Remember late September 2008?On Monday, September 29, the DOW dropped from Friday's close of 11,143 to 10,365 - a 778 point decline. By this time, it was clear there was a serious financial crisis, what with Lehman, AIG, et al in the news (and the failure of the House to pass economic-related legislation).
The next day, Tuesday, on the morning network shows, they trotted out various financial advisors. What did they say? The all said pretty much the same thing:
Don't panic and sell. If you sell now, you won't have a chance to erase (some of) the losses.
Since then, and after virtually every major decline the advice has remained constant: Don't sell (with an exception for those who may need money in the next 24 months or so).
Boy, did those advisers screw over the viewers.
FYI: Today the Dow closed at 6,763, a 34% decline from the 10,365 close of Monday, September 29.
posted by Quiddity at 3/02/2009 01:08:00 PM
There wasn't any particularly compelling reason to sell then. Obama created one with the promise to strip away the mortgage interest deduction from high earners.
I suspect that there are a lot of high earners who are carrying a mortgage for the sole reason of benefiting from the tax deduction. They have enough capital left in the stock market to pay off their mortgage if they chose to.
Take away the deduction, and what's the point of holding the mortgage? Doesn't this move prompt people to pull out of the stock market and pay off their mortgage early?
Is that what's happening this week?
