A lot of people have been doing well shorting stocks. They are about to get hurt badly.
They are expecting a trading range and will probably short agressively when the market gets up around 9000 again.
But this will not hold. The market is headed up at least to 10,000 and quite likely more.
These short sellers will be geting margin calls and they will be forced to cover. When they all try to cover at once the markets will be in a buying panic of historical proportions. Many shorts will be bankrupted.
HOLD ON TO YOUR HATS
Wednesday, January 28, 2009
Sunday, January 25, 2009
Friday, January 23, 2009
What Environment?
I was just reading how hard it must be to make money in "this environment."
I guess they mean there is something wrong with "the economy."
So,
I am doing very well thank you.
And it is not because I am a short seller.
I have a small business in Los Angeles.
I can estimate my net income for this January is already 20% higher than last January.
So I can testify that business is GREAT!!!
The people not doing well are just having an attitude problem.
Let the bad apples fall and rot on the ground
Prune the dead wood
Don't listen to the crying of the foolish, the lazy, the crazy, the wicked, and the politicians who just crave power.
Take care of your own business and you will be fine.
Opportunites are excellent right now.
It is a prosperous world.
I wish the people doing well would shout it out from the rooftops.
I know I am not alone in my prosperity.
I guess they mean there is something wrong with "the economy."
So,
I am doing very well thank you.
And it is not because I am a short seller.
I have a small business in Los Angeles.
I can estimate my net income for this January is already 20% higher than last January.
So I can testify that business is GREAT!!!
The people not doing well are just having an attitude problem.
Let the bad apples fall and rot on the ground
Prune the dead wood
Don't listen to the crying of the foolish, the lazy, the crazy, the wicked, and the politicians who just crave power.
Take care of your own business and you will be fine.
Opportunites are excellent right now.
It is a prosperous world.
I wish the people doing well would shout it out from the rooftops.
I know I am not alone in my prosperity.
Thursday, January 22, 2009
Mark To Market Has Caused The Crisis
If Banks Are Really Sound, Why Are Investors Scared?
By: Jeff Cox, CNBC.com 22 Jan 2009
Despite a seemingly never-ending stream of bad news about big losses, top banking experts say the industry as a whole is sound.
So why are so many people panicking?
For one thing, there are good reasons for fear. Banks are posting billions of dollars of losses and warning of more bad times ahead. There also is continued speculation that the government may have to intervene even more than it has to prevent some of the biggest banks from collapsing.
But what's really hurting banking stocks, the pros say, is the uncertainty over what the government may—or may not—do about the banking industry. Part of that, ironically, is whether the government will relax regulations that have forced banks to declare bigger losses than they might otherwise have incurred.
"We can fix this," said Bill Isaac, chairman of the Federal Deposit Insurance Corp from 1981-85. "We just need a coordinated policy on all fronts, including accounting and regulatory actions, that is clearly articulated to the world."
Without a clear legislative direction, investors have been abandoning banks in droves.
Titans of the industry, most notably Bank of America , appear at least according to stock-price movement, to be on the verge of collapse.
But to Isaac and other analysts, much of the damage is self-inflicted by a government that has hamstrung the sector with burdensome rules that don't reflect the state of affairs in banking.
Accounting rules that are forcing institutions to severely mark down assets and reserve regulations that restrict risk are wrecking balance sheets and spreading panic throughout both the industry and investors. On top of that are worries that the government may step in to nationalize banks, which would wipe out shareholder value.
Paramount among the fixes Isaac identified are changing the mark-to-market accounting rules, and assuring that banks have access to capital without the burden of strident loan-loss capital reserves.
While some have argued that loosening the rules could encourage more irresponsible lending from banks, Isaac said the government needs to set priorities.
"Don't worry about ideology now," he said. "Don't worry about systemic risk and moral hazard--now is not the time to worry about that stuff. Now is the time to get things under control. We can worry about moral hazard going forward."
Current FDIC Chair Sheila Bair said in an interview on CNBC that the government needs to take the proper steps, including capital injections, to restore investor faith.
"The share price issue is being driven by uncertainties about what the future will bring," she said, adding the fear is coming "from a balance sheet standpoint, which is why we're working on troubled asset relief to try to put an outer bound on what some of those losses could be on those troubled assets, to give the market confidence to try to stabilize the situation."
Bank of America in particular has been maligned despite its solid position in the global banking market, Isaac said. Investors have been ditching BofA shares since the company disclosed larger than expected losses realized from its takeover last year of Merrill Lynch.
