Or is it just me?
*&#@!
This past 2 weeks has not been kind to my portfolio.
Or is it just me?
*&#@!
This past 2 weeks has not been kind to my portfolio.
Feature costumes for sale!
I'm down about 9% and it is a fully diversified and balanced portfolio.





the very few stocks that I have still been holding on to over the past three weeks since 'calling a top' ( see ) have hung in there pretty well.
There are major corrections going on all over the place created by the imbalance of trade, income, and credit.
Expect more. I am forecasting 11500 for the market to settle to.





^^^ yes it looks like this epidemic of subprime, then Alt-A, then CDO's, now hedge fund implosions are destroying debt quality, gobbling up liquidity, and creating new demand for US dollars in order to pay off / prop up losers (or die trying).
I'm not sure that I agree with your 11500 forecast, as much depends on how willing the ECB and US FED will be to print worthless new paper money in order to 'inflate' their way out of a deflationary recession. It's odd that there now seems to be an inverse correlation between the US dollar exchange rate and the US stock market indexes - probably due to the fact that half of US stocks and bonds are now owned by foreign investors (or were, until the foreign owners started selling off and running for the exits to avoid currency losses on top of stock share price losses).
But one thing is for sure ... things are going to continue getting worse through September and October at least, as consumer spending runs out of credit, as prices for 'necessities' continue to rise, as corporate profits continue to slide, as shaky debt problems continue to claim new 'victims', and as financing for new private equity takeovers and/or corporate stock buybacks (which are arguably the two biggest factors which have propped up DOW stock prices over the past 6 months) gets more difficult to secure and more expensive to carry.
It is rumored that the 'smart money' has been selling off US stock shares (and European stock shares, and Japanese stock shares) and making a 'flight to quality' ... which fortunately for us still means the US dollar / US treasuries. Ironically, were it not for the massive subprime debt quality problem, the US dollar would probably have fallen off the proverbial cliff by now. Ultimately, the short term future of the US stock markets now depends more on US FED policy than on anything else - surprise rate cut ? - another batch of billions in TOMOS/POMO's ? - proxy buying of index futures ?
If the US markets were left to 'natural economic forces' I'd buy your 11,500 projection. This is actually right in line with the supposed correlation between the NAHB housing index and the S&P index delayed one year (see the 'calling the top' thread link above). Unfortunately, the 'UNnatural economic forces' are still stronger than the natural ones ! There's no other way to explain why the US stock markets didn't start tanking 6 months ago when clear evidence of bad economic fundamentals started becoming pretty clear. The only satisfaction may be that the greedy bastard yen carry traders are now looking for crash helmets themselves.
PS if anybody is looking for stocks in sectors that may actually rise significantly over the next few months, you might want to research ...
reposession companies
payday loan companies
downscale residential REITS
breweries and distillers
~
Last edited by Melonie; 08-15-2007 at 06:08 PM.
"Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
"And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion
Originally Posted by Mia M
Wow!!! I just learned something about why the market is a mess. Thanks![]()





In an unbelievable show of the power of the printing press, the fed managed to inject enough 'confidence' in today's stock markets to recoup a 300 point loss in the DJIA in less than an hour. Actually, they enacted a stealth 'temporary' fed funds rate cut and also started intervening in the currency markets to drive down the exchange rate of the Japanese Yen vs US dollar to 'bail out' the carry trade cowboys and take the pressure of the big US investment banks. As of yet we don't actually have any idea how many dollars of US taxpayer money were used to fund this bailout, but you can be sure it's in the tens of billions. Of course most US taxpayers are totally unaware of what the fed is / has been doing for the past week or so ...
Last edited by Melonie; 08-16-2007 at 03:35 PM.





today's drop made me a lot of money.
I hate to take pleasure in the pain of others, but god damn, thanks a lot.
#stocks on efnet
We have a pretty good track record for our plays. I'm mostly a forex and TSE player, but hard to resist the shorting potential earlier today.
We shorted CFC at 19, it went to 15.
The JPY:USD trade is my primary forex action, and I had a favorable day there today. Sony didn't get their money's worth as I spent most of my day daytrading with my office door closed.





What a beautiful day to be short (and then close them out and go long)
I bought puts on CFC last week when it was @ 25.
I bought puts on GS, BSC, KBH, and BZH on the bounce last week also.
I'm not ready to trade Forex, I just don't understand it yet. I do watch FXY which is the etf that tracks the yen. Interesting how if fxy is up, the us markets are down.
I see a reversal today with the hammer formation. It won't be confirmed until tomorrow. I sold a a few naked Sept 137 puts today when the VIX was at it's peak. I see the SPY bouncing back up to about 141 before heading back down again.
Rebecca Avalon





Shot, you are not taking pleasure in anyone's pain.
You are being an active investor, something that EVERYONE can do if they truly want to.
Rebecca Avalon




I don't watch stocks every day, but this thread makes me curious, so I checked.
Ouch. It's down a little.





