Shut Down the Market?

[mr_genius]

Actually you're slightly off on that...the market plummeted when the bailout got shot down the first time...it just also plummeted when it passed.

 

it rebounded after the bailout failure. after it passed it's been all down hill. screw it just toss 20 trillion into bankers pockets. done and done. market secure.

 

but really, the bailout sucked. if it works i'll be happy, i sure don't like this disaster.

Edited October 10, 2008 by mr_genius

[Chisoxfn]

DOW to 8579.19 at today's close.

 

Might it be time to shut down the markets for a little while?

Shutting down the market would be a disaster. A s***load of big companies have went under or are teetering on going under. Even after the bailout many companies will be adjusting the way they do business in the future and it will have an impact on the types of margins they'll make. The reality is the market is adjusting to a more realistic pricing scheme (which is what the market is for). It's going to be a rough period but things are starting to straighten out and we'll see new companies excel in the future and many old companies reorganize and take back off again. However, it'll be a bit, but we'll also see the market priced at a more accurate PE ratio (especially once Q3 earnings get released cause those are going to be some ugly earnings given the OTTI companies will be taking). 12/31 will have some bad reports as well, but I believe that will be the end of the truly disasterous numbers for the financials. Doesn't mean the financials will sore any time soon but at that point we'll see a shift and the bad annuals will be the consumer business companies that will suffer from poor consumer confidence/holiday sales.

 

After that you'll finally see everything revalued at an accurate point throughout the industry (tech is already priced right, imo) and the market will be back in the right spot. I'm guessing we are talking about a bottom around 7000.

[Chisoxfn]

Decreased demand. That's not a good sign in this case.

Also the speculators have just not been as involved. Things got pushed up to a point and there were obviously other factors, specifically the media causing phony runs on the pricing but right now oil is sitting at a pretty good price structure compared with the supply/demand curves. I think you'll see a 20 buck flux either way but nothing too significant in the near future.

 

Gold has done as well as I'd expect given this is a time where I could see a lot of investors pulling a s***load of cash and sticking it into checking accounts. Oh if people want a little stock recommendation...IDC. Its an independent pricing company that should see a huge boom. I've been preaching it to buddies the past couple months and they should be pretty much recession proof because the recession actually will give them more business as there is a lot more high $ value investments with no readily ascertainable market value so IDC will come in and do its independent pricing.

[Chisoxfn]

there's a reason I called it drastic.

 

The real point of this thread, not made clear by my (my fault), is to talk about solutions.

Honestly, its scary, but let the market handle things. It'll all settle out, you just hope the government/fed can smooth things to an extent. They cna't fix it, there was a bubble in real estate and in the market and this was inevitable. You just have to make sure enough players survive the bubble burst so that things can continue and build again when the dust settles.

[StrangeSox]

We need to slap the people that are panic selling their stuff and taking a bath, when in most cases they should just sit tight and ride it out. They are helping to cause this by their own behavior. Alcoa went down $3 per share today. Is Alcoa really worth $3 less this afternoon that it was this morning? If you have bank stocks, maybe.

 

Hedge funds deleveraging is what I've heard.

 

[StrangeSox]

Secretary Paulson hasn't even figured out how he's going to use the funds yet. Today instead of buying up the troubled assets like they were talking about last week, they're talking about using the money to buy shares of the banks and use that as a way of recapitalizing them (like some people thought was a better idea anyway).

 

Part of the problem is the government has no idea what to pay for these mortgage-backed securities. Pay too much and the tax payers are screwed. Pay too little and you haven't really helped.

 

No sh*t. That's the whole problem in the first place. They still don't have a plan on how to actual value these things.

[lostfan]

I have no idea if they got the checks yet, or when they will. If anyone has a link that would be helpful.

I'll try and find a link to what I was talking about for you, but this was something I heard on CNN. Balta's link covered it some though.

[NorthSideSox72]

Big drops at the open - major indices went down another 5 to 6% at one point. But now rallying, and majors are down 2 to 3% from open at present.

 

[NorthSideSox72]

Traders saying that Berlusconi (sp?), the Italian leader, is calling for a "global market shutdown".

 

Yeah, and we should always listen to the Italians about economics.

 

[lostfan]

Big drops at the open - major indices went down another 5 to 6% at one point. But now rallying, and majors are down 2 to 3% from open at present.

I'm leaving work early to go to Wall Street to pass out bottles of Prozac to keep them from flipping the f*** out. It might save our economy. Anyone wanna come with?

[NorthSideSox72]

I'm leaving work early to go to Wall Street to pass out bottles of Prozac to keep them from flipping the f*** out. It might save our economy. Anyone wanna come with?

There will be a lot of hedge funds and small trading firms going out of business in the coming months as a result of this mess. People will lose jobs. If walking around in Manhattan or downtown Chicago, watch for falling traders.

 

In a way though, getting some of the highly risk tolerant players out of the markets may not be a bad thing.

 

[Cknolls]

It depends on whether or not you have a plan to do anything during the time its closed.

 

 

There is nothing "they" can do while the mkt is closed that will avoid a crash when it re-opens. After 9-11 the mkt was down huge the first day trading resumed. The 2002 lows on the SPX at 765.68 WILL NOT HOLD. Be it today, Monday or more likely after a vicious rally of a hundred or two points in the SPX.