"I believe that Bank of America has the most attractive banking franchise in the world," Isaac added. "I don't understand why people are getting all flustered."
One reason is likely the fear that widespread bank nationalizations would crush shareholders, including those invested in the sector through funds and pension plans.
A template for such a doomsday scenario would be the takeover of government-sponsored enterprises Fannie Mae , the mortgage giants who fell into precarious positions from their exposure to the subprime mortgage crisis. The government's position in the companies superseded those holding common stock, causing shares that traded a year ago in the $35 to $40 range to enter penny-stock status.
As the fear lingers that the government could inflict the same damage on other big banking names, convincing investors to buy stock is a tough sell.
"It's time for the government to make it clear that it's not going to do that. The shareholder has been punished enough," Isaac said. "Who are the shareholders of these banks? It's all of us who have 401(k)s and pension plans and the like."
"People don't invest in banking stocks because they're speculators," he added. "It's not like they're investing in dot-coms. The people who invest in bank stocks are looking for fairly steady growth and good dividends."
The government can get banks back to solid ground by making sure they're well-capitalized, and by implementing policies that are more than one-off events like rate cuts that provide little lasting relief, Bair said.
"We need a programmatic response," she said, later adding, "The whole purpose of all this is to get banks lending again."
But Isaac said the Securities and Exchange Commission has not done its part to quell the fear contagion through the market.
"I am deeply disappointed that we have not done anything to address mark-to-market accounting, which has destroyed billions of dollars in bank capital," he said. "The SEC just blithely goes along and doesn't get rid of that terrible accounting requirement that is wreaking havoc on our accounting system. The SEC is irresponsible in the extreme."
By: Jeff Cox, CNBC.com 22 Jan 2009
Despite a seemingly never-ending stream of bad news about big losses, top banking experts say the industry as a whole is sound.
So why are so many people panicking?
For one thing, there are good reasons for fear. Banks are posting billions of dollars of losses and warning of more bad times ahead. There also is continued speculation that the government may have to intervene even more than it has to prevent some of the biggest banks from collapsing.
But what's really hurting banking stocks, the pros say, is the uncertainty over what the government may—or may not—do about the banking industry. Part of that, ironically, is whether the government will relax regulations that have forced banks to declare bigger losses than they might otherwise have incurred.
"We can fix this," said Bill Isaac, chairman of the Federal Deposit Insurance Corp from 1981-85. "We just need a coordinated policy on all fronts, including accounting and regulatory actions, that is clearly articulated to the world."
Without a clear legislative direction, investors have been abandoning banks in droves.
Titans of the industry, most notably Bank of America , appear at least according to stock-price movement, to be on the verge of collapse.
But to Isaac and other analysts, much of the damage is self-inflicted by a government that has hamstrung the sector with burdensome rules that don't reflect the state of affairs in banking.
Accounting rules that are forcing institutions to severely mark down assets and reserve regulations that restrict risk are wrecking balance sheets and spreading panic throughout both the industry and investors. On top of that are worries that the government may step in to nationalize banks, which would wipe out shareholder value.
Paramount among the fixes Isaac identified are changing the mark-to-market accounting rules, and assuring that banks have access to capital without the burden of strident loan-loss capital reserves.
While some have argued that loosening the rules could encourage more irresponsible lending from banks, Isaac said the government needs to set priorities.
"Don't worry about ideology now," he said. "Don't worry about systemic risk and moral hazard--now is not the time to worry about that stuff. Now is the time to get things under control. We can worry about moral hazard going forward."
Current FDIC Chair Sheila Bair said in an interview on CNBC that the government needs to take the proper steps, including capital injections, to restore investor faith.
"The share price issue is being driven by uncertainties about what the future will bring," she said, adding the fear is coming "from a balance sheet standpoint, which is why we're working on troubled asset relief to try to put an outer bound on what some of those losses could be on those troubled assets, to give the market confidence to try to stabilize the situation."
Bank of America in particular has been maligned despite its solid position in the global banking market, Isaac said. Investors have been ditching BofA shares since the company disclosed larger than expected losses realized from its takeover last year of Merrill Lynch.
"I believe that Bank of America has the most attractive banking franchise in the world," Isaac added. "I don't understand why people are getting all flustered."
One reason is likely the fear that widespread bank nationalizations would crush shareholders, including those invested in the sector through funds and pension plans.
