Dow Jones watch - 9/29/08

[Parkbandit]

It's 10am and already down 270 points.

[Clove]

Let's just say; you won't be retiring on your 401k THIS year.

[Keller]

Does anyone have a good site to watch it? I'd google it, but I figure one of you has a good (free) one.

[NocturnalRob]

Let's just say; you won't be retiring on your 401k THIS year.

emerging markets ftw

[TheEschaton]

yeah, foreign investment has been my bread and butter for at least a year now.

-TheE-

[crb]

Does anyone have a good site to watch it? I'd google it, but I figure one of you has a good (free) one.
CNBC.com has free live streaming level 2 quotes.

[NocturnalRob]

yeah, foreign investment has been my bread and butter for at least a year now.

-TheE-

hopefully you got out of any russian investments by march. i pulled the trigger too early (i always seem to have that problem...) and liquidated in february, so I missed a few %s, but that shit has fallen like a rock as a whole over the past 6 months.

fucking militaristic russian douches...

[TheEschaton]

LOL, I just never invested in Russia. I mainly do Asian and European markets.

[Keller]

CNBC.com has free live streaming level 2 quotes.

Thanks.

[Bobmuhthol]

Fuck that noise. I'm using millions of dollars of databases and technology, and I have a 15 minute delay (although it's listed as 75, I pray to God they're using central time).

[Gan]

www.realclarmarkets.com = 20 minute delay

http://www.morningstar.com/Cover/Markets.html = almost up to the minute if its accurate.

[ClydeR]

Many employees will receive their quarterly 401k reports in October for the quarter ending September 30. I'm not sure how that will affect their vote, but I'm certain that it will weigh heavily on their minds as they make a decision.

According to Google Finance, the S&P 500 is down 9.03% for the last three months.

[NocturnalRob]

down 600 off the failure to pass bailout. ouch.

[Ignot]

even the Vice fund is down alot. you know its bad when people don't want to buy smokes and alcohol.

[Gan]

Where are you seeing -600? *(You talking about your funds?)

I'm seeing -235 DJIA
-140 Nasdaq
-75 DJIA

At 12:52 CST

Freddie Mac +13.5
Apple -13.01
:whistle:

[Ignot]

there is to much volatility to post an accurate quote, most i saw so far was 500 or something.

[NocturnalRob]

Where are you seeing -600? *(You talking about your funds?)

I'm seeing -235 DJIA
-140 Nasdaq
-75 DJIA

At 12:52 CST

Freddie Mac +13.5
Apple -13.01
:whistle:

no. i'm talking about the Dow. My portfolio is up this year, slut.

[crb]

This has got to be one of the biggest (percent) nasdaq down days ever. Shit. Man. Fuck.

A few more days of this... I don't know... it is getting hard to take.

But what can we say? Bernanke and Paulson were right, 1 week ago ya know they said it needed to be done now.

[Kranar]

The Dow is a worthless measure, use SPY which is the S&P 500 ETF:

http://finance.google.com/finance?q=spy

Or use the Russell 2000:

http://finance.google.com/finance?q=NYSE%3AIWM

[Parkbandit]

Dow down 700 currently.

[NocturnalRob]

i know it's only a one-day view, but my portfolio is currently taking the nut-stomping of all nut-stompings.

[Parkbandit]

Once again the conservative sandwich-heavy portfolio pays off for the hungry investor! :lol:

?

(I don't get it.. if it's a joke)

[NocturnalRob]

?

(I don't get it.. if it's a joke)

it's probably a Virginia joke.


It's a Futurama quote, old man! About crashing stocks. Anyway..

zoidberg?

[Parkbandit]

Ah. Never saw Futurama.

[Parkbandit]

I heard an interview with Ron Paul today... the guy sounds like a fucking crackpot.. but he's pretty much been dead on with this whole mess now for a while. Of course, he's now predicting the demise of the United States Empire... in much the same manner as the USSR folded under.

If that's the case.. I think I might move to Texas.

[Keller]

I heard an interview with Ron Paul today... the guy sounds like a fucking crackpot.. but he's pretty much been dead on with this whole mess now for a while. Of course, he's now predicting the demise of the United States Empire... in much the same manner as the USSR folded under.

If that's the case.. I think I might move to Texas.

Why Texas?

Was he saying we'd break up into states?

I need to move back to California, pronto!

[Jorddyn]

Of course, he's now predicting the demise of the United States Empire

All empires fall.

And I'm staying here. Nobody wants to live here.

[crb]

If you're really worried about SHTF scenarios, you're best bet is to simply move out in the country, and buy guns. Ie... get out of the city...

on topic... only company in my portfolio positive today is OPTT - last quote up 15%...

[Kembal]

You know, I was sitting in on a meeting this morning with our trade credit insurance broker, discussing the recent reductions we had gotten on our trade credit insurance against bad debts.

I'm afraid to see what will happen to it now. :(

[crb]

If you're really worried about SHTF scenarios, you're best bet is to simply move out in the country, and buy guns. Ie... get out of the city...

on topic... only company in my portfolio positive today is OPTT - last quote up 15%...
actually... it went up almost 30% today. I'm not seeing anything on the wires to indicate why... Hrmm...

[Jorddyn]

If you're really worried about SHTF scenarios, you're best bet is to simply move out in the country, and buy guns

Like I said, I'm staying here.

[Drew]

Lots of money to be made!

[Parkbandit]

Lots of money to be made!

I would wait personally. You might not be at the bottom yet. I would wait until at least Wednesday.

[Kranar]

Lots of money to be made!


I just made more money today than ever before and a lot of people I know at other firms either made record money or came close to it.

If you're a long term investor, you got screwed today. Of course I don't have a crystal ball but I think it still will get much worse for long term investors. But if you play it day to day, then today was one of the best trading days in decades. The VIX, which is a volatility index measured by the Chicago Board of Exchange hit its highest price adjusted level in history.

When the VIX is high, there is greater volatility in the market. When there is greater volatility in the market, there are greater arb opportunities.

Not to mention that tomorrow is the last day of the month and all the big banks and mutual funds play a very dirty trick called window dressing where if they are down in a position, they will manipulate the price of a stock at the very last moment of trading, pushing the price up by posting huge size on the level two, and by doing so they get to legally quote that price as representing their position for the next month or the next quarter. The guys who work for mutual funds will say they are 'defending their position' which is just a code word for some seriously corrupt manipulation. But hey, doesn't mean you can't profit off of it.

This is why I don't feel sorry for banks or for Wall St. If you trade and get to physically see what these guys do, you wouldn't believe how much crap they get away with and how much of a blind eye is turned towards these guys.

[Gan]

I heard an interview with Ron Paul today... the guy sounds like a fucking crackpot.. but he's pretty much been dead on with this whole mess now for a while. Of course, he's now predicting the demise of the United States Empire... in much the same manner as the USSR folded under.

If that's the case.. I think I might move to Texas.


http://www.tablerock.org/Tablerockrep/images/TexasFlag.jpg

[Back]

Man, am I glad I opted out of 401k and spent the cash money on having a good time.

[Ignot]

Man, am I glad I opted out of 401k and spent the cash money on having a good time.

yeah no sense saving money in a time like this!

2430

[Parkbandit]

Man, am I glad I opted out of 401k and spent the cash money on having a good time.

:rofl:

Spoken like a true Dumbercrat. Grats.

[Tea & Strumpets]

Shit, I took Backlash's advice and cashed in my 401k and other savings before I read any of the replies.

[Parkbandit]

Shit, I took Backlash's advice and cashed in my 401k and other savings before I read any of the replies.


I hope you didn't smoke it all like he did :P

[Back]

:rofl:

Spoken like a true Dumbercrat. Grats.


