Friday, October 10, 2008

In just 12 more days...

...like Thursday and the Dow will be at 0.

Today might be Capitulation Friday for a confluence of disparate issues:

• Fearless leader speaks
• Lehman settlement
• Bank Failure Friday?
• Insurance Implosion Friday?
• GE and futures guide lower. It looks like international events echo.
• My favorite. This is a long weekend. Who would want to be long over a long weekend and then have to explain that decision to clients? It just isn't a defensible position.

37 comments:

wagga said...

New post first thing in the morning!

It's gonna be a very interesting day.

Peripheral Visionary said...

The long weekend is a good point. We have The Mother of All Dead Cat Bounces coming one of these days (especially now that the short selling rule has been suspended), but it might not be today.

My one exposure to this mess is via Japan; went long on Japan just a bit too early. But the vast majority is cash, gold, and Treasuries. Very pessimistic portfolio, but what are my options?

H Simpson said...

I think wall street is out to beat every concession out of Washington prior to the elections knowing congresscritters will bow down to every whim to make it look like they can fix this.

Bunch of spoil brats.

Time to perp walk a couple douche bags into court on fraud charges. Watch how fast things square away.

Remember how oil pices fell when the word got out that the feds were looking for fraud?

I want my pound of flesh. I am going to be paying for this greed for years to come.

Rob Dawg said...

PV,
I was all set to do some complicated shuffling when MMF were guaranteed. Now I'm just waiting for an entry point.

Dead Cat Bounce is gonna be epic. Interesting is while the bounce will carry everyone up only a few will stay up. The rest will slide back.

wagga said...

In Oz it's Freefall Friday

wagga said...

Falling 100 points per minute!

H Simpson said...

Wow

down 700 before it turned now ONLY off by 450. All in 10 minutes.

What a ride!

Pleather Murse said...

DJIA was down over 670 a minute ago to around 7900 level. S&P is in the 830s, down around 70. It's a little better right now.

European markets were down between 7 and 9 percent but I think they're still open.

H Simpson said...

Some guy on Bloomburg is speaking the truth. Some chestnuts:

Let them fail. Propping up will not work.

Not letting it happen will cause another japan who is 20 percent of 2 decades ago.

Printing all this money will only cause inflation.

Trying to freeze markets will not work. Just make things more illiquid.

H Simpson said...

1000 points of volitility in 15 minutes. Got to be a record.

thank goodness for fast computers..

H Simpson said...

Should have typed 1100 points.

Peripheral Visionary said...

Wow, just wow. So that's what volatility looks like. The Mother of All Dead Cat Bounces is on . . .

Pleather Murse said...

Yowza. It just erased a 700 point decline and was briefly in the green by a smidgen.

Bob said...

I'm not a stock investor, but I don't understand the free-fall in price across so many industries. Shouldn't the stock price be determined by things like the price/earnings ratio, at least for companies not in the finance sector? Also, how big a deal is it for a company if their stock price falls? The price is falling for shares that they've already sold, right? The lower priced shares don't affect how much cash is in the bank, does it? I suspect I'm being naive, so somebody please tell me where I'm wrong.

Rob Dawg said...

You can bet an awful lot of positions were unwound in those 45 minutes. To the swift go the spoils.

As expected MSFT and AAPL led out. $23 and $85 were screaming buys.

Rob Dawg said...

Bob,
The problem is that many of the biggest losers need cash to maintain their positions. That means they are selling winners. That's why good quality, relatively immune companies are seeing stock sales.

tk said...

Ok, I'm calling the bottom here and putting my money where my mouth is by rolling over my Traditional IRA into a Roth.

Peripheral Visionary said...

Bob, when investors who have borrowed money against their portfolios get hit with a margin call, they need to sell something to meet the margin. In a terrible market like this one, you well whatever you can find a buyer for, which means selling winners, as Rob said. If you're short a CDS and long MSFT and get hit with a margin call, you sell the MSFT because there isn't a market for the CDS.

tk, I'd take it easy on rolling over into a Roth. I certainly hope this is near the bottom, but Roubini revised his forecast to Dow 7000, and he's been right more than anybody else in this cycle. I would be more interested in specific sectors than in the broad market at this point.

Bob said...

Rob and PV,

Thanks for the explanations - I knew about trading on margins, but I didn't realize it was so prevalent as to cause this kind of drop in stock prices across the board.

This is why I don't own stock - not only do you have to evaluate companies that may or may not be honest about their finances, but then you have to guess how the actions of a million other investors are going to affect your portfolio.

tk said...

PV,

Well, I did go easy on the conversion. I just converted about 1/5 of it this morning.

tk said...
This comment has been removed by the author.
tk said...

Also, the nice thing about conversions is that you get one do-over where you can recharacterize back to a Roth IRA if it doesn't work out.

w said...

Roubini is off by 67 points. Pray to the Vixen.

Rob Dawg said...

"Kill anybody today, Curly?"

"Day ain't over yet."

Rob Dawg said...

203 hours for the Lehman CDS settlements. Early indications are 9.75¢. Yes, less than ten cents on the dollar. They gonna be some fallout from that for sure.

tk said...

what the hell happened to iceland?

The whole country is broke

Akubi said...

what the hell happened to iceland?
Pakistan is nearly bankrupt as well.

I stand by my low of 2759.

Lost Cause said...

Bush speaks, it is a triumph of the will. Stocks fall 800 pts.

PS -- no way are those p/e's gonna look anything like that in a couple of quarters. Today's bargain is tomorrow's white elephant.

Lab Dog™ said...

Christopher Buckley:
We are all in this together. Necessity is the mother of bipartisanship. And so, for the first time in my life, I’ll be pulling the Democratic lever in November. As the saying goes, God save the United States of America.

Teri said...

Island... what can you say of a country where debt is equivalent to $250k for every man, woman and child? Even more, what can you say of financial institutions who knew of Island's practices and continued to do businesses with that country? http://www.rgemonitor.com/blog/roubini/122420

Property Flopper said...

OK - anyone want to call the bottom for TODAY? I'm thinking it'll close at 7800 +/- 50pts.

Long weekend (though not for me), people aren't going to want to hold over the weekend.

Just dipped below 8000 for the second time today, but quickly pulled back up. Wild ride today (and a really bad week overall).

Also - Casey has gotten lazy, even by his own standard. Rather than do a post, he recycled Nigel's. He quoted Nigels long personality rant in its entirety. Like anyone cares... he's quickly loosing eyeballs, he's out of money... I wonder which will hit the ground harder the DOW or Casey?

Rob Dawg said...

PV,
"Day ain't over yet."

Won't drop that much. Should but won't. 8340?

Property Flopper said...

That's PF to you. :)

Jean ValJean said...

I'm callling, for absolutely no reason whatsoever, 7925, +/- 25

Dolph said...

Somebody should tell Bush to not speak when the Dow is tumbing. When he started speaking it dropped.

Jean ValJean said...

What the hell's going on? +400 in less than an hour? just before closing?


Me smells shenanigans.

Funny Circus Bears said...

I bought BAC @ 19.xx and XOM @ 56.xx

Call me crazy. Again.