Have we hit the BOTTOM at 8,000?

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Have we hit the BOTTOM at 8,000?

Postby GeoDaddy » Sat Oct 11, 2008 1:10 am

Talking to a lot of the fund managers today, they feel that we hit "bottom" at 8,000 today - the institutions started buying at the end of the day and we are settling in at 8,000 for the next several quarters...

I don't think so.

I think today's end of week rally was manufactured - like the way the market was jump started after the 1987 anomoly. Tthe Three Major Brokerages at the time, JP, Merrill, and Goldman Sach agreed to push their institutional clients to buys positions - back by Federa Govt funds that "guaranteed" against any down positions - this was a gimick intended to give investors a chance to review Paulson's Buy Bank Equity program and place their bets on Monday.

Will it work? I have NO idea. Too many variables.

But I think that the "bottom" of this market is at 6,000.

Why? Simple, the CRA (Community Reinvestment Act) ginned up in 1993 did not really get going until we were out of the recession in the early 90s and - by 1996 - the banks started to really set aside millions of dollars to buy off the harrassments of ACORN and the ACLU that were holding up bank mergers... that is when the critical mass of when garbage loans started to be made within "redline" districts to people who put little to no money down and under lax income stds...

Hence - if Sub Prime Mortgage is the main product that is polluting the financial system - it is only when the economic growth that occurred in the DOW, since 1996, is factored out (and either taken out of the system by the govt or held in segregated - NOT marked-to-market - accounts...) that investors fell they will be back to where we should be when this fiasco started...

That would put us in 1996 at DOW 6,000

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Postby q5q » Sat Oct 11, 2008 1:12 am

no.
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Postby GeoDaddy » Sat Oct 11, 2008 1:15 am

Not "no" - what's YOUR number.

You can keep it at a rounded thousand. 4K, 6K, 8K?

Make a stand buddy

g

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Postby salmonid » Sat Oct 11, 2008 1:16 am

I'm shooting for Dow 3,600.

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Postby q5q » Sat Oct 11, 2008 1:18 am

i dunno, i've never owned stocks, never really thought that was the way a just society or sound economy should be organized. tbh, seems kinda obvious to me there should be meltdowns every couple of generations. greed is a shit foundation, and when compounded with mass stupidity it's a volatile awaiting only the spark of market panic to conflagrate.
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Postby Marshall » Sat Oct 11, 2008 1:35 am

and q how should a just and sound society be organized?

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Postby q5q » Sat Oct 11, 2008 1:41 am

Marshall wrote:and q how should a just and sound society be organized?


hey, i read plato's 'the republic' 3 times, and i still don't know.

put me in charge of everything, and i'll work it out soon enough.
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Postby Marshall » Sat Oct 11, 2008 2:01 am

q5q wrote:
Marshall wrote:and q how should a just and sound society be organized?


hey, i read plato's 'the republic' 3 times, and i still don't know.

put me in charge of everything, and i'll work it out soon enough.


I always knew you were power mad q.

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Postby q5q » Sat Oct 11, 2008 2:08 am

Marshall wrote:
q5q wrote:
Marshall wrote:and q how should a just and sound society be organized?


hey, i read plato's 'the republic' 3 times, and i still don't know.

put me in charge of everything, and i'll work it out soon enough.


I always knew you were power mad q.


you misspelled 'enlightened', marshall.

don't worry. once i'm enthroned, i'll dispatch a special...clown squad to...beg your advice.

happy happy.
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Postby Marshall » Sat Oct 11, 2008 2:23 am

q5q wrote:
Marshall wrote:
q5q wrote:
Marshall wrote:and q how should a just and sound society be organized?


hey, i read plato's 'the republic' 3 times, and i still don't know.

put me in charge of everything, and i'll work it out soon enough.


I always knew you were power mad q.


you misspelled 'enlightened', marshall.

don't worry. once i'm enthroned, i'll dispatch a special...clown squad to...beg your advice.

happy happy.