It is an inescapable fact that short term stock and/or options trading is a 'zero sum' game. For every winner there must be a corresponding loser. Never feel bad about emerging on the 'winning' side !
I would also add that tomorrow is 'options expiry' for the month of August ... which at least partially explains why the 'cavalry' (i.e. the mysterious Plunge Protection Team - see ) seemingly rode in with big guns blazing at 3pm today to drive the DJIA back up the 300 points it had lost. In doing so it allowed hedge funds and investment banks with billions at stake in August options to avoid taking even bigger losses. However, after tomorrow, the options clock has another entire month to run before September expiry - so I doubt that we'll see the same order of magnitude of market interventions next week.
On the US dollar vs Japanese Yen issue, the Yen carry trade is probably one of the most significant factors in US credit markets and stock markets. However it somehow avoids receiving a lot of publicity (from mainstream US media at least). The basic premise is that Japanese yen can be borrowed at a 0.5% interest rate, that those borrowed yen can be lent / invested in US dollar denominated securities (mortgages, stocks, business loans etc.) at a much higher interest rate, and that the carry trade cowboys can then pocket the difference between the 5.5% interest / earnings they receive and the 0.5% interest they must pay out as easy money profit. However, the scheme depends on the exchange rate between the US dollar and the Japanese yen to remain relatively stable. This is because a 5% move in the wrong direction would totally wipe out carry trade profitability, and a 6% move would put the carry trade cowboys at an actual loss. Remember that they must pay back their loans in yen not dollars. see
Prior to 3pm today the exchange rate on the yen had moved 4% in the wrong direction. This put a great deal of pressure on the carry trade cowboys to sell off their US dollar denominated investments, to convert the US dollar proceeds back into yen, and to pay off their Japanese low interest loans, while the exchange rate still allowed them to pocket a tiny profit.
Arguably, part of the 3pm 'cavalry charge' involved the US Fed and the Bank of Japan intervening in the currency markets to force the exchange rate on the yen in the opposite direction, to restore the carry trade interest rate differential, and to thus stop the carry trade cowboys from selling off their US dollar denominated stocks. It worked, obviously, as the yen fell 3% and the Dow rose 300 points in less than an hour. However, it did not happen without a cost ... either to US taxpayers or to US consumers depending on whether the US economy inflates or deflates from here on out.
Not surprisingly, we didn't even get a 'thank you' for our involuntary contribution toward saving the million dollar profits of hedge fund investors and the million dollar bonuses of hedge fund managers !!! Of course that was fairly easy to get away with, since the vast majority of Americans are totally unaware of the hedge fund carry trade and also totally unaware of the Fed's actions (and eventual cost of those actions). Then again the Fed's actions probably saved billions of dollars worth of losses on the average American's 401k and IRA too - but there's obviously no guarantee that those losses won't happen next week !!!
Last edited by Melonie; 08-17-2007 at 01:24 AM.




What about those people on CNBC that cover the markets situation and talk about stocks all day long on TV? Yesterday when the market began to go up at the end of the trading day they seemed so excited and didn't look worried. I wonder if they truly believed the market was up for a rebound and our economy is really not doing so bad or were they just supposed the feed the Americans what the Americans are supposed to swallow?





^^^ all I can say is that, where certain cable news networks are concerned, their financial commentary tends to follow their political commentary.




Where do you go then for information that is trustworthy?
Don't trust anything on the cable financial news networks!
"Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
"And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion
Originally Posted by Mia M





^^^ subscription services, certain internet investment bulletin boards (most are worthless), certain investment bloggers, and my favorite source ... drunk investment bankers and brokers talking among themselves after work !
my 'friend' Elaine Supkis usually has a very realistic take on the world economy ...
Last edited by Melonie; 08-17-2007 at 03:07 PM.




Thank you, Melonie. I am trying to understand what really goes on in the market, it's not easy since I hear contradicting opinions.





^^^ well, please don't think that I have any real handle on the market ! These days, 50% of the trades (dollar volume anyhow) originate with hedge funds, investment banks, even foreign governments, so the classical rules of supply and demand seldom apply anymore. Also, these days, 50% of the trades (dollar volume anyhow) seem to have some other 'action' connected to the deal besides simply earning a profit on the stock because the company is sound and profitable.





My two cents on CNBC: hit "Mute"
Rebecca Avalon
Mmmmm, I love it when you talk dirty to me. Oh yeah.
This is a market correction. I admit I get a little nervous during them, but my investments are for the long-haul, so I don't plan on touching most of them for a very, very long time. Regardless, you also shouldn't be afraid to unload the stinkers from your portfolio and therein lies the rub for a lot of people. Either they stick with a shitty stock for too long or jump the gun during a correction. Even with research and a good history, it's hard to know what to do sometimes.
"She has written so well, and marvellously well, that I was completely ashamed of myself as a writer...But this girl, who is to my knowledge very unpleasant and we might even say a high-grade bitch, can write rings around all of us who consider ourselves as writers"
Ernest Hemingway on writer, aviation pioneer and horse trainer Beryl Markham





^^^ agreed on dumping the losers. I follow an 'unwritten' rule that every stock I buy will be covered by a 'stop loss' sell order if the market price drops more than 15%-20% from the price I initially paid for the shares. Yes this means that I get squeezed out once in a while. But it also means that there is a down side limit to my loss exposure. Historically, people lose the most money holding on to shares that have dropped 20%+ in the hopes that they will turn around, and as a result wind up losing 30%, 50% or sometimes even 100% of their original investment when that turnaround never happens.





Interesting bullish divergence on the MACD and Stocastic oscillators. Very similar to May/June 06, Vix is returning to it's historic mean of 20.
I'm getting royally screwed on my CFC puts, stock is down, but the market makers sucked out all the Implied Volatility.
Rebecca Avalon
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