Right now there doesn't appear to be a bottom. This thing could drop below 8000 tomorrow for all we know.
He gets a better deal than us. $5 billion of preferred stock with a 10% dividend. He will rake in $500 million every year from Goldman Sachs. Common stock has only a 1.1% dividend. He's getting 9x the regular dividend! Goldman can buy back the stock at any time, but they have to buy it at a 10% premium. He makes $500 mil on the back end. He also gets warrants, so he can buy $5 billion of common stock at anytime in the next 5 years at $115. If the regular guy can get a deal like that, why not buy that stock?
S&P 500 Breadth: A New Low Has Been Set Currently, there are just five stocks in the S&P 500 trading above their 50-day moving averages. This is easily the lowest level seen during the current bear market, and it's on par with the lowest levels registered ever. After all, the indicator can't go below zero. http://bespokeinvest.typepad.com/bespoke/images/2008/10/09/spx50day1009.png
I gave in and bought some DXD... if the market goes up, I won't make as much, but if it goes down, I won't lose as much... hell, that's fine with me under the circumstances. lol. Any of you guys that are possibly more in-the-know agree with the belief that much of this nutty selling is a result of hedge funds getting margin calls?
I have an open order for URPIX for everything in my IRA. Here's hoping I can get some cash back. Hopefully, this is a good idea. The economy looks really weak next year. It's all downhill from here.
Part of this is mutual fund redemptions. People are pulling out a ton of money and the managers have to sell the stocks further driving down prices. Everything and I mean everything is on sale. Blue chips, small caps, foreign stocks. XOM got slaughtered today. I only wish I had several hundred thousand to invest right now. You can't time the market and it will probably get worse from today. But as John Tempelton said, "Buy at the point of maximum pessimisim." We're about as pessimistic as you are going to get.
Pretty much my thoughts at this point. There was rampant speculation a couple of weeks ago about massive hedge fund redemptions coming in that could trigger heavy liquidation in the coming weeks. I guess that got drowned out in the sheer pandemonium of what we've seen in the markets lately. It seems like the situation is feeding on itself: investors are so spooked that virtually nobody wants to buy anything, and daily margin calls and hedge fund liquidations are triggering sell-off waves. Basically lots and lots of selling with no buyers, driving prices down at a ridiculous rate. The situation feeds upon itself, as the market collapse triggers forced/automated selling and fearful investors who were previously willing to ride out the storm begin to exit by the droves. If I've described the situation right, it probably explains why it feels like there is no bottom in sight. We are just too oversold at this point. Tomorrow could be even worse, but this madness can't last beyond this week. I find it hard to believe that it will. We have to see a bounce, and we have to see one soon.
As I sit here watching Asian markets get obliterated, I honestly thought I'd never see a sell-off like I saw after the dot com bubble burst... if that was a bubble, this is an atom bomb. Oh well, I have money on the side waiting to get back in, but I'm not seeing any end to this sell-off tomorrow. DOW futures, while probably meaningless right now, are down around 250. The reason I asked about the hedge fund margin calls was I had been hearing that on financial networks and it would make me feel somewhat better about a bounceback (even if it's a quick bear/recession rally).