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Postby judik » Sat Oct 11, 2008 3:34 am

geo- my hubby feels the same way
Considering he got us out of the stock market before the big crash of 2000 and got us into cash 8 months ago I'll go along with his instincts....
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Postby GeoDaddy » Thu Oct 16, 2008 12:17 am

i've never owned stocks...


I find that hard to believe...

You don't have a 401K??? Is it all in US Treasuries (as mine has been since March '08) - guess what - you own stocks - even if only as an index.

I think there are probably a LOT of people who don't think they own "stocks" who are gonna get a nasty surprise on their next 401K Quarterly statement...

Nevertheless...

After Monday's "surge" - which DID reflect the approval of the global backing of the banking system (LIBOR is down) - the 700 point dive today actually reflects good old bad earnings, high unemployment, poor consumer confidence (none!) and high govt spending...

In other words, we are back to just a good old recession (instead of a complete global economic collapse and global depression) and that's what we should expect, given the battering of the mortgage fiasco and high oil prices.

But I stick with my guns...

We will bounce up and down - but the bottom is 6,000 and it won't be reached until the bad mortgage are handled in some way (and if the tax payer has to eat those losses - it will be lower...)

g

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Postby Espina » Thu Oct 16, 2008 3:12 am

...it'll reach bottom when everyone who "just needs cash" or "needs to preserve...something" stop selling!!! :)

But then, no one seems to have any spare cash to buy anyway. I know I don't. :cry:
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Postby q5q » Thu Oct 16, 2008 3:15 am

personally i think the bottom is around 1, but the local low will probably be around....um, 5,000, based on what i heard tonight from an economist buddy and a lehmon bros broker turned historian opine.

actually, what they said makes me think lots lower, but i'm thinking short term.
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Postby blueeyes_austin » Thu Oct 16, 2008 3:16 am

Bear Market Rally. We'll hit 5,000 in the depths of the coming recession is my bet.
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Postby judik » Thu Oct 16, 2008 3:20 am

We discussed buying some stock but decided we didn't want to risk an ulcer
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Postby UrbanII » Thu Oct 16, 2008 5:16 am

Who cares?
Smart investors make money as long as there is movement...
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Postby Ryan » Thu Oct 16, 2008 11:49 am

My guess is mid-low 6,000s before it bottoms out. A mini recovery to the end of the year and a quick slide when the recession kicks in via the consumer credit market and the general economy.
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Postby pauldeba » Thu Oct 16, 2008 1:05 pm

This is already the biggest drop form the peak since 1929 and P/E's are running from 7 to 16, in 1929 after the drop they were still averaging over 20. I heard 5,000 in 2002 after the worldcom bankruptcy. Seems way too low as it is. The fed's reaction is exactly the opposite of what happened in 1929 and exactly what Milton Friedman said should have been done then. I'll go with 7,800 as the bottom and a frenzied, panicked false bottom that wasn't justified.
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Postby Vince » Thu Oct 16, 2008 1:17 pm

Even if its going further at 8,000 its a glorious buying opportunity - shares are way undervalued at present IMHO
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Postby foolsprogress » Thu Oct 16, 2008 1:27 pm

How's gold as an investment in the midst of all this turmoil?
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Postby Doc » Thu Oct 16, 2008 3:49 pm

6,000-7,000.
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Postby Ped_Yai » Fri Oct 17, 2008 6:42 pm

q5q wrote:
Marshall wrote:
q5q wrote:
Marshall wrote:and q how should a just and sound society be organized?


hey, i read plato's 'the republic' 3 times, and i still don't know.

put me in charge of everything, and i'll work it out soon enough.


I always knew you were power mad q.


you misspelled 'enlightened', marshall.

don't worry. once i'm enthroned, i'll dispatch a special...clown squad to...beg your advice.

happy happy.


Better check your gravy, Q. It may be missing a few waves.
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Postby GeoDaddy » Wed Oct 22, 2008 1:42 am

Once again, Vince and I are about on the most opposite end of an arguement as two people could possible be...

