Good Question: Who Makes Money When The Dow Drops?

MINNEAPOLIS (WCCO) — The Dow dropped more than 600 points Monday, making the plunge the biggest dip in the market since the 2008 financial crisis.

However, the drop isn’t bad news for everyone. Some are making money in the bad market, but who are they?

Mark Mekler, the senior vice president of investments at Raymond James and Associates, says that the only people who made money on a day like Monday were institutions that hedged their investments.

“There are short sellers and there are those who use options and other strategies to hedge their portfolios,” Meckler said.

In other words, investors who prepared last week by shorting the market, or anticipated a drop in stock prices, were right on target and were raking in the money.

But for every seller, there’s a buyer.

If the market bounces back, it doesn’t take a rocket scientist to know if you bought Monday you’ll benefit later.

So Brokers, people who sold stocks hoping the market would fall and anyone who traded in gold made money.

Meckler says having a financial plan and sticking to that plan is the best thing you can do during stressful economic times.

He says not having a plan is like sticking your cash in a coffee can and putting it in a hole in the backyard.

More from Reg Chapman
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  • Pete

    A better question might be ” who will make money as a result of the recent downgrade of the US bond rating from AAA to AA+ by S & P?” Many of the stories mention that we all may pay a little more interest on most borrowed money but do not say who will benefit from it.

  • jan

    He forgot to mention that people who owned treasury bonds made a ton of money (on paper). If I were to sell my bonds today, I’d get quite a bit more than I paid for them but would get hit on taxes and then where would I put the money I made so it would be safe? Savers take a hit because now you can only get around 3-1/2% on a 30 year bond that’s been downgraded to AA+

  • Johnny Rain Cloud

    Whether the market is up, down or steady only brokers come out ahead all the time. I would like to hear the reasons the S&P downgraded our debt rating, seems to me it was a political move rather than a strategic one. If there wasn’t a downgrade yesterday’s selloff would most likely not have happened. I guess I will have to take advantage of the stock market being on sale!

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