CHESSNOID

All the foreign stock markets seemed to plunge yesterday between 4-7% in one day. I was amazed at the big declines that took place for today when I read the closing numbers for those same foreign stock markets. Many, if not all, the foreign stock markets got ripped up today with even bigger declines.

According to MarketWatch:

India’s Sensitive Index tumbled 2,029.05 points, or 11.5%, to 15,576.30 in the early minutes, forcing trade to be halted for an hour. The index had finished 7.4% lower in the previous session, after dropping as much as 11% during the day.

“It doesn’t look good at all. We expected it to fall, but nobody expected this kind of correction,” said Sharmila Joshi, a trader with Prabhudas Lilladher in Mumbai.

Japan’s Nikkei 225 average tumbled 4.8% to 12,682.47, while the broader Topix index skidded 4.6% to 1,233.99 in afternoon trading. Earlier in the day, the Nikkei dropped as low as 12,666.09 — its lowest level since September 2005.

Hong Kong’s Hang Seng Index slumped 8% to 21,914.28 as the sell-off deepened from the previous session, when it tumbled 5.5%. The Hang Seng China Enterprises Index plummeted 11.9% to 11,927.55. See related story.

Australia’s S&P/ASX 200 extended losses into the 12th straight session, slumping 5.8% to 5,257.80 and New Zealand’s NZX 50 index ran its losses into the 14th session, dropping 1.1% at 3,607.13, while South Korea’s Kospi shed 4.8% at 1,602.93.

China’s Shanghai Composite, which fell more than 5% in the previous session, sank 4.1% to 4,714.30, Taiwan’s Weighted index tumbled 6.4% to 7,585.93 and Singapore’s Straits Times index lost 4.4% at 2,789.31, while Indonesia’s JSX Composite tumbled 8.3% to 2,279.27.

The US stock market was closed today, but according to the futures market there will be a big drop.

The Dow Jones Industrial Average futures contract was recently off 520 points at 11,586, the Nasdaq futures were at 1773.25, down 76.25, and the Standard & Poor’s 500 futures recently were at 1265, down 60.3.

There will be panic selling tomorrow because of the major drop expected will make regular news coverage. Many investors and people with stocks in 401k’s and other retirement vehicles will not want to see their portfolio drop another 3-4 percent after being down 10 percent in most major stock indexes. There will be some people making money tomorrow, but tomorrow many more people will lose money. I think after this month, February may be the month I begin to go back into stock using the dollar cost average method. I think bank, real estate and technology stocks will be good long term investments in the 10 year horizon. I am looking for market leaders in beaten up industries to make the best returns in that time frame.

Tomorrow will be a stressful day for most investors. I still remember Black Monday in 1987 and was still in college and thought if I had money I would be buying every major blue chip stock I could. I think we are in a similar place in the stock market right now. Usually there is a bounce after a few big bad days, but I would recommend sitting on the sidelines unless you have nerves of steel.