A template for such a doomsday scenario would be the takeover of government-sponsored enterprises Fannie Mae , the mortgage giants who fell into precarious positions from their exposure to the subprime mortgage crisis. The government's position in the companies superseded those holding common stock, causing shares that traded a year ago in the $35 to $40 range to enter penny-stock status.
As the fear lingers that the government could inflict the same damage on other big banking names, convincing investors to buy stock is a tough sell.
"It's time for the government to make it clear that it's not going to do that. The shareholder has been punished enough," Isaac said. "Who are the shareholders of these banks? It's all of us who have 401(k)s and pension plans and the like."
"People don't invest in banking stocks because they're speculators," he added. "It's not like they're investing in dot-coms. The people who invest in bank stocks are looking for fairly steady growth and good dividends."
The government can get banks back to solid ground by making sure they're well-capitalized, and by implementing policies that are more than one-off events like rate cuts that provide little lasting relief, Bair said.
"We need a programmatic response," she said, later adding, "The whole purpose of all this is to get banks lending again."
But Isaac said the Securities and Exchange Commission has not done its part to quell the fear contagion through the market.
"I am deeply disappointed that we have not done anything to address mark-to-market accounting, which has destroyed billions of dollars in bank capital," he said. "The SEC just blithely goes along and doesn't get rid of that terrible accounting requirement that is wreaking havoc on our accounting system. The SEC is irresponsible in the extreme."
Big Boys Deserve Jail Time
How many crooks does it take to drive a company into the ground?
Merrill Lynch CEO Thain Spent $1.22 Million On Office
By: CNBC.com 22 Jan 2009
When John Thain became Merrill Lynch’s CEO in early 2008, he hired Michael S. Smith Design to revamp his office suite, spending approximately $1.22 million according to documents.
Additionally, documents showed that Thain signed off on the purchases personally, and that he used another $5,000 to pay the expenses Smith incurred in doing the work.
The following is a list of the items in his suite:
Area Rug $87,784
Mahogany Pedestal Table $25,713
19th Century Credenza $68,179
Pendant Light Furniture $19,751
4 Pairs of Curtains $28,091
Pair of Guest Chairs $87,784
George IV Chair $18,468
6 Wall Sconces $2,741
Parchment Waste Can $1,405
Roman Shade Fabric $10,967
Roman Shades $7,315
Coffee Table $5,852
Commode on Legs $35,115
Thain also hired Smith, whose celebrity client list include Steven Spielberg, Michelle Pfeiffer, Cindy Crawford and Sir Evelyn de Rothschild, to design his Manhattan apartment at 740 Park Avenue, and his 14 bedroom home in Rye, NY.
Smith is also Michelle Obama’s interior designer and the White House paid him $100,000 for his services.
Thain also paid his driver $230,000 for one years work, which included the driver's $85,000 salary and bonus of $18,000, and another $128,000 in over-time pay, documents show. Drivers of top executives are often paid about half that amount.
RELATED LINKS
Current DateTime: 03:58:22 22 Jan 2009LinksList Documentid: 28794026
Thain's Future at BofA To Be Decided
Merrill's Thain Era Losses
Bank Problems Seen Spreading
Thain was appointed as Merrill’s CEO as the firm suffered massive losses from investments tied to the depressed real estate market under his predecessor Stan O'Neal, who was ousted in late 2007.
Those losses continued through 2008, forcing Thain and his management team to sell the brokerage firm to Bank of America in mid September or face near certain liquidation as investors fearing further losses began pulling lines of credit and other financing.
Wednesday, January 21, 2009
Things Not So Bad
Nation's Banks Are Well-Capitalized: FDIC's Bair
Wednesday January 21, 2009, 12:00 pm EST
Yahoo! Buzz
Print
The nation's banking system remains generally sound despite the doom and gloom that has dominated some of its biggest names, FDIC Chairman Sheila Bair said Wednesday.
"It was a tough quarter. We knew it was going to be a tough quarter. Banks have some real challenges," Bair said during a CNBC interview. "But I think it needs to be emphasized and re-emphasized these banks are solvent, they're well-capitalized overwhelmingly, and that really is what creditors and depositors seem to be focusing on right now."
Moreover, Bair rejected predictions in some areas that the bank industry as a whole is facing ruin, though she did acknowledge problems. She said 98 percent of all banks are well-capitalized, representing 99 percent of all assets.