Shit, I took Backlash's advice and cashed in my 401k and other savings before I read any of the replies.


I hope you didn't smoke it all like he did :P

Good times. Good times.

:D

[Gan]

Man, am I glad I opted out of 401k and spent the cash money on having a good time.

I take it you never heard the story about the grasshopper and the ant...

[diethx]

I take it you never heard the story about the grasshopper and the ant...

I haven't, but i'm assuming it ends with them both having bigger penises than Backlash.

[Back]

I take it you never heard the story about the grasshopper and the ant...

No, but I have heard of the scorpion and the frog.

What is this grasshopper and ant story all about?

[Some Rogue]

Yeah, and then Diethx inspected it and approved.

[diethx]

Yeah, and then Diethx inspected it and approved.

Don't hate cuz I won't look at yours. I don't own a magnifying glass. :(

SRY OKAYY I :heart: U

[Some Rogue]

Don't hate cuz I won't look at yours. I don't own a magnifying glass. :(

SRY OKAYY I :heart: U

EVERYTHING LOOKS TINY NEXT TO THE GRAND CANYON!!!111

:roll:

[diethx]

EVERYTHING LOOKS TINY NEXT TO THE GRAND CANYON!!!111

:roll:

I'm so telling your mom you're spreading nasty rumors about her. And after she was so kind to show you "the way"!

[Some Rogue]

Aw the mom jokes, you can do better than that!

[Celephais]

Once again the conservative sandwich-heavy portfolio pays off for the hungry investor! :lol:
My favorite futurama quote.

Has my sandwich appreciated in value too!?

[Drew]

I haven't, but i'm assuming it ends with them both having bigger penises than Backlash.



:rofl: I just swallowed my tongue.

[Gan]

So to look at what happened today...

Dow closed up 485 points.
Nasdaq up 98 points.
S&P up 58 points.
Russell 2000 up 21 points.
NYSE up 328 points.
AMEX up 27 points.

[AnticorRifling]

So to look at what happened today...

Dow closed up 485 points.
Nasdaq up 98 points.
S&P up 58 points.
Russell 2000 up 21 points.
NYSE up 328 points.
AMEX up 27 points.
So let's pretend I'm 27 and haven't ever opted into a 401k would this be a good time as shit is cheap or do I wait for a touch more stability?

[Gan]

401k? If you have not opted in yet, I would recommend you do so now simply because of the lag time of pulling the trigger in buying into whatever funds you allocate (or your company). This morning was a great time to buy. Its still a good time to buy now- but its hard to say specifically about your 401k simply because I dont know what your allocation is, what type/kind of portfolio you want to allocate your investment to, etc.

[Ignot]

So let's pretend I'm 27 and haven't ever opted into a 401k would this be a good time as shit is cheap or do I wait for a touch more stability?

there is no reason to stop SAVING just chose an investment that fits your risk tolerance. Put money in your K and if your not comfortable with the market conditions then chose the money market option available, almost every K has one. But now is as good a time as ever to put money in your 401k. It's easy to get caught up in market returns because that's what everyone talks about. Contributions are the life blood of your retirement planning, not investment returns. Investments are just a vehicle to assist in meeting a specific goal. Don't get me wrong, investment returns are important but contributions are much more important, IMO. Im sure some will disagree.

[Gan]

So to look at what happened today...

Dow closed up 485 points.
Nasdaq up 98 points.
S&P up 58 points.
Russell 2000 up 21 points.
NYSE up 328 points.
AMEX up 27 points.

So it begs the question.

Is the bailout really necessary?

[Soulpieced]

The bailout is still absolutely necessary. The reason the market is up so much today is from the overreaction of the failed bill, plus now the expectation that a new one will be passed, presumably by the end of the week.

The bailout is necessary because the large financial companies need incentives to buy up the companies that "failed".

Example, Wachovia sold their deposits to Citigroup for $2.2B, which included approximately $140B+ of outstanding loans, $40B of which at LEAST are "troubled/worthless" and will need to be written off. Without the backing from the FDIC, Citi probably wouldn't have done this, because while they could have the benefits of the deposit base from Wachovia, significantly more BILLIONS of the outstanding loans could go wrong, which is money they simply don't have to write off their balance sheets. If Wachovia was allowed to go under, you're looking at TENS OF THOUSANDS of jobs that are going to go down the toilet, all shareholders wealth being wiped out, and the bad loans are still unresolved.

As a more macro consequence of this happening, banks will no longer loan money out because they need to keep so much on their books to cover the loans that are so leveraged and going under. Credit as we use it now in the US could cease to exist. If you want to buy that $20,000 car, you're going to have to either pony up $20k straight cash, offer a lien on existing tangible assets like your house, basically a completely secured loan that has nothing to do with a credit score or your personal income. Without easy money, people won't be able to afford houses, cars, anything that we currently use credit for.

Basically, a complete meltdown and restructuring of the economy in the US would occur, which would result in massive unemployment due to the number of financial companies that can't dig themselves out of the red from the bad mortgages plus the other industries this affects (all of them). Frankly put, pretty much every business in existence relies on the money lent out from these banks, and letting [m]any more of them go down would be catastrophic for the economy. These financials are so intertwined in the market that is responsible for your retirement plans, health care, housing, etc., that there is a lot more riding on their existence than to worry about "bailing out big business at the expense of taxpayer dollars". Unfortunately, nobody in the news or on politics has done a good job explaining WHY the bailout is necessary, mostly because what I just wrote is pretty much uncomprehensible to your average peon.

[AnticorRifling]

there is no reason to stop SAVING just chose an investment that fits your risk tolerance. Put money in your K and if your not comfortable with the market conditions then chose the money market option available, almost every K has one. But now is as good a time as ever to put money in your 401k. It's easy to get caught up in market returns because that's what everyone talks about. Contributions are the life blood of your retirement planning, not investment returns. Investments are just a vehicle to assist in meeting a specific goal. Don't get me wrong, investment returns are important but contributions are much more important, IMO. Im sure some will disagree.
I have no idea what this means, and that bothers me.

I just save money but I know I can do a better job at seeing that grow.

I never took any type of finance classes/courses everything I have is tech related. So yeah I can make a pimp ass roadmap and deliver a sweet life cycle solution but yeah...

[Stretch]

I'm still putting 11% of my salary into my 401k.

My company has historically matched 9%. Even if my portfolio goes down by 40%, I'm still getting a decent return on what I put in.

I pulled all my money out of my ETF back in July when I heard scary things from our Treasury department. All my liquid money has since been in a savings account. I don't need money badly enough to try and gamble it in an area where I have very limited information.

[Jorddyn]

I have no idea what this means, and that bothers me.


I think what he's saying is put money in your 401(k) and/or an IRA regardless of what types of investments those accounts hold.

If you're not enjoying the roller coaster of the market right now, toss a couple grand (or a couple hundred, or a couple bucks) into your IRA and put it in a money market rather than a mutual fund. When you're more comfortable with the market, or just feel more informed, then you can choose to move your retirement account into riskier investments which may (or may not!) provide better returns.

Time is the biggest asset you have right now, but you have to toss some cash at it to make it work for you. Do some time value of money calculations and what-if scenarios.

Every dollar you put away today will be worth $1 per year of retirement (at 65, 4% rate of withdrawal) if you earn a mere 8.6% average. If you figure you'll earn 10%, every dollar you put away today is worth $1.65 per year.

To be a millionaire at 65 (assuming 8% growth), you only need to put away $4185 per year. If you wait until you're 32, that increases to $6304/year. If you wait until 40, it becomes $12507/year.

[Kranar]

I never took any type of finance classes/courses everything I have is tech related.


I'm in the same boat as you except for the fact that when I hear finance people talking I find a lot of what they say to be absolute BS.