...just fyi i do ramble on a bit in this post... well it's not just that. that is certainly a large chunk of things but there are also major fundamental flaws with america since we have based our economy on credit for basically the entire bull market that started back in the early 80's. right now i think oil companies are a perfect example of hedge funds driving stocks down to warren buffett/benjamin graham valuations. there are profitable stocks trading near CASH value with little to no debt. that is some hardcore value there. TKTM is one...ticketmaster. anyhow...i was just doing some thinking about this and i have really struggled with things the whole way down because i am american and i want our country to be strong but the reality of things is that we are in this **** for the long haul. i have continued to not wanted to admit to myself that this may well be the top of american power. i have known it but not looked at things totally objectively. we have had decades of disgraceful mismanagement of our economy and we are on the path towards a bankrupt nation. i have accepted obama will likely win the presidency but i just don't think he understands the gravity of the situation we are faced with. this whole entire crisis has completely undermined my faith in america's ability to correct it's fundamentally flawed issue of wasteful deficit spending. we are currently highest debt to gdp AAA rated national govt. s&p has already come out and stated that our AAA rating is NOT A GOD GIVEN RIGHT. what do you think is gonna happen to that rating after we have to bailout GM and F? or after we have to expand our bailout of banks? it certainly won't be positive and if we are knocked down to AA (or god forbid even lower). do you know how much our costs of borrowing will skyrocket? it will be backbreaking. all this doesn't even address our aging nation that we are guaranteeing all these benefits that we will most certainly not be able to pay out. i dunno....i'll stop my rant for now...i'll let you read someone much more articulate than me who has been correct the whole way down. long but please read every word because he is inline with what i have been thinking and i just don't want to accept it. http://www.rgemonitor.com/blog/roub...ncial_meltdown_and_a_severe_global_depression RGE Monitor's Newsletter ALERT RGE Monitor October 9, 2008 On Thursday, October 09, 2008, Nouriel Roubini – Chairman of RGE Monitor and Professor of Economics at the NYU Stern School of Business – lays out his latest views on the global economic and financial crisis and the urgent necessary actions that need to be undertaken globally. Nouriel Roubini: The world is at severe risk of a global systemic financial meltdown and a severe global depression The U.S. and advanced economies’ financial systems are now headed towards a near-term systemic financial meltdown as day after day stock markets are in free fall, money markets have shut down while their spreads are skyrocketing, and credit spreads are surging through the roof. There is now the beginning of a generalized run on the banking system of these economies; a collapse of the shadow banking system, i.e. those non-banks (broker dealers, non-bank mortgage lenders, SIV and conduits, hedge funds, money market funds, private equity firms) that, like banks, borrow short and liquid, are highly leveraged and lend and invest long and illiquid, and are thus at risk of a run on their short-term liabilities; and now a roll-off of the short term liabilities of the corporate sectors that may lead to widespread bankruptcies of solvent but illiquid financial and non-financial firms. On the real economic side, all the advanced economies representing 55% of global GDP (U.S., Eurozone, UK, other smaller European countries, Canada, Japan, Australia, New Zealand, Japan) entered a recession even before the massive financial shocks that started in the late summer made the liquidity and credit crunch even more virulent and will thus cause an even more severe recession than the one that started in the spring. So we have a severe recession, a severe financial crisis and a severe banking crisis in advanced economies. There was no decoupling among advanced economies and there is no decoupling but rather recoupling of the emerging market economies with the severe crisis of the advanced economies. By the third quarter of this year global economic growth will be in negative territory signaling a global recession. The recoupling of emerging markets was initially limited to stock markets that fell even more than those of advanced economies as foreign investors pulled out of these markets; but then it spread to credit markets and money markets and currency markets bringing to the surface the vulnerabilities of many financial systems and corporate sectors that had experienced credit booms and that had borrowed short and in foreign currencies. Countries with large current account deficits and/or large fiscal deficits and with large short-term foreign currency liabilities and borrowings have been the most fragile. But even the better performing ones – like the BRICs club of Brazil, Russia, India and China – are now at risk of a hard landing. Trade and financial and currency and confidence channels are now leading to a massive slowdown of growth in emerging markets with many of them now at risk not only of a recession but also of a severe financial crisis. The crisis was caused by the largest leveraged asset bubble and credit bubble in the history of humanity where excessive leveraging and bubbles were not limited to housing in the U.S. but also to housing in many other countries and excessive borrowing by financial institutions and some segments of the corporate sector and of the public sector in many and different economies: an housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, a hedge funds bubble are all now bursting at once in the biggest real sector and financial sector deleveraging since the Great Depression. At this point the recession train has left the station; the financial and banking crisis train has left the station. The delusion that the U.S. and advanced economies contraction would be short and shallow – a V-shaped six month recession – has been replaced by the certainty that this will be a long and protracted U-shaped recession that may last at least two years in the U.S. and close to two years in most of the rest of the world. And given the rising risk of a global systemic