"There is a fear factor," she said. "You're seeing that in the stock market, you're seeing that in other places. People don't know how bad the economy is going to get, what the outer limit on these losses could be."
"This is why we need a Troubled Asset Relief Program to get banks lending again so we get out of this self-reinforcing cycle of a deteriorating economy."
Wednesday January 21, 2009, 12:00 pm EST
Yahoo! Buzz
The nation's banking system remains generally sound despite the doom and gloom that has dominated some of its biggest names, FDIC Chairman Sheila Bair said Wednesday.
"It was a tough quarter. We knew it was going to be a tough quarter. Banks have some real challenges," Bair said during a CNBC interview. "But I think it needs to be emphasized and re-emphasized these banks are solvent, they're well-capitalized overwhelmingly, and that really is what creditors and depositors seem to be focusing on right now."
Moreover, Bair rejected predictions in some areas that the bank industry as a whole is facing ruin, though she did acknowledge problems. She said 98 percent of all banks are well-capitalized, representing 99 percent of all assets.
"There is a fear factor," she said. "You're seeing that in the stock market, you're seeing that in other places. People don't know how bad the economy is going to get, what the outer limit on these losses could be."
"This is why we need a Troubled Asset Relief Program to get banks lending again so we get out of this self-reinforcing cycle of a deteriorating economy."
Monday, January 19, 2009
Two Theories
Many people believe that energy prices got very high last year because of price manipulation by speculators.
Here is one piece of evidence you don't usually hear.
World energy consumption from 1980 to 2005 increased by
63.3%
63.3%
That is a big increase. You might expect the price to go up in that situation.
I am confident that the optimists will ultimately prevail. In fact, they are always prevailing.
Most people are doing very well right now. That is the truth.
The falsehood is to say that we are in desperate times. The falsehood is to say that this is a bad economy. The falsehood is to say that things are going to get worse.
Each of us makes our own reality.
Plant your seeds.
Take care of them.
Have a good harvest.
Deal honestly and your reward will be prosperity.
Children know the score.
They say, "Cheaters never prosper."
Here is one piece of evidence you don't usually hear.
World energy consumption from 1980 to 2005 increased by
63.3%
63.3%
That is a big increase. You might expect the price to go up in that situation.
I am confident that the optimists will ultimately prevail. In fact, they are always prevailing.
Most people are doing very well right now. That is the truth.
The falsehood is to say that we are in desperate times. The falsehood is to say that this is a bad economy. The falsehood is to say that things are going to get worse.
Each of us makes our own reality.
Plant your seeds.
Take care of them.
Have a good harvest.
Deal honestly and your reward will be prosperity.
Children know the score.
They say, "Cheaters never prosper."
Sunday, January 18, 2009
DEAR MISTER OBAMA
Please drop these words from your vacabulary
FIGHT
CRISIS
Life is not a fight.
Obstacles are not crises.
No more fighting please.
FIGHT
CRISIS
Life is not a fight.
Obstacles are not crises.
No more fighting please.
Thursday, January 15, 2009
Just Between Jobs
Words are important.
Words create reality.
11 million unemployed
11 million out of work
11 million looking for work
11 million between jobs
Between jobs sounds best to me.
How many people are working?
143 million
143,000,000
that's a lot of jobs.
What are they all doing? What are they making? How are they helping?
Nobody in my household has a job.
Haven't had jobs in years.
But we have income.
One housewife
Two students
One retired guy. But I do take care of some property.
We aren't looking.
If we were looking, even though we have income, we would be called
unemployed.
I'm not unemployed
I am a student
I am retired
I am just rich.
I am between jobs.
I am looking for a job.
A good job will come soon.
Words create reality.
11 million unemployed
11 million out of work
11 million looking for work
11 million between jobs
Between jobs sounds best to me.
How many people are working?
143 million
143,000,000
that's a lot of jobs.
What are they all doing? What are they making? How are they helping?
Nobody in my household has a job.
Haven't had jobs in years.
But we have income.
One housewife
Two students
One retired guy. But I do take care of some property.
We aren't looking.
If we were looking, even though we have income, we would be called
unemployed.
I'm not unemployed
I am a student
I am retired
I am just rich.
I am between jobs.
I am looking for a job.
A good job will come soon.
Who Wins When Most Lose?
Who are the big short sellers?
Who owned all the credit default swaps that wrecked AIG?
Why are things being run for the benefit of the short sellers?
Not much is being reported.