I think it's something like 90% of funds do not beat the market, which grows at an average of 8-9% a year, and considering the market is supposed to compete against inflation and the risk free interest rate, which is something like 2-4% a year, one should not be all that impressed by an 8-9% average growth in the stock market.

No one can look at you with a straight face and say now is a good buying opportunity, anymore than I can look at you with a straight face and say now is a good selling opportunity. For every academic PhD finance guru saying that now is a buying opportunity you have someone saying now is the time to get the heck out.

In much the same way that statistically someone is going to win the lottery or someone is going to win big at the casino playing blackjack or whatever, some of these PhD guys are going to be right time and time again. In fact, if you took 1024 monkeys right out of the zoo, dressed them up in a suit and gave them an honorary PhD in economics, I kid you not it is a mathematical certainty that one of those monkeys will be right about the direction of the stock market every single year for 10 years in a row.

Having said this, if you want to save money, do so in a way that guards against inflation and at least matches the risk free interest rate. If you want to put money into the stock market, my only recommendation is that you not try and play the directional guessing game and say "Oh yeah, I am going to call the bottom of this complex and colossal situation right here today and begin investing right now."

If it's a long term investment, wait for the volatility to calm down. The volatility is not a claim that the stock market is going to go up or go down, you're not making directional bets by looking at the volatility of the market. All the volatility tells you is the 'stability' of the market, how confident you can be that you won't lose all your money overnight, but at the same time you won't make a fortune overnight either.

If the volatility of the market is high, hedge your position with derivatives to bring the volatility down to a range your comfortable with. When the volatility calms down, sell those derivatives.

But if on the other hand you still trust these banks or institutions who are honestly so incredibly corrupt and misleading, then of course best of luck. You may make a fortune overnight or you may lose it. Given the record high VIX I have no freaking idea what will even happen tomorrow let alone 2 or 5 years from now. My only argument, and I admit it's a bold and controversial one and a lot of people here will disagree with it, is that statistically, these finance gurus don't know what's going to happen anymore than you do but they have no problem gambling with your money and taking fees from you in the process.

If you take your cash, and put it right now in SPY (S&P 500 ETF), statistically you'll end up performing as well as 90% of these institutions and corporate fat cats, but it won't cost you a penny in fees to do it and they won't be able to use your money for manipulative purposes.

[Bobmuhthol]

<<In fact, if you took 1024 monkeys right out of the zoo, dressed them up in a suit and gave them an honorary PhD in economics, I kid you not it is a mathematical certainty that one of those monkeys will be right about the direction of the stock market every single year for 10 years in a row.>>

As someone studying for exam P/1, I have to disagree with you.

[Kranar]

As someone studying for exam P/1, I have to disagree with you.


The disagreement is more than welcome, as I said I know my statement is not only controversial, but it's also hot headed. The problem is I just don't care, in the stock market business of which I am a part of, the rampant amount of absolute BS I see personally spewed on a day to day basis on T.V., in the news, by academics etc... has jaded my opinion of the so called financial intellectuals that I personally do not trust them and I think they get way more credit for what they do (in dollar amounts) than what they're worth. Hedge funds, banks, and financial institutions do not beat the 8-9% average that any bimbo could make by putting their money into either the S&P 500 or the Russell 2000. And yet because these guys have degrees they give themselves huge end of year or end of month bonuses at the expense of those who invest in them.

So I welcome the disagreement. But onto my claim, I did say it was a mathematical certainty so I should justify that.

Statistically... you take 1024 monkeys, and half of them will say go long the market, and half of them will say sell the market. Just like if you flip a coin 1024 times, statistically half of them will be heads (go long) and half of them will be tails (sell out).

At the end of the year, 512 monkeys will be right, 512 monkeys will be wrong.

Of those 512 monkeys that are right after the first year, 256 monkeys will say go long the market the next year, 256 monkeys will say the market is no good, sell this year. After year 2 128 monkeys will be right, 128 monkeys will be wrong.

Rinse and repeat, after 10 years one monkey will have been right 10 years in a row. Guess what, he's still a monkey.

Remember those infomercials where the fine print says something to the effect of "Past success is not indicative of future results." The same goes for the market. Statistically it is not special if given a pool of millions of investors, some of them are right 10 or 20 or even 30 years in a row.

It's good for that investor, just like it's good to win money at the casino, but you as an individual have no way of knowing who the next Warren Buffet is, or which institution is going to outperform the rest of the market for the next 2, 5, or 10 years. It's just as hard to figure out who to trust your money with as it is to actually invest that money yourself. So forget paying these guys fees, put your money into the market directly by buying into the S&P 500. By doing so, you just ended up making about as much money as these guys do, and you don't have to pay fees or worry about transparency or other major gambles that I know and see first hand funds will do when they're in trouble and pushed into a corner.

[Bobmuhthol]

I'm an economics-finance major, so I sort of have to disagree with you on your analysis of people with degrees in the same field. However, exam P/1 is the first of the Society of Actuaries exams, and it's on probability. I disagree with you from a math standpoint.

You're making a huge assumption in saying "exactly half of the monkeys will choose each direction each year." This does, though, eliminate having to estimate the chance that the market goes in one direction, since you're always going to have an equal number of winners and losers. In fact, by making this assumption you're even eliminating the qualifier that the entities making the decisions are monkeys -- it's equally correct to say humans, ants, aliens, etc.

There are 2 possibilities each year: the market goes up, or the market goes down. Like you, I'll assume the market never stays the same over a year. After 10 years, with 2 possibilities per year, there are 2^10 (1024) possible permutations of the market going up or down, and 1 way to be right. In this sense, yes, the chances of being right randomly are 1 in 1024. However, you cannot at all claim that it is a mathematical certainty that one of 1024 monkeys will guess this correctly unless every single monkey guesses uniquely. By assuming this, you eliminate the actual element of chance, and you simply make a misleading statement: if every possibility of a finite sample space is accounted for, someone will be right. As correct as you are, you've simply stated fact with no experiment involved.

I'm tired and I haven't put much thought into this, but I think the actual chance of all 1024 monkeys picking uniquely (assuming a monkey has no preference concerning which direction it picks, ie., there is a 1/2 chance per direction per year) is going to end up being 1024!/(1024)^(1024). I don't have a calculator that will simplify this for me very easily, but I'm willing to bet it's not very likely. So the real chance that 1 of 1024 monkeys is guaranteed to be correct (the only way this can happen is if all 1024 monkeys pick uniquely over 10 years) is very, very small.

[Stanley Burrell]

The disagreement is more than welcome, as I said I know my statement is not only controversial, but it's also hot headed. The problem is I just don't care, in the stock market business of which I am a part of, the rampant amount of absolute BS I see personally spewed on a day to day basis on T.V., in the news, by academics etc... has jaded my opinion of the so called financial intellectuals that I personally do not trust them and I think they get way more credit for what they do (in dollar amounts) than what they're worth. Hedge funds, banks, and financial institutions do not beat the 8-9% average that any bimbo could make by putting their money into either the S&P 500 or the Russell 2000. And yet because these guys have degrees they give themselves huge end of year or end of month bonuses at the expense of those who invest in them.

So I welcome the disagreement. But onto my claim, I did say it was a mathematical certainty so I should justify that.

Statistically... you take 1024 monkeys, and half of them will say go long the market, and half of them will say sell the market. Just like if you flip a coin 1024 times, statistically half of them will be heads (go long) and half of them will be tails (sell out).

At the end of the year, 512 monkeys will be right, 512 monkeys will be wrong.

Of those 512 monkeys that are right after the first year, 256 monkeys will say go long the market the next year, 256 monkeys will say the market is no good, sell this year. After year 2 128 monkeys will be right, 128 monkeys will be wrong.