Even if its going further at 8,000 its a glorious buying opportunity - shares are way undervalued at present IMHO


Gosh, I really hope that all you do is "accounting" and not try FA (and not that there aren't a bunch of FAs out there that aren't spewing the same Buy Low Sell High mantra...)

Here's the problem.

This "assumption" is based on the conviction that the market will go - inevitably - UP (at least over the short term horizon)

Think about it - what would make the market go up???

Robust economy? Not likely under any administration for a while.

Major tecnological/financial innovation? Like oceans of solar panels and windmills? Not if it costs more to build 'em than the power they can generate and that power is a fraction of fossil and nuclear fuels... another Tech Boom/Bust?

Massive Federal Cuts in social spending or on the military? Naw, Bill Clinton found the $800 billion Peace Dividend in the late 90s and that's gone... cut the military now and you just ceed the world to China and Russia and Islamists... not that that won't stop Obama form doing just that.

Noooo...

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Postby golgo13 » Wed Oct 22, 2008 1:53 am

stocks go up when there are more buyers than sellers geo.
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Postby GeoDaddy » Wed Oct 22, 2008 1:54 am

The REAL problem here is that Market Makers - if you have been paying attention to the news over the last few months - are GONE! They have either gone belly up, been bought out by a bank, or become a "bank" (i.e. Goldman and Stanley)

The Investment Houses that took risks - and made money - are a thing of the past. They are going to take no more risk that your neighborhood bank (probably less!) and that is BEFORE we get a slew of new regulations that will simply make the equity market evaporate - here!

Face it - it's over, as Nancy Pelosi lauded, and IF you wanna keep playing the market, you will have to go to where there are markets... London is the most likely place (having taken over most of the derivavtive products after SOX drove that business outta New York) but London will be going thru a regulatory wash too! So where to play the market? Shanghai? Dubai?

The one thing that is obviuous is that it will NOT be in New York City.

So all those stocks that Vince is assuming will go up... will be flat until those companies move to trading plateform that is STILL TRADING based on risk rather than a govt mandated margin of acceptable... error.

No Risky, No Gainy.

So, for all we know (at least that way I see it) you can buy some "cheap" stox at 8K, they keep falling to 6K (as "Obama takes a patient with the flu - and gives him a heart attack, a stroke and cancer") and stays there - flat - for the next decade...

Buy and hold may be as relevant as think the airlines and automotive industry are the verge of a major comeback!!!

g

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Postby q5q » Wed Oct 22, 2008 1:58 am

Ped_Yai wrote:
q5q wrote:
Marshall wrote:
q5q wrote:
Marshall wrote:and q how should a just and sound society be organized?


hey, i read plato's 'the republic' 3 times, and i still don't know.

put me in charge of everything, and i'll work it out soon enough.


I always knew you were power mad q.


you misspelled 'enlightened', marshall.

don't worry. once i'm enthroned, i'll dispatch a special...clown squad to...beg your advice.

happy happy.


Better check your gravy, Q. It may be missing a few waves.


watch it; marshall and i go waaaay back. long as he's good with the dogs, he's good with me.
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Postby GeoDaddy » Wed Oct 22, 2008 2:01 am

stocks go up when there are more buyers than sellers


And there is reasonable expectation that the underlying business enterprise will grow and make more money...

You see American businesses growing and making more money in the near term???

Or will business owners offshore, outsource, shed payroll, cut inventory and keep their powder (capital) dry until we get to a place where the govt isn't keep looking to confiscate as much money as it can to fund their unsustainable socialist programs for the "good of the people"

Again, I think that most people - who have known NOTHING but growth and prosperity since the post Carter years - have NO IDEA how bad it can get... and back then there was no real China or India to simple take over what we are no longer willing to do ourselves....

No, I am keeping my monies in US Treasuries - where it's been since March (the moment I heard how bad Fannie and Freddie were entrenched with garbage mortgages and sold them to the Investment community...) I'll take it out when I figure out where the NEXT global financial market will be set up!

g

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Postby golgo13 » Wed Oct 22, 2008 2:04 am

That's hilarious geo. Hear anything else of interest Down at the Bus Station?

