In light of the stock market situation. Is this considered a crash? :rolleyes :shocked I’d like to hear about what you guys think and what to expect. Lets discuss.
No, it’s not a crash. In fact, it’s not even a fender bender. Today’s drop was only a little over 4% - no big deal. Wall Street is still playing as if the government is going to bail everyone out, and I think they’re probabl right. The government tried to send a message today, but it didn’t work.
If the market would have dropped 2,500 points today, that would have been a good START. There is NO WAY that this market should be valued at nearly 11,000 (on the DOW). 7,500 would be a better valuation in my opinion, so the DOW is still 3,500 points overvalued.
At any rate, this certainly wasn’t a crash. I’m betting that the government (the taxpayers) will be bailing out AIG (it’s too big to fail, you know).
Mike
This is going to get REAL for a whole lot of people HERE very soon.
Here’s what’s coming…
What everyone is talking about is Lehman. This is NOT the story…
The REAL story is AIG, The WORLD’S BIGGEST Insurer. The regional bank’s exposure to AIG is ASTRONOMICAL!!
I’ve told you guy’s this before…The next phase of this, which WILL affect us, is REGIONAL BANK FAILURES!!!
I will say this tonight because this site is not followed by enough people to effect the banking system…I would SERIOUSLY consider pulling a good chunk of CASH out of your bank TOMORROW!!
WHY???
Tonight…right now…CNBC is airing a show called “IS YOUR MONEY SAFE?” Are you sh*ttin me??? We have a MASSIVE financial crisis going on AS WE SPEAK, and these IDIOTS are running a show like this??? Can you say SELF-FULFILLING PROPHECY???
Let me give you a REAL WORLD example of how fast and bad this COULD get…
When INDY MAC went under the FDIC figured that it would cost them $2 BILLION to secure that bank. In other words, $2 billion dollars would cover the withdrawals from all the people who panic and pull out every cent they have, even when the bank re-opened under FDIC control.
THEY FIGURED WRONG…It cost then $8.9 BILLION!!! That $8.9 billion came out of a fund that has only $50 billion in it. The FDIC announced last week that they were increasing the number of REGIONAL banks they are watching to 120 from 90. You do the math.
I’m not talking about a dooms day scenerio here… What I am talking about is the VERY REAL potential of you having LIMITED access to YOUR CASH. This will probably not last long…BUT…I have NO INTENTION of “seeing what happens.” Pull out enough cash NOW to get you through 3 to 5 months. YOU ARE RISKING NOTHING by doing this. If nothing happens you simply deposit it back. But…if the so called “contained contagian” continues to spread, it will be too late to act then.
EXACTLY what I took a lot of heat for warning about 2-3 years ago is coming true. This is NOT OVER.
Hope for the best…but PLAN for the worst!!
AIG isnt going to get a bailout package imho. AIG has tremendous exposure to Europe CMO"s to the tune of $1 Trillion…When you have Abu Dhabi funds stepping away things may get ugly quickly…I wouldn’t be surprised if we see moron (Bernanke) cut rates before the open tomorrow…This dopey bast*** hasnt learned a thing…
Dow 7500 would be interesting,doubtful but interesting…Lets not forget that hedge funds have $160 Billion in cash that is ready to be put to work in this market…Equities can get cheaper no doubt…
I wouldn’t buy into the panic of worrying about your money etc…Your money is insured up to $100k and then capco insurance takes over…So you are fully covered up to %100…But the panic is setting in and the blood is in the streets…Don’t throw rocks at me but these times are historically the buy points…You can bet that the blackboxes were kicking out buy signals in every major trading room near todays close…You have the cojones???
Very true. If you have $100k or less in a bank account almost all of it was available after a day or two, at maximum, if you look at all the recent bank collapses/takeovers. I just feel REALLY sorry for those small business owners who can’t function with less than $100k in their accounts. If you have 25-100 employees I imagine your average daily balance is well above $100k — your monthly payroll is far bigger than that even.
I hope any sophisticated investor knows to spread his funds among through different banks. I sure do!
Note that some people don’t know a spousal joint account (e.g. a CD, checking account, etc) is insured up to $200k.
Amen to that! What I’m most upset about is that I don’t have more cash to buy more stocks at dirt bottom prices. DROOL Buying wisely now and in a decade you’ll remember both stocks and real-estate as that fun pasttime you tinkered with back when you were poor.
Dean
They said on Squawk Box that AIG has to come with the money by tomorrow or declare bankruptcy.
But New York state is apparetnly willing to loan them 20 billion.
We now know that AIG is BROKE and the our benevolent government has bailed them out, to the tune of $85 BILLION! “Experts” are now on CNBC saying that $85 BILLION will not be enough!