Rinse and repeat, after 10 years one monkey will have been right 10 years in a row. Guess what, he's still a monkey.

Remember those infomercials where the fine print says something to the effect of "Past success is not indicative of future results." The same goes for the market. Statistically it is not special if given a pool of millions of investors, some of them are right 10 or 20 or even 30 years in a row.

It's good for that investor, just like it's good to win money at the casino, but you as an individual have no way of knowing who the next Warren Buffet is, or which institution is going to outperform the rest of the market for the next 2, 5, or 10 years. It's just as hard to figure out who to trust your money with as it is to actually invest that money yourself. So forget paying these guys fees, put your money into the market directly by buying into the S&P 500. By doing so, you just ended up making about as much money as these guys do, and you don't have to pay fees or worry about transparency or other major gambles that I know and see first hand funds will do when they're in trouble and pushed into a corner.

The gambler's fallacy is frickin' awesome when you use monkeys.

That is all.

[Kranar]

I'm an economics-finance major, so I sort of have to disagree with you on your analysis of people with degrees in the same field. However, exam P/1 is the first of the Society of Actuaries exams, and it's on probability. I disagree with you from a math standpoint.


Despite my crude position, I know you're a smart guy, in fact a lot of people with a finance/economics degree are very smart people. But if you're not someone with a finance degree, then how do you know who to pick to trust your money with? Every single finance guru out there has an opinion and can write a great academic article on why they are right and the other guy is wrong. There is hardly ever a consensus in academia over major historical events in finance or even a consensus amongst financial institutions about what's going to happen in the market for the next year or so. So to an outside observer, determining who to trust with your money over a long period of time is just as challenging as trusting your money with the market itself. To me, an outside observer, it all comes across like BS even though half of the opinions I hear are going to be correct.

To me it all sounds like monkeys debating with each other on T.V. or in academia. Half of those monkeys will be correct at the end of the year, half of them will claim they were a genius and saw it coming, and if there are 1024 of them debating with one another, after 10 years the expectation is that one of them will be correct every single year for 10 years just by pure coincidence. Maybe after 10 years that guy really was a genius in retrospect, Warren Buffet certainly is a genius and I think it's reasonable to say he isn't just a lucky monkey, but there was no way to know this beforehand and it is not an indicator that he will be right about the future.

As an outside observer such as myself or Anticor, there is no way to differentiate between the expert and the monkey and because of this, there is no way for us pick an institution or even accept advice about what to do with our money that will on average outperform the market. Putting my money directly into the market myself will yield what 90% of financial institutions yield except I don't have to pay the rake, the fees, and I don't have to worry about the chance that the institution is corrupt and will use my money in a dishonest manner.



You're making a huge assumption in saying "exactly half of the monkeys will choose each direction each year." This does, though, eliminate having to estimate the chance that the market goes in one direction, since you're always going to have an equal number of winners and losers. In fact, by making this assumption you're even eliminating the qualifier that the entities making the decisions are monkeys -- it's equally correct to say humans, ants, aliens, etc.


There's no huge assumption at all. Am I making an assumption in saying that if I flip a coin, half the time it comes up heads, and half the times it comes up tails? If that's the case, call me a huge assumer of things because statistically it's a sound argument to make.

I used monkeys to be funny, clearly I failed. But it should be obvious I wasn't trying to say there is something special about monkeys over ants or aliens or a coin toss for that matter, what I'm trying to say is that if you have enough people, don't be surprised if one of them is right 10 years in a row. It doesn't mean that person is special or skilled. And if someone wins the lottery, even if they win it twice in a row, it doesn't mean they're good at playing the lottery.



There are 2 possibilities each year: the market goes up, or the market goes down. Like you, I'll assume the market never stays the same over a year. After 10 years, with 2 possibilities per year, there are 2^10 (1024) possible permutations of the market going up or down, and 1 way to be right. In this sense, yes, the chances of being right randomly are 1 in 1024. However, you cannot at all claim that it is a mathematical certainty that one of 1024 monkeys will guess this correctly unless every single monkey guesses uniquely. By assuming this, you eliminate the actual element of chance, and you simply make a misleading statement: if every possibility of a finite sample space is accounted for, someone will be right. As correct as you are, you've simply stated fact with no experiment involved.


You do not need an experiment to prove a mathematical fact, although thought experiments are fun and intuitive. Heck maybe this thought experiment will clarify some stuff. You assemble this mass of monkeys straight from the zoo in one giant room, and you draw a line right down the center of the group of monkeys. If they're to the right of the room you just assume that those monkeys picked going long the market for that year, and if they're to the left of the room you assume they picked selling off/shorting the market for that year. At the end of the year you kick out all the monkeys who were wrong, regroup them, and repeat. I mean heck, it's as good a way as any of figuring out what that monkey is thinking.

Also the monkeys don't pick uniquely as you claim they must. In fact every year half of the monkeys plagiarize one another since every year half of the monkeys will say go long, and the other half will say go short. There is no uniqueness about the situation.

Your guess about there having to be on the order of 1024!/(1024)^(1024) unique choices for the monkeys to make is false. There are only 1024 total possible choices that you can make over a 10 year period. All I'm saying is don't be surprised if given 1024 monkeys, one of them makes the right choice of the 1024 possibilities.

[Bobmuhthol]

<<There's no huge assumption at all. Am I making an assumption in saying that if I flip a coin, half the time it comes up heads, and half the times it comes up tails? If that's the case, call me a huge assumer of things because statistically it's a sound argument to make.>>

In a finite, random sample? Yes, it's a huge assumption to say you'll get exactly half heads and half tails.

<<Also the monkeys don't pick uniquely as you claim they must. In fact every year half of the monkeys plagiarize one another since every year half of the monkeys will say go long, and the other half will say go short. There is no uniqueness about the situation.>>

If every monkey is independent, their picks over the 10 years cannot match any other monkey's picks. Given 1024 monkeys and 1024 possibilities, if two monkeys say up ten times and zero monkeys say down ten times, and the market goes down ten times, there is no longer a monkey that was right all ten years. 1024!/(1024)^(1024) is a probability [0, 1] demonstrating the chance that 1024 monkeys will pick every possibility out of the 1024 possibilities.

[Kranar]

Perhaps I was confusing in making my argument because we're going off on a wild tangent, possibly my own fault.

My argument is that if I have 1024 agents, I can come up with a strategy to guarantee 100% that one of them correctly predicts the direction of the market for 10 years in a row. I am also arguing that over 10 years, given 1024 agents, it is statistically expected that one of them will be correct 10 years in a row. Another way of saying this that might make it easier to digest is, it requires on average a group of 1024 investors for one of them to be right 10 years in a row. There is a way to make it a certainty, but barring that and just assuming a complete random mess of choices, the outcome is still statistically expected. As such, don't be surprised if someone predicts the market 10 years in a row since it only takes on average a group of 1024 investors for one of them to do so. I think people would find it awesome if someone could predict the market 10 years in a row, yet you only need 1024 investors for it to happen.

If you want empirical evidence of this, write a computer simulation in QBASIC or maybe you've upped your elite hax0r skills and can write it in C/C++ or whatever. But it's a simple program, determine what the average number of investors is required for one of them to be right 10 years in a row. The computer simulation will converge to 1024. If you want I can write it for you.

In general, given a time period of X years, the expectation is that if you have 2^X agents, monkeys, ants, whatever, one of them will be right for X years in a row and furthermore there is a strategy to guarantee such an outcome. The strategy is simply to do a binary partition every single year over these agents between going long the market and going short the market and after X years you have one agent remaining who will have been right for every single year.

[Clove]

Private ownership of monkeys is restricted in the United States. Perhaps for this very reason.

[AnticorRifling]

Bob have you graduated yet?

