completely, there are things that business owners, both small and large, can do to save on shipping costs.

Find a Company That Works With Small Businesses

While there are lots of shipping solutions out there, not all of them cater to small business owners. David Kiger’s profile, who is the CEO of Worldwide Express, talks about the need for small companies to find advanced freight and shipping options that will help them reach their goals.

This becomes even more helpful when small companies start trying to ship overseas. Advanced freight and shipping services help protect small businesses by keeping them informed about international shipping and customs laws that they might not have otherwise known.

Avoid Guesswork of Shipping Costs

Another problem that small companies have, especially for those that are just starting out, is that they never know how much shipping they will be doing. They don’t know the size, weight or the shipping cost.

Not knowing this information turns out to be an added expense later. The result is that companies often overpay for shipping because they aren’t really sure what the price should be. Removing the guesswork from the equation can save a lot of money.

Use Shipping Tools When Provided

Some companies try to figure out what shipping will be by themselves. However, many shipping solution providers offer free online tools that they can use to help determine the cost. These providers offer the tools because they want to draw in more business by being as helpful and upfront as possible.

Most of the online tools will help companies calculate their shipping costs for both international and domestic shipments. Other tools allow them to track shipments, print forms or even standardize addresses.

Watch Those Hidden Fees

When shipping internationally, there are a number of fees that companies might not be aware of and that end up hurting their businesses. For example, export compliance and proof of delivery all come at an added cost. Additionally, taxes and customs duties alone can often amount to nearly 30 percent of the total shipping fee on international shipments.

It’s important to know which party is responsible for paying these fees because it can affect the bottom line of a business.
While all of these tips are good, the only way for any of these tips to be helpful is to do the research to determine what the appropriate costs will be for the business’s shipping operations. Understanding these costs will help companies like yours more effectively manage the pricing, the budget, and profit margins.

How did you manage to control your shipping costs, especially with items that were unexpected by you or the client?

Useful Resources

Screencast: How the Shipping Cost Calculation Works in  your WordPress eStore

Youtube: PayPal Shipping Calculator

Why are you building someone else’s Web 2.0 wealth?

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There are many community based sites on the Web2.0… and many of them are private companies, not foundations. While many of them claim to have altruistic motives, sometimes the motivation of money can be much stronger than the notion of building a unique service that helps humanity.

For most users, that’s fine because they don’t really worry about such things. But if you are a webmaster and you’re busy using these websites (e.g. Facebook) to build your brand, draw traffic to your site, or sell products, I have but one question to ask:

Why are you making someone else rich when you should be tilling your own Web 2.0 fields?

This is seriously an issue. It didn’t just affect your social life, it will also impact your business development. I’ll give you three reasons:

1. It’s their field, not yours

Simply put, you are building someone else’s business by submitting content, viewing content, and developing relationships THERE. It’s not building your own brand, business or blog HERE. Facebook’s stock valuation is rising, how is yours doing?

Well, if you put all your time & effort into your Facebook profile, and neglect your own field… there’s not going to be much to harvest come summertime, is there?

Solution: Till your fields, drive traffic from the Web 2.0 to your site, put most of your effort onto your site. Avoid distractions.

2. It’s their game, not yours

Things change, something we all realize. Since the internet first came about, the only constant has been the nature & speed of change. We intrinsically know this. But even within Social Media, things change fast.

Even a simple change in TOS can effectively mean that your business is no longer possible (either outlawed by TOS or made prohibitively expensive). While these kinds of changes aren’t that common, you can just ask those users of services like YouTube, Ebay, AdSense, etc. that have had accounts closed because of changes of TOS, or been forced to close accounts because they can’t continue under the new TOS.

Where service continuity and TOS aren’t issues, you will find that algorithm changes can severely impact your social network performance. Take a look at the feed of your Facebook profile, now compare that to the most recent feed. The same? Hardly. Facebook’s algos regularly pull content from your feed that IT thinks you don’t want to see.

As a user, I find this very regretful. I followed many websites on Facebook because I wanted to stay current with their updates, such as OMGUbuntu, or Agnes b coffee shop, but I rarely see posts from either in my feed. With less viewership, there is less incentive for these websites to post anything new on their Facebook profiles.

No one expects Facebook to be primarily for brands or products, but … we do like to keep up with our favorites, don’t we? Agnes b. for example has over 120k likes… yet on one of its posts, there were 331 likes and 2 comments! I won’t tell how small the % of the interactions is… it’s ludicrously small.

Solution: Look for value on the Social Networks. Sometimes paying to play will provide the answer to your issues (because they need to earn money and discern quality feeds). Consider…

3. Pay to Play

Facebook want you to pay for that access; and you can advertise on their system. For many websites, this is a viable way to go and traffic can be quite good for a reasonable price. I would only suggest you do this to drive traffic to your site.

Obviously, Facebook wants you to drive traffic to your presence on THEIR network. You could do this, too; but I think you will find that there is little point to doing so. One of the ways of doing is to “Boost Your Post” which is activated on selected posts (again, you can’t always choose which post to boost). Check out this post from The Digital Marketer on “The $5 Solution to Your Organic Reach Problem on Facebook” on performance and read the comments. Obviously, there are as many caveats: watch your performance, track your budget, watch for algo changes.

4. Service Outages

First there was Myspace and Friendster. Who uses those nowadays? Now we have Facebook, Twitter & LinkedIn. But how long those will be here? Already many apps are forging communities based solely around the phone; it’s already the next big social network.

Now look at the gyrations that happened to Myspace over the years, and consider what happened to Geocities and Friendster? Neither of these sites is now operational. Yahoo! closed Geocities down recently, too.

And Yahoo has a habit of purging sites, services and companies that they do not feel have a future. So, although I use Flickr, I don’t depend on Flickr being available for ever. But I wonder how many people upload their photos to Flickr as their only copy! Stupid, yes. Do people do it? Yes.

But this threat can cut into your business, even when the site doesn’t disappear.  Twitter, FaceBook, YouTube are all evolving media and while at least one of the three is supported by big pockets, you can bet bottom dollar that ALL of these services will depend on being successful on their monetization models.

However, even success there doesn’t guarantee that the business won’t be closed down, limited, restricted, or made premium, by current or new owners at some point in the future.

So, if you value something, always have at least two copies of something: one on your PC, and one on a preserved copy. Just in case you have to deal with a closure.

Now, have I convinced you to start planting your own fields? I hope so. Have you started yet?