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Postby GeoDaddy » Wed Oct 22, 2008 2:10 am

No, but I am missing your detailed refutation that itemizes why my position is wrong and your (suppsed) position is right and what YOU believe the numbers will be in a couple of years...

Why is that??? Oh, ya, you don't wanna put anything down in writing so I can save it for the nest and invite you to eat crow a couple of months and years from now...

HEY! If you think I am wrong - then GO BUT STOCK INDEXES! Put your money where your mouth is and show me how wrong I am...

g

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Postby golgo13 » Wed Oct 22, 2008 2:22 am

You're the canary in the coal mine announcing that we are close to a bottom.

Bragging about treasuries or cash makes you very much like a cab driver bragging about shares of cisco or GE in 1999.

PS I'm not going to bother refuting your laundry list because you construct arguments like a victim of schizophrenia.

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Postby AntiEverything » Wed Oct 22, 2008 3:15 am

golgo13 wrote:Bragging about treasuries or cash makes you very much like a cab driver bragging about shares of cisco or GE in 1999.

PS I'm not going to bother refuting your laundry list because you construct arguments like a victim of schizophrenia.


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Postby Espina » Wed Oct 22, 2008 3:40 am

...I think the market is being artificially driven down by those who just need cash...now.
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Postby coffeeguy » Wed Oct 22, 2008 5:28 pm

8000 was the bottom. You saw massive liquidations the whole week 2 weeks ago due to margin calls. The sellers are out, anyone left is holding on until we recover rather than make paper losses real ones. We're not going up 20% from here over the next 2 months in my opinion, but we'll bounce around here until we start getting some positive news, maybe by Xmas or 1st quarter then market will rally ahead of the economic recovery. The big money being pumped into the banking system, lowered interest rates world wide, and lower oil will eventually help. Corporate profits are still not bad, and places like China still growing 9% per year.

Politics has no impact on the stock market, never has. Doesnt matter whether Obama or McCain gets in. May impact specific sectors but not market as a whole. Certainly any 'theory' of where the bottom is based on what ACORN did or didnt do in 1996 is just rubbish. Market is driven short term by fear and greed and long term by economic prospects and the underlying companies. Unless Obama is gonig to nationalize or severely penalize whole swaths of the economy, he will have no impact on what stock prices do.

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Postby blueeyes_austin » Wed Oct 22, 2008 5:44 pm

I dunno, coffee. I don't see how we're at the bottom of the market and the recession hasn't really hit yet.
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Postby coffeeguy » Wed Oct 22, 2008 6:14 pm

stock market is usually a leading indicator. drops before going into a recession, and then rises as recession hits. Depends on whether we are in for a long hard recession or a soft one. I'd suggest the later due to the massive govt intervention we've seen and emerging market growth acting as a support. that might just be wishful thinknig on my part.

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Postby Espina » Wed Oct 22, 2008 6:18 pm

I dunno, too, Coffee guy, as certainly whatever Obama or McCain end up doing with universal health care will affect that sector of the market.
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Postby Vince » Wed Oct 22, 2008 6:18 pm

Anyone here got a vaguely successful record making predictions that they can attribute to anything other than luck?
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Postby pauldeba » Wed Oct 22, 2008 6:37 pm

blueeyes_austin wrote:I dunno, coffee. I don't see how we're at the bottom of the market and the recession hasn't really hit yet.


Haven't all the P&L budgets/forecasts been sent to the analysts for next year? That should get us through 12/09. Not everyone goes back and cuts them.
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Postby GeoDaddy » Thu Oct 23, 2008 12:54 am

You're the canary in the coal mine announcing that we are close to a bottom.


Actually, the function of the "canary" is to die before the larger life forms from lack of oxygen...

and

PS I'm not going to bother refuting your laundry list because you construct arguments like a victim of schizophrenia.


That - more likely you don't even have the beginning basics of understanding or vocabulary to make your point - or, even more likely, you don't HAVE a point other than just a lemming recitation "Obama Good" All other's Baaaad"

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Postby GeoDaddy » Thu Oct 23, 2008 1:08 am

Now let's get to someone who actually HAS a point to make...