[Parkbandit]

Bob have you graduated yet?




As someone studying for exam P/1, I have to disagree with you.

I would say no.

[NocturnalRob]

I'm still putting 11% of my salary into my 401k.

My company has historically matched 9%.

i'd like to point out that both of these statements are fucking mind-boggling.

[Stanley Burrell]

After all this financial shit (caused by crb) I will put everything into savings from my job earnings. I'm not ever using salary stock options if I'm offered your typical two-for-one dollar investment/incentive for paycheck-in-stock form. I'd invest my in a company stock option if my employer's investment (paycheck to stocks/bonds) ratio was, like, five dollars of Wall Street investment for every $1 in my salary. Four thou shalt not count. Three is right out.

Edited to Add: My post makes sense.

[Gan]

Mama called the doctor and the doctor said.

No more monkeys jumping on the bed!

[Trouble]

i'd like to point out that both of these statements are fucking mind-boggling.

What's wrong with 11% in the 401k? As the market tanks, you're buying more shares. Unless you plan on retiring in the next 5 years, there's plenty of time for the market to even out. And nothing says you have to put your 401k in stocks anyway (depending on the choices of your 401k, most have at least a money market).

The 9% match is amazing. The best I ever had was 5%. My current company is 0%.

[NocturnalRob]

What's wrong with 11% in the 401k? As the market tanks, you're buying more shares. Unless you plan on retiring in the next 5 years, there's plenty of time for the market to even out. And nothing says you have to put your 401k in stocks anyway (depending on the choices of your 401k, most have at least a money market).

The 9% match is amazing. The best I ever had was 5%. My current company is 0%.

i didn't say anything was wrong with it. i said it was fucking mind-boggling.

l2readingcomp

[Parkbandit]

What's wrong with 11% in the 401k? As the market tanks, you're buying more shares. Unless you plan on retiring in the next 5 years, there's plenty of time for the market to even out. And nothing says you have to put your 401k in stocks anyway (depending on the choices of your 401k, most have at least a money market).

The 9% match is amazing. The best I ever had was 5%. My current company is 0%.


Now is the time to maximize your 401K contributions. I think there's still more shit to hit the fan before we reach the bottom (can you say Hedge Funds?).. but never stop putting money in your 401K. It's free fucking money in the long term.

[Daniel]

The bailout is still absolutely necessary. The reason the market is up so much today is from the overreaction of the failed bill, plus now the expectation that a new one will be passed, presumably by the end of the week.

The bailout is necessary because the large financial companies need incentives to buy up the companies that "failed".

Example, Wachovia sold their deposits to Citigroup for $2.2B, which included approximately $140B+ of outstanding loans, $40B of which at LEAST are "troubled/worthless" and will need to be written off. Without the backing from the FDIC, Citi probably wouldn't have done this, because while they could have the benefits of the deposit base from Wachovia, significantly more BILLIONS of the outstanding loans could go wrong, which is money they simply don't have to write off their balance sheets. If Wachovia was allowed to go under, you're looking at TENS OF THOUSANDS of jobs that are going to go down the toilet, all shareholders wealth being wiped out, and the bad loans are still unresolved.

As a more macro consequence of this happening, banks will no longer loan money out because they need to keep so much on their books to cover the loans that are so leveraged and going under. Credit as we use it now in the US could cease to exist. If you want to buy that $20,000 car, you're going to have to either pony up $20k straight cash, offer a lien on existing tangible assets like your house, basically a completely secured loan that has nothing to do with a credit score or your personal income. Without easy money, people won't be able to afford houses, cars, anything that we currently use credit for.

Basically, a complete meltdown and restructuring of the economy in the US would occur, which would result in massive unemployment due to the number of financial companies that can't dig themselves out of the red from the bad mortgages plus the other industries this affects (all of them). Frankly put, pretty much every business in existence relies on the money lent out from these banks, and letting [m]any more of them go down would be catastrophic for the economy. These financials are so intertwined in the market that is responsible for your retirement plans, health care, housing, etc., that there is a lot more riding on their existence than to worry about "bailing out big business at the expense of taxpayer dollars". Unfortunately, nobody in the news or on politics has done a good job explaining WHY the bailout is necessary, mostly because what I just wrote is pretty much uncomprehensible to your average peon.


The question to ask is this a good thing or a bad thing?

I have no doubts that this would cause a lot of heart ache, but is an economic system built upon ever increasing growth based upon debt sustainable indefinitely? I'd think not.

[Daniel]

i didn't say anything was wrong with it. i said it was fucking mind-boggling.

l2readingcomp


Why?

I put in 20%. I also make 1.25 mortgage payments a month and put another 4.5k a year into a Roth IRA.

The rest of my money gets sucked into booze and bitches. So, it's probably better in the long run for me even if the market completely tanks.

[NocturnalRob]

Why?

I put in 20%. I also make 1.25 mortgage payments a month and put another 4.5k a year into a Roth IRA.

1) the fact that you qualify for a Roth IRA makes the 20% more believable
2) Putting 20% of your paycheck into your 401k and still carrying a mortgage is awkward unless your rate is crazy low
3) that is all

[Clove]

Why?

I put in 20%. I also make 1.25 mortgage payments a month and put another 4.5k a year into a Roth IRA.

The rest of my money gets sucked into booze and bitches. So, it's probably better in the long run for me even if the market completely tanks.If you're going to overpay your mortgage that much, you may as well refinance a shorter term with lower interest.

[NocturnalRob]

If you're going to overpay your mortgage that much, you may as well refinance a shorter term with lower interest.

i.e., awkward.

Clove = my clarification

[Ignot]

As an outside observer such as myself or Anticor, there is no way to differentiate between the expert and the monkey and because of this, there is no way for us pick an institution or even accept advice about what to do with our money that will on average outperform the market.


Anticor,

This is how people end up making big financial blunders. First of all, "I want to outperform the market" is not a sound financial planning goal. Second, there is a big difference between an Analyst and an Advisor. It sounds like Kranar doesn't trust the analysts who are attempting to make predictions on specific market movements but there is no reason not to have an advisor, someone to help you make the decisions on how to manage your finances. You asked a question for an advisor, not an analyst. "is now a good time to put money in my 401k?"

Look, if this was easy then everyone would do it on their own but financial planning is not easy and if this is all greek to some of you (like it is to most people) then having an advisor is completely appropriate. Someone you can talk to and ask questions and get advice on how to plan for your financial goals.

Kranar, I totally see your point and I somewhat agree with you about analysts predictions being inaccurate but I feel it is still necessary.

Anticor, if you really want help then you need to speak with an advisor and have a real goal in mind for yourself, other then "I want to make money."

When I ask people what their goals are and they tell me they want to make money then I know they haven't thought about their goals for more then a minute and have no idea what they want to do with their lives. Your situation is so unique that nobody can give you advice on a text based message board and I don't want you to be afraid to walk into a bank or brokerage firm and ask for help.

[Daniel]

If you're going to overpay your mortgage that much, you may as well refinance a shorter term with lower interest.

I will once I get 20% equity.

[Bobmuhthol]

Exam P/1 requires no degrees or qualifications, just knowledge of math and actuarial topics. And no, I haven't graduated. I'm in my first semester.

[Sean of the Thread]

KRANAR = CRAMER!

[Bobmuhthol]

<<In general, given a time period of X years, the expectation is that if you have 2^X agents, monkeys, ants, whatever, one of them will be right for X years in a row and furthermore there is a strategy to guarantee such an outcome. The strategy is simply to do a binary partition every single year over these agents between going long the market and going short the market and after X years you have one agent remaining who will have been right for every single year.>>

That is certainly the expectation, but it's more looking at oversimplified math than anything else. In practice, it doesn't work quite as nicely. We're taking two totally different approaches. Admittedly, mine is the one that says there's always an alternative; my method is used by insurers.

