This is two 4%+ drops in 1 week - a slow motion crash. We're down 8%ish in 3 days.
Worse yet - we have to be subject to another 4 hours of CNBC 'special programming' tonight full of pundits who missed "this" in the summer of 2007, and scoffed at the few who were warning about the situation. Instead of getting to watch 'Deal or No Deal'. Insult to injury.
On the plus side as we take a step back and look at the broader picture there are incredible values in companies getting punished relentlessly that have nothing to do with financials, and will do fine with a grinding US economy. Until fear recedes it won't matter much.
On the flip side, credit is the lifeblood of this economy and the past year's events have set the stage for years of issues ahead as credit availability is impaired. Strewn on top of the structural issues many US consumers of the bottom 2/3rds of America already faced, it does not point to a rosy outcome for a sustained period of time.
Again, I want to reiterate - the conventional wisdom is the U.S. will lead the world out of this mess. Brought to you by the same pundits who told you housing could never fall nationally. Subprime was contained in spring of 2007. And there was no chance of recession in the fall of 2007 (some even today insist this to be true!). We are in denial as a nation and it appears only the strongest of slaps across the face will wake us up - old arrogance also rears its head: "We are so strong, and so rich (rich? we are the poorest country if you count debt) we will lead the world back!"
I disagree - it will be the opposite. Let me ask you - which governments were calling which governments/sovereign wealth funds today for emergency capital and help? Which government was selling Treasuries at a furious rate to replace its depleted capital?
After the shocks to the world system from the #1 consumer on Earth falling off the wagon, there will be a rebound - but it won't be led by those who fell off the wagon. We're going to be in intensive care for a while. Thankfully, even at our reduced level of consumption the rest of the world still "needs" us, so they will hopefully continue to fund our consumption lifestyle (debt). But I can only imagine the amount of trust has fallen off the cliff as the onion is peeled back layer by layer. Oh well, we're better than Russia still - at least we kept our stock market open. (ahem)
However, between now and "the recovery of the globe" stage it will a tricky environment as people will flee to 'safety' and they still consider the U.S. safe. After watching what has happened here the past 2 weeks, I don't understand that thesis, but old habits are hard to break. Right now we'd love to "only" have the problems China or even a Germany faces. The leadership is slowly moving from West to East; old ideas (and ideals) take much longer to change.
Since I posted our performance Monday
to be consistent I'll show you today's results... well, we "beat the market" at least (considering our top long position going into the day lost 20%+ I guess that's not all bad)
5 comments:
a close below 1165..bearish..what did u do with the positions u bought in the morning with a condition of closing below/above 1165?
Huh?
I did not buy anything this morning
I made some buys at 2:30 PM
LEN is down a bit, SQNM is up a bit, and UYG is down a bit. I bought around 1170 so its down a bit from there
I'm hoping for a gap down tomorrow morning to create panic, and a hold of S&P 1140. We shall see.
I am more unhappy about letting go of much of my hedges than the long positions.
Every time the VIX hits over 35 in 2008, the next day is a huge fall...I'm anticipating the same tomorrow and a bounce.
So I thought, hey, yesterday we rallied, we'll be all right today, I can get some great deals in right now! Forgot the #1 rule - while the high is technically infinity, the low is technically zero. Suppose we'll see where this goes tomorrow... Another night of pouring over analysts crap and waking up wondering if we're going to hit another Black Thursday...
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