However, I disagree that blood is in the streets. Quite the contrary, I don’t think that Wall Street even has a paper cut! And… why should they? Now that it is apparent that big companies CAN NOT FAIL, why should the stock market reflect the reality of an economy that is in intensive care? The only problem is that this can not go on forever. At some time, we’re going to pay the piper and there is going to be a HUGE increase in inflation (as if it’s not bad enough now) and a HUGE collapse of the dollar. As NYC said, I believe that the FED is only making things WORSE - A LOT WORSE!
Time will tell, but I’m still waiting for DOW 7,500 AS A START! LOOK OUT BELOW!
Mike
Mike I do feel humbled by this market at the moment…To say I wasn’t concerned about my own money market fund breaking $1 would be a lie…But it is getting very bloody ,closed end funds have been slaughtered…I mean big time…I had to stop myself from buying 2 different times today…I will watch the open tomorrow very closely as always…Sometimes its best to sit out and watch but jeez I havent had to worry about money market accounts in my lifetime…For a trader money market funds are as safe as one can get,yet many were concerned and remain to be about potential losses…
I cannot even begin to tell people here how many times I shifted money around this year from long to short to cash to bonds etc…I’m still only down %2 on the year (personal account)…But thats been a fulltime job in itself…
I dont know what else to say other than I’m stunned…I feel horrible for the people that are losing money…Its never a good feeling during these times because usually its the least experienced investors taking the worst of the losses…
I do have my shopping list when I feel the market rebounds…Same basket of closed end funds,proshares,etf’s as usual…I’ve posted them numerous times…Some REITS I have traded in and out of have lost %50 in a 2 weeks…Alot of these closed end funds are getting killed because they trade lower volume and they have LEH and AIG debt exposure…Bill Gross is getting mauled by all of this…He guaranteed something like $750 million in just one fund of LEH debt…Fixed Income has taken a very hard hit…I’m close to being a buyer of it here and canroys (Canadian Oil Trusts)…PGH,PWE,PVX,AAV etc…Oil has been hit very hard and these canroys pay huge dividends and have pulled back %20-%35 in recent weeks…My debt and various other sector closed end funds are as follows…PBT,PHK,PBF,RCS,ESD,CWF,MIN,GDL,GGN,RIT,RTU,IGR,PFN,PTY,JRO,PBT,EVF…And my index& etfs buys are going to be QLD,USD,URE,UYG,SSO,…and a good balanced retirement fund FFFFX…
Also look into Oakmark,Nygren is a legend and has gotten the daylights kicked out of his funds and he owns quality…Get your recovery list ready…If and when the bounce comes you have to know what to buy…Otherwise do as Sun Tzu would do…Sit and wait and be patient, keep the ammo dry…
Not to worry! The government has come up with the latest and biggest bailout of them all. They are now planning to simply erase the woes of the big banks through another huge bailout (details yet to come). I’ve got to tell you that I’m so pissed off at all these socialists in Washington that my head is ready to explode! What ever happened to the free market? What ever happened to the idea that a company could take risk and that the company was responsible for it’s success or failure? What ever happened to small government and personal responsibility? What ever happened to our system of Capitalism? It’s pretty clear that all this is now gone and that we’re living in a socialist state where both the rich and the poor live on government handouts! It makes me SICK!
Mike
After all these bailouts, it appears the rich are getting handouts too! :banghead Why are there no heads on the chopping block? It appears to me that CEO’s, executives, etc… should be held responsible for these bailouts… Someone needs to lose their job!
I did see a report last night that compared these bailouts to state run businesses in China. Thought that was an interesting comparison. Especially if the next things to get bailed out are Detroit and the airlines.
I did hear a reporter mention about HUD having money problems. Does that mean there could be problems with the future of Section 8 families being able to pay their rent?
Yeah, talk about adding insult to injury. Why do these inept idiots need $24MM “severance pay?” Absolutely pathetic. They’re getting paid to fail. Someone should sack up and hold them accountable. Maybe or maybe not for prison time depending on the situation, but at the least they should leave their failed firm with no money.
News is breaking at an incredible pace. From what I understand, the SEC has now placed a 10 day ban on ANY shortselling of 799 companies. So, you can no longer bet that the stock of a company is going down. INCREDIBLE! No wonder the market won’t go down (as it should), the government is making it ILLEGAL!!! IDIOTS!
The government is also talking about a repository for bad bank debt - MEANING A HUGE BAILOUT OF THE BANKING INDUSTRY! I say, let the banks fail!
The government has also just announced some sort of insurance programs for money market funds!
Welcome to the United Socialist States of America!