[Gan]

I will once I get 20% equity.

You also paying PMI?

[Daniel]

You also paying PMI?

Yep. That's why I'm waiting till 20% equity.

I was dumping 1400 a month into rent in DC and I'm paying considerably less now on my mortgage when you factor in the income I'm getting from renting my extra room.

I figured it was better to capitalize on lower home prices and make that sacrifice than waste another year of paying ridiculous amounts on rent.

I'll probably refi in a year and a half by my current calculations.

[Gan]

Yep. That's why I'm waiting till 20% equity.

I was dumping 1400 a month into rent in DC and I'm paying considerably less now on my mortgage when you factor in the income I'm getting from renting my extra room.

I figured it was better to capitalize on lower home prices and make that sacrifice than waste another year of paying ridiculous amounts on rent.

I'll probably refi in a year and a half by my current calculations.

Dont forget to consider any increase in market appraisal value when requesting the cancelling your PMI. If you can find comps from like units selling for more than you paid then see if its worth including a new appraisal to bolster your LTV position (appraisals go for 300 to 500 bucks in this area, dont know about DC). Either way, your request will be subjected to market value as the PMI insurerer will take any devaluation in your property into consideration of dropping that requirement or keeping it up.

Read over your PMI paperwork included in your closing paperwork to be sure of your rights and the stipulations of the PMI you are responsible for.

[NocturnalRob]

Dont forget to consider any increase in market appraisal value when requesting the cancelling your PMI. If you can find comps from like units selling for more than you paid then see if its worth including a new appraisal to bolster your LTV position (appraisals go for 300 to 500 bucks in this area, dont know about DC). Either way, your request will be subjected to market value as the PMI insurerer will take any devaluation in your property into consideration of dropping that requirement or keeping it up.

Read over your PMI paperwork included in your closing paperwork to be sure of your rights and the stipulations of the PMI you are responsible for.

i have no idea what any of that means.

-renter 4 life

[Gan]

Just remember that 20% equity is the magic number when buying a home. It gives the borrower the best position for interest rates and other requirements, such as Private Mortgage Insurance. Lenders have the right to require PMI on all loans greater than 80% LTV of the property being purchased. (which leads me to the question I'll bring up at the end). This PMI payment is a fixed amount that is paid monthly on top of Principal + Interest or any impounds/escrows. Sometimes its as low as 40 bucks a month, sometimes its as high as a couple of hundred bucks a month - all depending on the amount of the loan being applied for. Significant impact on monthly expenses that could be redirected to other bills or put towards principal.

Think of it as credit insurance for the lender protecting them in case you default on your loan.

*Post thought question: Where are all the PMI claims and payoffs for all the defaulted mortgages and are they being given any consideration in the rating of said bad debt. Thats something I'm going to have to research...
:thinking:

Adding a crude source for PMI explanation.
http://www.mgic.com/pdfs/71-42265howmiworks_csmr.pdf

And a more indepth one:
http://library.hsh.com/read_article-hsh.asp?row_id=74

[Jorddyn]

Post thought question: Where are all the PMI claims and payoffs for all the defaulted mortgages and are they being given any consideration in the rating of said bad debt. Thats something I'm going to have to research...

I'm going to bet there is very little PMI. Most were probably done 80/20 or 80/15/5. Second mortgage holder is completely hosed, first mortgage holder gets the house back at its now deflated value.

[Daniel]

Dont forget to consider any increase in market appraisal value when requesting the cancelling your PMI. If you can find comps from like units selling for more than you paid then see if its worth including a new appraisal to bolster your LTV position (appraisals go for 300 to 500 bucks in this area, dont know about DC). Either way, your request will be subjected to market value as the PMI insurerer will take any devaluation in your property into consideration of dropping that requirement or keeping it up.

Read over your PMI paperwork included in your closing paperwork to be sure of your rights and the stipulations of the PMI you are responsible for.

Yea. Definitely. At this point I'm trying laying things out there in a manner that allows me to adjust to changes in the market, life circumstances etc.

[Kranar]

Wow the bailout just got passed in the House and the market just got smoked.

This is some of the heaviest selling I've ever seen.

[Keller]

Wow the bailout just got passed in the House and the market just got smoked.

This is some of the heaviest selling I've ever seen.

Doh.

[Kranar]

If anyone thought that wasting $700 billion and an additional $50 to $100 billion in pork was going to save the economy... this should be evidence to the contrary.

This is really quite something to see and could end up being worse than what happened during the panic 4 days ago.

Who knows if it rebounds before the end of the day, I sure as hell am not going to make that call, but as things stand this is an absolute crush in the market.

[ElanthianSiren]

it's just buy the rumor, sell the news.

Either that or I'm lucky. Nothing I'm holding long has tanked; no puts right now.


edit: I realized 1. I have the stomach flu. 2. I should point out stuff I'm holding has taken since the crashing started, but it didn't tank with the news presented. When Kranar posted that I very quickly ran to my portfolio to check then was relieved :)

[Trouble]

The tanking in the past couple of days has created some buying opportunities... Like I hate Apple as a cultural phenomenon, but the stock seems like a bargain at $100. I might have to take a bite.

[Kranar]

Either that or I'm lucky. Nothing I'm holding long has tanked; no puts right now.


I'd say you're lucky. The Dow tanked 460 points on news of the bailout passage. The last time when the bill didn't pass the Dow dropped 550 points. Of course I think the Dow is a very poor indicator but similar results apply on other indexes and indicators.

I was trading Microsoft which at that point was up a dollar (4%), the news comes out and boom, it drops almost instantly giving back all of its gains and ends the day up only 7 cents, (0.25%).

[ElanthianSiren]

That sucks :(

I guess I am lucky, but I went back to options instead of short term trading when class started in sept. I'm pretty sure that's why nothing of mine has seen a huge sell off; of course it hasn't gone up either. Sorry you had to watch a winner go loser though. That's really psychologically crappy.

[Kranar]

Wow a second day of the market getting toasted.

And yet the American people are $700 billion dollars poorer.

But as they say, "Now is a great time to buy, Apple is below $100. This has gotta be the bottom."

In my business we have a saying for people who have expressed that sentiment:

Famous last words.

[Ignot]

check out the international markets, they are plummeting just as bad.

[nub]

I am so pissed, I left money in mutal funds too long. Hopefully the $700 Billion goes toward anything I have mutual funds in.... damnit. (Although I was against the bailout)

I mean I am still above the amount I originally put in, so it's not like I lost anything. But the that's the general feeling I have, that I did lose, since I did not take out my money when I "should" have.

[Kranar]

Canada is plummeting even worse and Brazil is shutdown for the day.

I do most of my morning trading doing arbitrage between the Canadian and the U.S. markets and Canada is getting rocked beyond belief . This is the biggest drop over the course of an hour that I have ever seen on the TSX.

[crb]

shit sucks... fuck...

just buy good stable companies, and realize that historically speaking, the market recovers from it's dips relatively quickly. So as long as what you invest in doesn't go under, you should do fine in the long run. In the meantime, look for dividends that'll payout regardless. Of course, the one time it took awhile to recover was the great depression, so lets hope we don't get BS protectionist policies that delay this recovery.

[Gan]

Russia lost 15% of overall value and shut down as well.

[NocturnalRob]

a brazil-based fund my friend works for is down 70% for september...70% in a month. That is raw.

[Parkbandit]

Wow a second day of the market getting toasted.

And yet the American people are $700 billion dollars poorer.

But as they say, "Now is a great time to buy, Apple is below $100. This has gotta be the bottom."

In my business we have a saying for people who have expressed that sentiment:

Famous last words.