One German billionaire killed himself after losing a lot in a short squeeze on Volkswagon.
How many people are working to destroy the economy and who are they?
Will it ever come out?
Who owned all the credit default swaps that wrecked AIG?
Why are things being run for the benefit of the short sellers?
Not much is being reported.
One German billionaire killed himself after losing a lot in a short squeeze on Volkswagon.
How many people are working to destroy the economy and who are they?
Will it ever come out?
Tuesday, January 13, 2009
Mortgage Help Would Be Cheap
What might it cost to help out all the homeowners facing foreclosure?
Suppose there are 5 million needing help
Suppose on average $1000 a month would let them keep the home.
This would cost $1000 times 5 million per month
That is $5 billion a month
Comes to $60 billion a year.
Could that be right? Only $60 billion?
But look at what has been lost so far. Trillions. TRILLIONS!
It does not make sense.
Stop the foreclosures. That is the cheap and easy solution.
Don't give the banks 350 billion dollars.
Just give the debtors enough to make their payments.
Suppose there are 5 million needing help
Suppose on average $1000 a month would let them keep the home.
This would cost $1000 times 5 million per month
That is $5 billion a month
Comes to $60 billion a year.
Could that be right? Only $60 billion?
But look at what has been lost so far. Trillions. TRILLIONS!
It does not make sense.
Stop the foreclosures. That is the cheap and easy solution.
Don't give the banks 350 billion dollars.
Just give the debtors enough to make their payments.
Monday, January 12, 2009
$6,200,000,000 Aircraft Carrier
1oth and final Nimitz-class nuclear aircraft carrier coommissioned Jan. 10, 2009. USS George H.W. Bush.
4.5 acre ship
cost $6.2 BILLION
I wonder what it costs to run it?
How much does it cost to maintain it?
And what use is it?
4.5 acre ship
cost $6.2 BILLION
I wonder what it costs to run it?
How much does it cost to maintain it?
And what use is it?
Sunday, January 11, 2009
TRUTH
Mark Twain:
In religion and politics people's beliefs and convictions are in almost every case gotten at second-hand, and without examination, from authorities who have not themselves examined the questions at issue but have taken them at second-hand from other non-examiners, whose opinions about them were not worth a brass farthing.
Autobiography, 1959
I would like more facts and fewer opinions.
Never blame the economy. Always look at yourself. Give good service and charge a reasonable rate and you will always be fully employed.
In religion and politics people's beliefs and convictions are in almost every case gotten at second-hand, and without examination, from authorities who have not themselves examined the questions at issue but have taken them at second-hand from other non-examiners, whose opinions about them were not worth a brass farthing.
Autobiography, 1959
I would like more facts and fewer opinions.
Never blame the economy. Always look at yourself. Give good service and charge a reasonable rate and you will always be fully employed.
Saturday, January 10, 2009
Friday, January 9, 2009
DEFLATION PLUS PIGHEADEDNESS
Prices are falling
Oil
Real estate
most commodities
deflation
to clear your inventory, whatever it is, lower your price to the market
this goes for jobs
but people hate to take less
so they are slow to cut the price
and that leads to unemployment of capital and labor and resources
everything else is just noise, all the rhetoric and posturing
if you want to sell something, lower your price
if you still can't sell
find another business
Oil
Real estate
most commodities
deflation
to clear your inventory, whatever it is, lower your price to the market
this goes for jobs
but people hate to take less
so they are slow to cut the price
and that leads to unemployment of capital and labor and resources
everything else is just noise, all the rhetoric and posturing
if you want to sell something, lower your price
if you still can't sell
find another business
Thursday, January 8, 2009
TOXIC RHETORIC
Mr. Obama is still talking negative about things.
Let us wake up and know the truth of abundance. Things are great.
Just read this toxic stuff below. It is not the truth. The truth is that we each and all have more than we need.
"If nothing is done, this recession could linger for years. The unemployment rate could reach double digits," he said.
"For every day we wait or point fingers or drag our feet, more Americans will lose their jobs. More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse," he said.
Obama laid the groundwork for urgent action on his "American Recovery and Reinvestment Plan," a plan he says will save or create more than 3 million jobs and invest in health care, energy and education, among other priorities.
WE DO NOT NEED MORE STIMULATION
I WOULD LIKE LESS
I WOULD LIKE TO BE LEFT IN PEACE TO RELAX AND ENJOY THE TOTAL BEAUTY OF CREATION
WE CAN ALL BE HAPPY AND FULFILLED RIGHT NOW.