Then, our next support will be in the 500's.

[Cknolls]

Hedge funds deleveraging is what I've heard.

 

 

And huge mutual fund redemptions.

[lostfan]

There will be a lot of hedge funds and small trading firms going out of business in the coming months as a result of this mess. People will lose jobs. If walking around in Manhattan or downtown Chicago, watch for falling traders.

 

In a way though, getting some of the highly risk tolerant players out of the markets may not be a bad thing.

I'm going to put money into suicide hotlines, cashmere nooses, and Bluetooth-enabled coffins.

 

That was horrible, I realize that I've just upgraded my ticket to hell to first-class.

[NorthSideSox72]

There is nothing "they" can do while the mkt is closed that will avoid a crash when it re-opens. After 9-11 the mkt was down huge the first day trading resumed. The 2002 lows on the SPX at 765.68 WILL NOT HOLD. Be it today, Monday or more likely after a vicious rally of a hundred or two points in the SPX.

Then, our next support will be in the 500's.

500's? No way. I'd bet money against that.

 

Actually, in a way, I just did bet money against that.

 

[lostfan]

And huge mutual fund redemptions.

When are my high-risk mutual funds going to stop getting pounded? Another year or so?

[NorthSideSox72]

When are my high-risk mutual funds going to stop getting pounded? Another year or so?

Which kind are you talking about here? Aggressive growth like Russell or small biz stuff? Commodity funds?

 

[lostfan]

Which kind are you talking about here? Aggressive growth like Russell or small biz stuff? Commodity funds?

The one with the most money in it is Weitz Funds. I forget the name of the other one, it's worth about 3k right now though.

[NorthSideSox72]

The one with the most money in it is Weitz Funds. I forget the name of the other one, it's worth about 3k right now though.

I'm not familiar with Weitz. What sectors or types are in the fund? domestic or foreign or both? small/growth firms, large value firms, or both? Just stocks, or does it include fixed income or other instruments? Or is it a sector fund (i.e. technology, energy, etc.)? Indicies?

 

 

[lostfan]

I'm not familiar with Weitz. What sectors or types are in the fund? domestic or foreign or both? small/growth firms, large value firms, or both? Just stocks, or does it include fixed income or other instruments? Or is it a sector fund (i.e. technology, energy, etc.)? Indicies?

You're getting pretty close to the fringe of my knowledge here but they have a lot of different types of funds (these were given to me, BTW).

 

I went to go dig up a report from earlier this year, and I'll give you the top 5 stocks and industry sectors:

 

Stocks:

Berkshire Hathaway 11%

Liberty Media - Entertainment - 5.2%

Redwood Trust 4.9%

American International Group 4.7% (lol, yeah)

Liberty Media - Interactive 4.7%

 

Industry Sectors:

Financials 31.5%

Consumer Discretionary 30.8%

Health Care 10.9%

Industrials 6.5%

Information Technology 3.8%

 

This probably reads a lot easier to you than it does to me. I do know the "financials" part is getting raped right now though (that report is from 6 months ago).

Edited October 10, 2008 by lostfan

[NorthSideSox72]

You're getting pretty close to the fringe of my knowledge here but they have a lot of different types of funds (these were given to me, BTW).

 

I went to go dig up a report from earlier this year, and I'll give you the top 5 stocks and industry sectors:

 

Stocks:

Berkshire Hathaway 11%

Liberty Media - Entertainment - 5.2%

Redwood Trust 4.9%

American International Group 4.7% (lol, yeah)

Liberty Media - Interactive 4.7%

 

Industry Sectors:

Financials 31.5%

Consumer Discretionary 30.8%

Health Care 10.9%

Industrials 6.5%

Information Technology 3.8%

 

This probably reads a lot easier to you than it does to me. I do know the "financials" part is getting raped right now though (that report is from 6 months ago).

That looks like a typical breakdown for a large value fund - which is actually not the highest risk stuff. Usually.

 

Interesting that its more than 10% in Berkshire. I wonder if its a model fund, chasing the same stuff that the Oracle does. If so, and if they model well, the choices in each sector may be better off than some other funds. But I couldn't say for sure.

 

You are semi-well diversified there, other than that aberrant BH holding. Diversification to sector looks broad enough to be lower risk. How many other stocks are held though? If its just a dozen or so others in that same 4-5% like range, that's actually not well diversified to company, and that's a little risky to me. but if its piled with another 50 or 100 in small percentages, that mitigates your risk a bit more.

 

If indeed there are only, say, 10 to 20 stocks in there... then that would be the worrying factor to me. Beyond just putting too much money in a few issues, it also means they are probably either following a narrow model, and/or are trading a lot more rapidly than other funds. That's not what I, personally, want to see. but everyone to their own preferences.

 

[lostfan]

There's a whole lot of stocks, too many for me to list. I'm not sure the exact number, or what they currently have. I know that in the last couple of reports they've sent, they've been basically saying they can't help the poor performance lately and that investors need to be patient, which I was thinking already, I'm just not sure how long it's going to take to ride out. Not that I'm particularly worried because none of this is anything I consider income, and anything I want to touch for at least about 20 years.