Indeed. I wouldn't put any money into any type of business that isn't essential to actually living. All the liquid disposable income is drying up and people aren't likely to spend money on non-essentials.

[Trouble]

Sheesh, yeah I bought Apple at $100 on Friday and already my 10% stop-loss kicked in and closed the position today. Dur.

I'm tempted to close out all of my mutual funds and move to cash; but then with my luck this will actually be the bottom and I'll be double-screwed. I should have treated my mutual funds like I do my stock positons (10% trailing stop). If I had done that I would have escaped the 30+% drop in the past year with a mere 10% hit. Stupid 20/20 hindsight.

[Clove]

Buy.

[Sean of the Thread]

BUY BUY BUY

[Parkbandit]

<< Not Buying Yet

I don't think we've hit the bottom.

Edited to say: I'm not buying into non-essential type stocks and putting more and more into precious metals. Once I decide that the bottom is closer, I'll shift back from metals back into stocks. I don't anticipate that for a while though.

[Gan]

Apple, realtime on Yahoo.

http://finance.yahoo.com/echarts?s=AAPL#chart8:symbol=aapl;range=5y;indicat or=volume;charttype=line;crosshair=on;ohlcvalues=0 ;logscale=on;source=undefined

[Kranar]

Don't time the market, advisors are going to try to tell you to buy because that's how they get paid (based on volume, not performance).

The most important thing to do is put your money into a broad ETF (my preference is S&P500) hedge your position against volatility, and do it consistently, regardless of the news, regardless of whether the market is going up or down. Put in however much you can save.

Today Microsoft is down 1.52, tomorrow who knows it could get back up. Just hedge your position so that the volatility is constant, because the problem with volatility is that while you can make an unlimited amount of money in the market from stocks going up, you can only lose so much money before you go broke and the game is over. While in the long run I agree the market will go up, in the short run you could go broke before you see that day.

Because of that you need to make sure the volatility of the market doesn't threaten your position to the point where the game ends before you get a chance to realize a profit.

I just can not stress enough that these jokers on T.V. with their PhDs and their fancy gimmicks are largely the ones who started this mess because they had an incentive to pretend like everything is a-okay and come up with such a convoluted system that no one could understand.

Give these guys as little money as you can, put your money in the market, and just hedge your position against volatility during times like these. By doing that you will have performed as well as 90% of these guys and not subject yourself to an incredibly convoluted and corrupt scheme.

[Clove]

Or in otherwords. BUY.

You only go "broke" if you spend more money buying than you have (say no to margin).

[NocturnalRob]

i'm a firm believer in dollar cost averaging, especially when you're invested in strong companies who will ride this out.

I'm gonna wait another week and then pick up a few hundred shares of Duke Energy on the cheap.

[Allereli]

I just can not stress enough that these jokers on T.V. with their PhDs and their fancy gimmicks are largely the ones who started this mess because they had an incentive to pretend like everything is a-okay and come up with such a convoluted system that no one could understand.

I admit to being mostly ignorant when it comes to the market. I have (had?) my 401k, that's about it, I understand casino betting more than the market.

Anyway, would you put Warren Buffett in this group since he's going on every show talking like he's the business messiah? Is he part of the solution or part of the problem?

[NocturnalRob]

Buffett is the man and is absolutely funneling a massive amount of money into the market right now. He understands the market and he understands the long-term aspects of the economy.

And the reason he talks like he's the business messiah is because he is.

[Allereli]

Buffett is the man and is absolutely funneling a massive amount of money into the market right now. He understands the market and he understands the long-term aspects of the economy.

And the reason he talks like he's the business messiah is because he is.

yeah, but I'm a cynic, if someone is too good to be true, it usually is.

[Clove]

If you're in the last 10 year stretch before retirement and your 401k is in stocks... they shouldn't be. Otherwise- BUY!

[Ignot]

Don't time the market, advisors are going to try to tell you to buy because that's how they get paid (based on volume, not performance).


No, they tell you to buy because you have to put your money somewhere if your going to have a financial plan. Are you just going to take it out and put it under your mattress? God forbid the advisor actually try to help someone manage their portfolio.

If you not comfortable with the market then make a change but you are going to buy something, wether it be a CD or money market or another conservative investment. Believe me, an advisor does NOT want you to buy into an investment that is going to perform poorly. The lifeblood of our business is New Money and referrals which is pretty hard to do when your making shitty reco's for people.

And we NEVER encourage market timing, that's grounds for a lawsuit real quick so your wrong if your assuming FA's encourage you to buy based on market timing.

Maybe you had a real bad experience with an FA but don't go out and assume that all of them are bad.

[Clove]

I think we just all assume you're bad Ignot :D

[Parkbandit]

Buffett is the man and is absolutely funneling a massive amount of money into the market right now. He understands the market and he understands the long-term aspects of the economy.

And the reason he talks like he's the business messiah is because he is.


Take a look at what he's funneling money into.. and the guarantees.. and the payouts.. and the options. This isn't just Mr. John Q Public putting money into the stock market and taking the same risks as we all take. If I had 5 billion dollars just hanging around, I would certainly make the same investment he did. It's a no brainer.

[Parkbandit]

Or in otherwords. BUY.

You only go "broke" if you spend more money buying than you have (say no to margin).


Tell that to the poor fools that bought Wachovia stock when it was at a 52 week low. How much is that stock worth today again?

[NocturnalRob]

If I had 5 billion dollars just hanging around, I would certainly make the same investment he did. It's a no brainer.

but you don't. because you're not warren buffett. if you were, i'd laud your praises too. as is:

http://i7.photobucket.com/albums/y280/BigMamaK/Movies/Misc%20Movies/Shoosh.png

[Clove]

Tell that to the poor fools that bought Wachovia stock when it was at a 52 week low. How much is that stock worth today again?7 dollars a share if you go by Wells Fargo. With 783 billion in total assets I don't think this merger is going to send any stockholders to the poor house.

Buy. Diversify. (Happy?)

[Kembal]

I'd expect it to be bad for the rest of the week. (maybe a dead cat bounce tomorrow) Credit's locked up tight.

[Parkbandit]

450 point swing in an hour.

[Clove]

I'd expect it to be bad for the rest of the week. (maybe a dead cat bounce tomorrow) Credit's locked up tight.But... but... but... we just spend 700 billion to free up our credit!

[Sean of the Thread]

Not my fucking credit.

I sold my house early enough but I'm still broke.

I suck.

[Gan]

But... but... but... we just spend 700 billion to free up our credit!

I've had no problem getting credit. A HELOC and a new car in my driveway say that I have great access to credit.

[Kembal]

You're pretty lucky then Gan. We were (emphasis on were) planning to expand our asset based line of credit for our business by 50%, and we had a commitment from Wells Fargo to participate at our current terms with US Bank from a couple of months ago, and we were just waiting on some revaluations to be done by US Bank. Got a call from Wells Fargo this morning saying that'd they have to double the spread on the interest rate to participate now, and basically advising us to not go forward with the expansion, because our current interest rate is very good and we'd lose it if we expanded.

I have a call planned to talk with US Bank tomorrow. I'm not expecting good news. :(

[Parkbandit]

I've had no problem getting credit. A HELOC and a new car in my driveway say that I have great access to credit.

YOU HAVE A FUCKING HELOCOPTER IN YOUR FUCKING DRIVEWAY!? WTF!

[Gan]

YOU HAVE A FUCKING HELOCOPTER IN YOUR FUCKING DRIVEWAY!? WTF!

ROFL

I'm trying to keep up with John Travolta.

[Parkbandit]

ROFL

I'm trying to keep up with John Travolta.


IT'S A ROFLCOPTER!? WTF!

[Clove]

I've had no problem getting credit. A HELOC and a new car in my driveway say that I have great access to credit.A secured line of a credit, however did you manage?