8000 was the bottom. You saw massive liquidations the whole week 2 weeks ago due to margin calls. The sellers are out, anyone left is holding on until we recover rather than make paper losses real ones.


Again - this is meaningless mumbo jumbo analysis that simply pops out the Cliff Notes for normal times... we are no longer in "normal" times...

"Margin Calls" played NO significant part of the convulsions in the markets (else the Intl Markets that did not have such margins would not have reacted to American "margin calls"

The collapse started when the financial institutions - holding the garbage mortgages issued by Fannie & Freddie - either as products or derivatives - were forced to "mark-to-market" those instruments as their liabilities were called into question with the US Govt take-over of F&F - and they had to admit that the value of those instruments was ZERO! Zero simply because they could not evaluate their non performing mortgages and had no way to assess the debt vs market value of these faux securities (that turned out to be un-secure when the Federal Govt backing them was shown to be having to get the money to cover their commitment from an ever more angry tax payer base.

That triggered the larger seizure of credit when Intl Investors suddenly called into question the 4.1 trillion dollars the US Govt has taken on in debt and threatened to start dumping US treasuries at pennies to the dollar for fear that the US Govt will NEVER be able to cover it debt.

And, of course, the global credit community shuddered because they wer carrying so much IS debt and it was so buried in the abstract financial derivatives they couldn't even assess what would be left if the global credit system collapsed.

After three - 3 - tries, the final move for Western Govts to buy pfd stock in the largest banks, the credit seizure abated and we are back to "normal" recession market volatility.

But!

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Postby GeoDaddy » Thu Oct 23, 2008 1:18 am

What the "market as usual" people are completely missing is that NOTHING has been resolved regarding those non-performing mortgages..

NOTHING!

There are billions of non-performing mortgages out there - perhaps even MORE than 700 billion (since that was only a 5% estimate of unsecured loans guaranteed by Fannie and Freddie - which could be MUCH higher!!!) - and they are in limbo due to "politics"

Namely, the politicians can't make ANY move until the election is over and the winner is resolved... then that winner can dictate what the Federal Govt will do with those non-performing mortgages.

Simple fact is that - NOTHING will be resolved until 1.) the people who can't meet their obligations are kicked outta their house and those houses are re-sold to credit worthy buyers AT WHATEVER PRICE THAT CAN BE GOT! or 2.) as McCain suggested, the Govt re-write the mortgages for WHATEVER MARKET VALUE CAN BE ESTABLISHED THAT WILL SUPPORT A NEW LOAN and EAT the losses.

Until that happens, the markets are simply frozen for EVERY financial instrument that can't be marked-to-market i.e. what is the value of this garbage mortgage now that the US Govt has taken responsiblity for the losses -it's somewhere between Zero and MUCH less that the original contact amount. That's a pretty wide spread to leave unresolved and settle the market.

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Postby GeoDaddy » Thu Oct 23, 2008 1:31 am

And, of course, what's exacerbating this is the simple fact that the bad mortgages are bringing down the "good" mortgages - people who DID properly put 20% down and DID qualify with a NET income for less than 30% of salary...

As more houses come online, existing housing prices continue to collapsed and - even responsible mortgagees - are going upside down on their home loans - paying MORE than their home is worth.

We are trying to track a downward spiral of housing prices that is the underlying sell off foro some UNKNOWN number of mortgage backed securities...

There has been NO SELL OFF! We are waiting to see how the Govt will handle it...

And the latest word that the Obama camp put out there is that they were considering a six month moratorium... well that only puts off the "bottom: for six more months during which we can STILL not access how bad this housing collapse will be - in fact, the longer we put it off, the lower it will sink simply because the buyers are waiting to buy at the bottom and the bottom won't be reached until the houses that will be released from existing countacts are available to establish that "bottom" of the market!