WE DON'T NEED TO WAIT FOR SALVATION.
Let us wake up and know the truth of abundance. Things are great.
Just read this toxic stuff below. It is not the truth. The truth is that we each and all have more than we need.
"If nothing is done, this recession could linger for years. The unemployment rate could reach double digits," he said.
"For every day we wait or point fingers or drag our feet, more Americans will lose their jobs. More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse," he said.
Obama laid the groundwork for urgent action on his "American Recovery and Reinvestment Plan," a plan he says will save or create more than 3 million jobs and invest in health care, energy and education, among other priorities.
WE DO NOT NEED MORE STIMULATION
I WOULD LIKE LESS
I WOULD LIKE TO BE LEFT IN PEACE TO RELAX AND ENJOY THE TOTAL BEAUTY OF CREATION
WE CAN ALL BE HAPPY AND FULFILLED RIGHT NOW.
WE DON'T NEED TO WAIT FOR SALVATION.
A Real Bull?
The low in the S&P 500 was November 20, 2008.
752.44
Since then we have seen higher highs and lower lows.
8 more trading days and the bull will be two months old.
Trading patterns are different.
Remember when the market would go down 300 points for days at a time and then go up 900? That was a rally in a bear market.
Now we are seeing the opposite.
The market goes up gradually and then there is a big selloff.
Yesterday Jan. 7 was a big selloff. These are bull market selloffs.
The trend is up. The year should be up. The bull should have legs.
Is it safe again to buy the dips?
752.44
Since then we have seen higher highs and lower lows.
8 more trading days and the bull will be two months old.
Trading patterns are different.
Remember when the market would go down 300 points for days at a time and then go up 900? That was a rally in a bear market.
Now we are seeing the opposite.
The market goes up gradually and then there is a big selloff.
Yesterday Jan. 7 was a big selloff. These are bull market selloffs.
The trend is up. The year should be up. The bull should have legs.
Is it safe again to buy the dips?
Wednesday, January 7, 2009
Why Prices Fluctuate
It is a mystery and yet it isn't.
Oil got awfully high before dropping.
It got high because demand was increasing. It dropped because supply increased.
The high price signalled producers to get more oil to market. One magical day they got a little more than was needed. The price started to drop.
And there is a lag. It takes a while to get oil on line. Same thing for houses and other buildings. So the supply keeps going up even after prices start falling. Ultimately everything adjusts. But it always overshoots in both directions.
The pundits have concentrated on demand in the analysis of oil prices. They have said very little about the increasing supply.
Oil got awfully high before dropping.
It got high because demand was increasing. It dropped because supply increased.
The high price signalled producers to get more oil to market. One magical day they got a little more than was needed. The price started to drop.
And there is a lag. It takes a while to get oil on line. Same thing for houses and other buildings. So the supply keeps going up even after prices start falling. Ultimately everything adjusts. But it always overshoots in both directions.
The pundits have concentrated on demand in the analysis of oil prices. They have said very little about the increasing supply.
BULL MARKET
Market has moved up more than 20% from lows. But people refuse to call it a bull market.
What gives?
Just like the recession.
Definitions don't count. It is all fuzzy stuff decided by various shadowy figures.
I actually measure a 24% increase in the S&P 500 just looking at closing prices. If you look at absolute highs and lows the move has been 26% from the bottom.
What number would be a new bear?
S&P 500 close below 747.8 would be a new bear market.
Today we closed at 906.65, pretty far above 747.8.
A correction could take us to 841.
What gives?
Just like the recession.
Definitions don't count. It is all fuzzy stuff decided by various shadowy figures.
I actually measure a 24% increase in the S&P 500 just looking at closing prices. If you look at absolute highs and lows the move has been 26% from the bottom.
What number would be a new bear?
S&P 500 close below 747.8 would be a new bear market.
Today we closed at 906.65, pretty far above 747.8.
A correction could take us to 841.
Friday, January 2, 2009
OUCH!
Dec. 31 (Bloomberg) -- It has been a year of record misery: the largest bankruptcy, bank failure and Ponzi scheme in U.S. history; $720 billion in writedowns and losses by financial institutions; $30.1 trillion in market valuation wiped out.
The biggest loss and the hardest thing to recover, though, may be something that can’t be precisely measured -- confidence in the markets and the firms that rely on them.