financial meltdown, the probability that the outcome could become a decade long L-shaped recession – like the one experienced by Japan after the bursting of its real estate and equity bubble – cannot be ruled out. And in a world where there is a glut and excess capacity of goods while aggregate demand is falling, soon enough we will start to worry about deflation, debt deflation, liquidity traps and what monetary policy makers should do to fight deflation when policy rates get dangerously close to zero. At this point the risk of an imminent stock market crash – like the one-day collapse of 20% plus in U.S. stock prices in 1987 – cannot be ruled out as the financial system is breaking down, panic and lack of confidence in any counterparty is sharply rising and the investors have totally lost faith in the ability of policy authorities to control this meltdown. This disconnect between more and more aggressive policy actions and easings, and greater and greater strains in the financial market is scary. When Bear Stearns’ creditors were bailed out to the tune of $30 bn in March, the rally in equity, money and credit markets lasted eight weeks; when in July the U.S. Treasury announced legislation to bail out the mortgage giants Fannie and Freddie, the rally lasted four weeks; when the actual $200 billion rescue of these firms was undertaken and their $6 trillion liabilities taken over by the U.S. government, the rally lasted one day, and by the next day the panic had moved to Lehman’s collapse; when AIG was bailed out to the tune of $85 billion, the market did not even rally for a day and instead fell 5%. Next when the $700 billion U.S. rescue package was passed by the U.S. Senate and House, markets fell another 7% in two days as there was no confidence in this flawed plan and the authorities. Next, as authorities in the U.S. and abroad took even more radical policy actions between October 6th and October 9th (payment of interest on reserves, doubling of the liquidity support of banks, extension of credit to the seized corporate sector, guarantees of bank deposits, plans to recapitalize banks, coordinated monetary policy easing, etc.), the stock markets and the credit markets and the money markets fell further and further and at accelerated rates day after day all week, including another 7% fall in U.S. equities today. When in markets that are clearly way oversold, even the most radical policy actions don’t provide rallies or relief to market participants. You know that you are one step away from a market crash and a systemic financial sector and corporate sector collapse. A vicious circle of deleveraging, asset collapses, margin calls, and cascading falls in asset prices well below falling fundamentals, and panic is now underway. At this point severe damage is done and one cannot rule out a systemic collapse and a global depression. It will take a significant change in leadership of economic policy and very radical, coordinated policy actions among all advanced and emerging market economies to avoid this economic and financial disaster. Urgent and immediate necessary actions that need to be done globally (with some variants across countries depending on the severity of the problem and the overall resources available to the sovereigns) include: * another rapid round of policy rate cuts of the order of at least 150 basis points on average globally; * a temporary blanket guarantee of all deposits while a triage between insolvent financial institutions that need to be shut down and distressed but solvent institutions that need to be partially nationalized with injections of public capital is made; * a rapid reduction of the debt burden of insolvent households preceded by a temporary freeze on all foreclosures; * massive and unlimited provision of liquidity to solvent financial institutions; * public provision of credit to the solvent parts of the corporate sector to avoid a short-term debt refinancing crisis for solvent but illiquid corporations and small businesses; * a massive direct government fiscal stimulus packages that includes public works, infrastructure spending, unemployment benefits, tax rebates to lower income households and provision of grants to strapped and crunched state and local government; * a rapid resolution of the banking problems via triage, public recapitalization of financial institutions and reduction of the debt burden of distressed households and borrowers; * an agreement between lender and creditor countries running current account surpluses and borrowing, and debtor countries running current account deficits to maintain an orderly financing of deficits and a recycling of the surpluses of creditors to avoid a disorderly adjustment of such imbalances. At this point anything short of these radical and coordinated actions may lead to a market crash, a global systemic financial meltdown and to a global depression. The time to act is now as all the policy officials of the world are meeting this weekend in Washington at the IMF and World Bank annual meetings. who ****in knows if they will actually get it done
outside of that trainwreck i just posted i do think we will eventually get some sort of bounce but i am NOT optimistic for the long term.
For all of those who lost a lot of money today, I hope this cheers you up. http://uk.youtube.com/watch?v=K0DmtmmFEVo
well if i could ever have the balls to do it i would be like jim rogers. he is a horrible market timer but the guy is almost always right on the big picture of things. <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/zhLPNdjyjyg&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><embed src="http://www.youtube.com/v/zhLPNdjyjyg&hl=en&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" width="425" height="344"></embed></object> the depressing part of it all is that the problem ARE able to be fixed if we start now. but we have a nice habit of not trying to fix things until they are completely broken. this crisis was COMPLETELY avoidable if we had heeded the warnings but hey when things are going good who cares
Lehman derivative settlement occurs on Friday. The contracts are estimated to be settled at 10 cents on the dollar, so if we see a higher amount we might see a nice rally. Many insiders say Lehman unwinding of their derivative positions have caused this recent volatility. And Lehman's collapse was reason for AIG's failure. http://www.ft.com/cms/s/0/04733ac8-9408-11dd-b277-0000779fd18c.html