Oh, BTW, keep in mind that this is not fixing the problems in the country, it is only making them worse!
Mike
Imagine if Burak Obama Bin Laden gets elected president?
Imagine if Burak Obama Bin Laden gets elected president?
At this rate, I don’t think it will matter. By the time the next president takes office, their won’t be anything left to nationalize. We’re dangerously close to full blown socialism (or worse) RIGHT NOW! I am a conservative, but I think that Bush is doing a TERRIBLE, ABYSMAL JOB on the economy and on preserving our capitalist way of life!!!
The crash is still coming and it will be much worse because of all this manipulation by the government.
Mike
Mike,
From what I understand, the shortsellers were manipulating the price of the stock and induced panic selling that might not have otherwise occurred. If this is the case, then the SEC action seems reasonable. The market can still go up and down under its own weight. We just won’t have people selling huge blocks of stock they don’t own influencing the direction of certain stocks.
I have to disagree with you on this one. It will still be legal for the stock market to go down even with this SEC action.
You have to play the hand you’re dealt.
The thing to remember here is…who is DEALING the cards???
The “DEALER” is Bernanke. Do yourself a HUGE favor and READ about this guy’s background. He literally has written BOOK after BOOK on the causes, and LACK OF GOVERMENTAL intervention during the 1929 stock market crash. This guy is a STUDENT of the depression. At some point here you might as well realize that he is NOT going to let this market COLLAPSE without throwing EVERY SINGLE thing he can at it. I will tell you this…
In my opinion, we could be looking at THE SINGLE GREATEST OPPORTUNITY OF ALL TIME here. Think about it…Real Estate SUCKS right now…Yea, Yea…I know it’s great to be a buyer…but it ain’t great NOT being able to find renters for your apartments, and NOT being able to find FINANCING for YOUR BUYERS. Commodities have imploded, that was where the money was pouring into last year. How about BONDS??? Did you happen to see the NEGATIVE rates on bonds this week :shocked :shocked
So what does that leave us with??? It leaves… ONE asset class boy’s…
STOCKS!!!
Did anyone here buy those Ford options last week at .98??
If you did, you’ll find a nice 50% return in your account at the open this morning.
Bernanke is taking some heat for this moves but in my opinion (and I know Rookie disagrees with me on this one) this guy will go down in history as the best Fed Chairman this country has ever had. People don’t realize what would have happened if these steps WERE NOT taken. Guy’s…yesterday we had a RUN on money market accounts…do you have any idea how catastrophic that would have been to the ENTIRE economic system?? IT WAS OVER. The Fed/Treasury SAVED this country. If you doubt that for one minute look at stock markets around the WORLD today. This was a GLOBAL co-ordinated effort to save our financial systems. I’m fully aware that the FEDS CAUSED this disaster. But without a TIME MACHINE there is NOTHING that could be done to fix this. They took UNPRECIDENTED STEPS here. THANK GOD they did.
What we have to realize here is at some times it is VERY BENEFICIAL to have GOVERMENT INTERVENTION & REGULATION. The MORON we have in the White House has spent 8 YEARS touting his MINIMAL REGULATION BULLSH*T. That single policy is EXACTLY what got us into this situation. If you don’t REGULATE NOW, YOU WILL REGULATE LATER!!
THIS IS LATER.
Hello President OBAMA. THANKS GEORGE for destroying the Republican
party in 8 short years. I’m not an Obama fan but it doesn’t matter, he WILL be our next President and we can all thank George’s “limited regulation” theory for every single bit of this mess.
GET READY…The next phase is HERE!! You can argue about it or you can make MONEY from it.
I will make more money in the markets TODAY, than I have in any single day IN MY LIFETIME!!!
GREAT DAY TO OWN CALL OPTIONS!!!
fdjake, you keep making sense, STOP IT!!! I’m not used to this!
j/k man, good post, I like reading your stuff now, never thought I’d ever say that.
Ah-Ha! I found some cash! I had some company stock from 2 jobs back. Sold that before it dropped $2 in one day. Phew! Now, some of you more versed in the ways of stocks may think this silly, but with my yearly $200 play money - money I might have just as easily spent on roulette in Las Vegas - I bought 100 shares of Washington Mutual at $1.90. I log in today and I was up 123% :shocked Damn! I have never seen 100+% on any investment I’ve ever had. Then again, this stock may tank and go bankrupt, but, then again, someone may buy them out at $5 per share. Hey, this was my yearly $200 play money. Let the dice roll, Babey!! :beer
Dean
P.S. I have been seriously considering buying Ford stock on fdjake’s recommendation that big, vane, stupid cars are one of the first things people buy when economic hard times turn back to good. Anyone got $500? :biggrin