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Postby GeoDaddy » Thu Oct 23, 2008 1:33 am

stock market is usually a leading indicator


Uh, when the DOW is swinging hundreds of points up and down on a DAILY basis that's not an "indicator" of ANYTHING other than PANIC!

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Postby GeoDaddy » Thu Oct 23, 2008 1:40 am

Politics has no impact on the stock market


But, of course, we are not talking about "politics" - about abortion or democrat or republican... or who is gonna win... are we?

We are talking about using tax payer money to bail out people who can't pay their mortgages, not now, not in the long term...

We are talking about punative taxes on businesses - both small biz and "windfall profits" that will cause a reaction by those businesses that will be affected - long before the laws are even passed

And

We are talking about a major movement to revitalize unionization by passing open ballots and enforced unionization on companies that fail to hold a vote within 120 days. That alone will cause a major shift of business to offshore as much work as possible - before they can be forced to unionize what is left.

This isn't "politics" anymore - this is socialization, nationalization and a major shift in how the economy works... or no longer will work.

And that's long before "univeral health care" or regneging on NAFTA.

g

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Postby GeoDaddy » Thu Oct 23, 2008 1:43 am

Like I said 6,000 takes US back to times when "subprime mortgages" was just a glint in the eye of liberal democrats, drooling over the prospect of putting poor people into homes and assuming that there will be NO major impact because the tax payer will simply cover any losses.

It's 6,000 at the bottom and there we will start having to see what is left of the equity markets and how much they are willing to bet on a Obamatized economy.

g

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Postby foolsprogress » Thu Oct 23, 2008 6:34 am

So far this seems to be working out for me. I don't have one cent in paper. My money's all in the mattress, and it seems to be getting more valuable by the day.
Let me live in a house by the side of the road...

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Postby coffeeguy » Thu Oct 23, 2008 1:41 pm

sorry you are just simply wrong on a number of points.

first Fannie and Freddie didnt get blown up becuase of garbage mortgages. You've been refuted dozens of times on this. The fannie/freddie portfolio is very high quality, they got blown up becuase the market dried up and they were forced to mark to market of which there wasnt one.

The vast majority of subprime had nothing to do with liberals putting poor people in homes, it was joe six pack buying a bigger mcmansion than he could afford and speculators hoping to get rich quick by buying homes on little or nothnig down and flipping them 12 months later.

You clearly have little or no understanding of what drives emerging markets - it is all hot money from foreign investors and hedge funds that drove up the prices in places like India, Russia and Brazil, and now that money is fleeing, hence the severe drop. Margin calls for hedge funds, voluntarily or not voluntarily caused the huge selling pressure over 5 days a couple of weeks ago. Thats why US dollar is strengthening, US hedge fund money flowing back into the US - place of safety.

The volatility is what historically you get at the market bottom, its the push and pull from the bulls and bears, one day one wins, the next the other wins. And historically in every recession the stock market recovers well before the economy does. Massive ammounts of money have been pumped into the system, lending rates between banks are down, interest rates are coming down, and oil is 50% of what it was just a few months ago. We'll be out of this in 6-12 months tops.

I have faith in the US, its free market economy, its people and innovation. Too bad you dont.

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Postby pauldeba » Thu Oct 23, 2008 1:47 pm

Thats why US dollar is strengthening, US hedge fund money flowing back into the US - place of safety.


Actually, I have to disagree with you. Ironically, Brazil increased because of fundamentals and commodity prices, to an extent. It wasn't hot money that pushed it up, it was trade. Hot Money is what is propring up the US dollar, "Hot, Safe haven" is more like it, it will eventually flow to places where there is opportunity to use it when credit markets normalize and they don't need it as a safety net in the US if their tap runs dry form their banks.
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Postby coffeeguy » Thu Oct 23, 2008 1:53 pm

Ironically, Brazil increased because of fundamentals and commodity prices, to an extent.


Think we're saying the same thing. I'm calling hot money foreign investment buying shares in emerging markets. In Brazil it was foregin investment in commodity stocks and the general economy when fundamentals looked good. Now that they dont, that meoney is flowing back to the US.

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