CNN projects Dow Jones Industrial Average to fall 8,000 points if debt ceiling breached

[NewsCenter28]

Truly a horrific scenario playing out here. CNNs Christine Romans yesterday on the program Early Start projected that if the US defaults, the S&P 500 would drop from 1,655 to 850 points. Its generally accurate to say that every 10 point drop on the S&P is worth a 100 point drop on the DJIA. So if the S&P drops 100 points, the Dow drops 1,000 points.

I will find the transcript for yesterdays Early Start and post this dialogue.

So...if the S&P were to drop 800 points to 850 from its 1655 today, the DJIA would drop 8,000 points from 14,900 to 6,900. Again, 8,000 points!! 8,000! Roughly what a 60% decline in the markets.

So, come October 17th:
1. The Dow begins its 8,000 point crash.
2. The US Dollar becomes worthless.
3. The US loses its reserve currency status.

A whole host of other horrors ensues. John Boehner poses more of a direct threat to the mainland USA than Adolf Hitler or Usama Bin Laden ever did.

To say we should be scared shitless is an understatement! I have roughly 30 years to retirement and am rather heavily invested in the stock market. If you were me, would you stay in or withdraw. It just so happens that I see my financial adviser on the 17th. Good timing!

[Journeyman]

1. Ah, October. A bad month to invest in stocks. The other bad months are. . .

April, February, November, July, May, September, January, August, November, June and March.

[Fumesucker]

2. Don't forget Poland

[lastlib]

8. Is November twice as bad? So it gets listed twice?

[magical thyme]

11. so December is the month to invest...got it! nt

[AngryOldDem]

3. The idiots who want this are playing with napalm here.

Not fire. Napalm. And they are too stupid to realize the ramifications of this, not only to us, but to the rest of the world.

As for your question, I changed my portfolio around about a year ago when it was looking like things might be headed south. Even before all this crap hit the fan I thought that the Dow was artificially high and way overdue for a correction. My investments are much more conservative -- I am about 13 years away from retirement (LOL, LOL, LOL) so I am in a low-risk category. I'm also trying to carry as little debt as possible.

I'm not about to tell you what to do -- can you possibly see your advisor sooner than the 17th?

But if we hit the debt ceiling and default, we're all gonna be in the same boat -- a la the Titanic.

[Katashi_itto]

4. I keep telling people this is Sedition and the idiots here keep trying to tell me it not.

I am looking forward to seeing what they say on the 18th.

[BadgerKid]

5. Out since last year.

I was risk-averse the last time we went through this, so I got out. Mind you, I think default will suck for many reasons and will hurt people who asked for none of it. However, a major market drop would provide a huge buying opportunity after things shake out.

[Swede Atlanta]

6. I have advised my financial advisor that if the debt ceiling is not resolved by the 16th.....

He is to sell all securities and invest only in cash and cash equivalents. As well I am going to go to my 401K and move everything out of securities to cash equivalents.

I still have 6-7 years before retirement (assuming I don't get caught up in the "you are over 50" syndrome) so it isn't crucial just at the moment for me to have access to these funds but still I am not taking any chances.

[Javaman]

7. I suspect a big sell off friday night.

it won't be pretty.

[Renew Deal]

9. Sounds like there's money to be made

Bwahahahahahaha

[malaise]

10. CNN predicted a RMoney win

CNN said Obamacare was overturned by the Supremes.
To be kind CNN is always fugging wrong.

[magical thyme]

13. the difference is that this kind of prediction can become a self-fulfilling prophecy

CNN's prediction about how voters would vote was somewhat speculation, based on reading skewed polls. They attempted to create a self-fulfilling prophecy and failed.

Their prediction about how the Supremes would vote was pure speculation.

However, the stock market is a different animal. It is very easy to spook that herd into a stampede, and the nature of the beast is that there is always a certain class who invest borrowed money and then are forced to sell to cover margin calls. It's got a track record of snowballing, and the situation is ripe for a stampede.

I can tell investors are nervous. I work parttime as a CSR for a mutual fund company, so take calls for about 24 hours/week to help them fill out forms, execute their trades, whatever.

Last week was biz as usual, but I noticed a distinct change in the tenor of calls starting on Monday of this week. A few were outright asking me what to do (sorry, not an advisor). But mostly people are just very edgy. Screaming for no apparent reason and just ready to go off at anything and everything that didn't go their way when they didn't read statements, provided incorrect information, etc. Just really ugly out there right now, and I expect it will get uglier...

[Ikonoklast]

12. I have put some cash aside in case the credit markets lock up.

At least I'll be able to buy food.