“The wholesale funding model lost its credibility,” said David Hendler, senior analyst at New York-based CreditSights Inc. “That started the semi-nationalization of funding in the financial markets. It’s a real chink in the armor of capitalism as supposedly the best process for allocating capital. The government is now deciding who gets access to capital.”
For Paul DeRosa, a principal of Mount Lucas Management Corp., a $1 billion hedge fund in Princeton, New Jersey, most unnerving was that the credit crisis revived something that, like the bubonic plague, was supposed to be a relic of the past.
“We had what was for all intents and purposes a systemic bank run for the first time in 70 years,” said DeRosa, whose fund is up 25 percent this year. “This ended our belief that financial panics were a thing of the past. That’s why this is a transcendent event.”
The price tag has been transcendent, too. Global stock markets lost about half of their value in 2008, or $30.1 trillion dollars. In the U.S., $7.2 trillion of shareholder value was wiped off the books, as the Standard & Poor’s 500 Index fell 39 percent through Dec. 30 and the Nasdaq Composite Index dropped 42 percent.
What was really lost?
Electrons? Marks on papaer?
All the real wealth is still here
People
Buildings
Machines
And the sytems that are gone, should be gone
They were wasting resources with manipulation
We will all be stronger and better off for what has happened.
"Let's get to work!"
The biggest loss and the hardest thing to recover, though, may be something that can’t be precisely measured -- confidence in the markets and the firms that rely on them.
“The wholesale funding model lost its credibility,” said David Hendler, senior analyst at New York-based CreditSights Inc. “That started the semi-nationalization of funding in the financial markets. It’s a real chink in the armor of capitalism as supposedly the best process for allocating capital. The government is now deciding who gets access to capital.”
For Paul DeRosa, a principal of Mount Lucas Management Corp., a $1 billion hedge fund in Princeton, New Jersey, most unnerving was that the credit crisis revived something that, like the bubonic plague, was supposed to be a relic of the past.
“We had what was for all intents and purposes a systemic bank run for the first time in 70 years,” said DeRosa, whose fund is up 25 percent this year. “This ended our belief that financial panics were a thing of the past. That’s why this is a transcendent event.”
The price tag has been transcendent, too. Global stock markets lost about half of their value in 2008, or $30.1 trillion dollars. In the U.S., $7.2 trillion of shareholder value was wiped off the books, as the Standard & Poor’s 500 Index fell 39 percent through Dec. 30 and the Nasdaq Composite Index dropped 42 percent.
What was really lost?
Electrons? Marks on papaer?
All the real wealth is still here
People
Buildings
Machines
And the sytems that are gone, should be gone
They were wasting resources with manipulation
We will all be stronger and better off for what has happened.
"Let's get to work!"
Thursday, January 1, 2009
PANIC OF 2008
Happy 2009!
Glad 2008 is behind us.
What really caused the panic of 2008.
We are told what to believe.
"House prices rose too high, driven by irresponsible lending and borrowing. The bubble burst, pulling down consumer spending and economies around the world." The Christian Science Monitor 12/31/08
But that is just the story we are told.
If you look beneath you see something different.
Things were going along well until the actual panic hit in September.
The panic was set off by the US treasury and remarks from Paulson.
But even deeper causes are behind the mess.
The rules were changed.
The rules were changed!
Two important rules were changed and that changed everything.
As if rules don't matter?!
Financial institutions were required to mark to market illiquid assets resulting in technical insolvencies.
Short sellers were able to systematically drive companies down because of the removal of the uptick rule in short selling.
Those two changes are what really led to the panic of 2008.
But you won't hear that from the big boys who call the shots.
Glad 2008 is behind us.
What really caused the panic of 2008.
We are told what to believe.
"House prices rose too high, driven by irresponsible lending and borrowing. The bubble burst, pulling down consumer spending and economies around the world." The Christian Science Monitor 12/31/08
But that is just the story we are told.
If you look beneath you see something different.
Things were going along well until the actual panic hit in September.
The panic was set off by the US treasury and remarks from Paulson.
But even deeper causes are behind the mess.
The rules were changed.
The rules were changed!
Two important rules were changed and that changed everything.
As if rules don't matter?!
Financial institutions were required to mark to market illiquid assets resulting in technical insolvencies.
Short sellers were able to systematically drive companies down because of the removal of the uptick rule in short selling.
Those two changes are what really led to the panic of 2008.
But you won't hear that from the big boys who call the shots.
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