I think it's very safe to say (anecdotes aside) that credit is pretty sparse right now. My business is dependent on it and we've seen some serious curtailed growth as a result (though we're still up 6% from last year).

[Parkbandit]

If you have good credit, the money is still there. I have a friend in the banking business and he's saying he still has high goals set for loaning money. He's saying the problem is, people who do have good credit aren't borrowing money right now.

[Clove]

http://www.hedgefundsreview.com/public/showPage.html?page=818530
http://blogs.wsj.com/middleseat/2008/10/06/credit-crisis-cutting-into-carrier-revenue/?mod=googlenews_wsj
I dunno. Maybe I'm imagining things.

[Gan]

A secured line of a credit, however did you manage?

I think it's very safe to say (anecdotes aside) that credit is pretty sparse right now. My business is dependent on it and we've seen some serious curtailed growth as a result (though we're still up 6% from last year).

See, you're falling into the same trap the media and the politicians are doing.

Its not that *credit* is pretty sparse. I just proved its not. Its that venture capital credit (or non-secured credit) is sparse.
People with good credit can get credit, as it should be. People with shitty credit cant get credit right now. I WONDER WHY?...

Be more fucking specific and you wouldn't look so fucking stupid responding to people who differ with the generic statement that the media and politicians use as a panic button for the public. :p

[Gan]

IT'S A ROFLCOPTER!? WTF!

Damnit, I wonder if she shows up in my driveway on Google Maps yet...


http://img460.imageshack.us/img460/5479/roflcopter4co.jpg

[Clove]

See, you're falling into the same trap the media and the politicians are doing.

Its not that *credit* is pretty sparse. I just proved its not. Its that venture capital credit (or non-secured credit) is sparse.
People with good credit can get credit, as it should be. People with shitty credit cant get credit right now. I WONDER WHY?...

Be more fucking specific and you wouldn't look so fucking stupid responding to people who differ with the generic statement that the media and politicians use as a panic button for the public. :pActually secured credit is becoming more difficult to acquire too. I believe I mentioned that my business is dependent on it. There's really no need to be more specific since venture capital has an important role in growing our economy.

What you provided was anecdotal evidence and a bad sample at that. You remind me of my friend after he returned from a 5 day trip to Seattle, "I don't know why everyone says it rains out there; didn't rain the entire time I was there."

Let's look at the auto industry shall we?


The credit crisis contributed heavily to the steep decline — analysts estimated that it cost the industry up to 100,000 vehicle sales in the final week of the month, on top of lost sales because of high gas prices and the shaky economy.

How about SBA loans?


(CNNMoney.com) -- A growing number of businesses are struggling to land loans through the Small Business Administration's flagship lending program. The number of 7(a) loans given in the 2008 fiscal year, which ended Sept. 30, dropped 30% from 2007, the SBA reported last week.

The total dollar amount funneled through the program also fell, but not as sharply. The SBA backed 69,434 loans in 2008 (down from 99,606 in 2007) totaling $12.67 billion. That's an 11% drop from the $14.29 billion in loans the SBA backed in 2007....

"More borrowers are less credit worthy compared to a year ago due to housing problems," Hedgespeth said...

"Though I meet the requirements, many will not, because home values have declined and that's the collateral these lenders want," MacDonald said. "In commercial banking, a personal guarantee is accepted, and not as punitive as a lien. I think the SBA makes it uncomfortable for the small business owner to seek a loan, rather than encouraging them."

Or maybe you'd like to buy a pool


The credit crisis, which has made loans more difficult to obtain, has had a dramatic effect on the sale of pools in the Valley, putting companies out of business and leaving others scrambling to diversify...

The average cost to build a pool in Maricopa County is $30,000.

Typically, new-home buyers use financing options such as rolling the cost of building a pool into their mortgage.

Buyers of pools also can finance construction by obtaining a second mortgage or a home-equity line of credit.

Some banks have the money to lend but now they have stricter requirements to get it, said Tanya Wheeless, president of Arizona Bankers Association in Phoenix.

"What's happened right now is that we've seen that second source for banks being able to borrow from other banks . . . drying up," Wheeless said.

"So banks can't lend any more money than they have, which means it goes beyond being an underwriting decision," she said, adding, "and whether or not you are a good risk, does the bank have the money available to fund credit?"

Even with a national rescue plan of $700 billion signed by President Bush on Friday, an economic recovery is a ways off, she said.

"In reality, the availability of credit that we saw two years ago . . . we probably won't see that amount of credit available for a long time," Wheeless said....

Riviera Pools could not hold on, and it closed.

The company owes 50 to 99 creditors, according to court filings. Chapter 11 is a voluntary bankruptcy that allows a company time for reorganization to settle debts. A meeting with creditors is scheduled at 2:30 p.m. Nov. 4 at U.S. Bankruptcy Court in Phoenix.

Within the past 30 days, Ostlund said AmeriFirst Home Improvement Finance, one of 11 lenders his company used, declined 33 pool loans worth about $827,272.

General Electric was one of his biggest lenders, he said, but it no longer offers home-improvement loans.

"We thought we could survive," Ostlund said. "We were downsizing and we've been struggling since April, but it's been getting worse and worse."

Ostlund said he still plans to finish the 40 pools he started for his paid customers.

Any other sectors you'd like to look at? Pause for a minute and realize that the national economy goes a little further than your back yard.

[diethx]

How about private student loans? I just got one last week. And they don't send that shit to my school or anything... they don't look at my school budget either. They just credit approve me and send me my dough.

Granted, it's not 100k, but it was for several thousand.

[Some Rogue]

I bet you showed boobs.

[Gan]

Actually secured credit is becoming more difficult to acquire too. I believe I mentioned that my business is dependent on it. There's really no need to be more specific since venture capital has an important role in growing our economy.

What you provided was anecdotal evidence and a bad sample at that. You remind me of my friend after he returned from a 5 day trip to Seattle, "I don't know why everyone says it rains out there; didn't rain the entire time I was there."
I suppose that I'm just not average? Anecdotal, perhaps - but I still represent a segment of middle-class America since I'm right there in the middle with everyone else. Discount it if you will, but I'm still part of the statistic.



Let's look at the auto industry shall we?
I blame your example on the auto industry (even without a source) to bloated inventories of economically uncompetitive vehicles and a correction to lenders who historically offer auto loans to unqualified buyers being unable to do so now. Again, I just bought a car - I qualified with 4 different big lenders. My loan is through B of A which is not some shady noname bank. Anecdotal or not - I represent those in the market segment who are part of the qualified buyer population. If you can find me data that demonstrate that the gross number of people unable to obtain financing are those who actually qualify for a loan - then I'll grant you this. Until then, I think you're over-representing the effects of a correction in the lending industry, much the same as the disappearance of subprime lending. These are loans that should never be made in the first place.


How about SBA loans? Here's an article from the Houston Chronicle. It mentions a tightening of lending requirements and availability, but it still says the loans are there for 'qualified' borrowers.


WASHINGTON — Despite a global credit crisis that has shaken some of the biggest Wall Street institutions, most small businesses are still able to get bank loans, though lending terms have tightened and the worsening economic picture could soon take a toll, according to a number of financial experts.
The Federal Reserve reported this summer 65 percent of the domestic banks it surveyed indicated they had raised their lending standards on commercial and industrial loans for small business, up from 50 percent in the spring. In some cases, this means the banks are demanding higher credit scores and want more collateral before lending.

Lines of credit may shrink

Jay Trien, an accountant and small-business adviser in Morristown, N.J., said loans for creditworthy small companies still are available. But he said many banks are facing their own financial constraints, and they might, out of necessity, begin to curb lines of credit and other financing for small businesses. "We haven't seen the kind of tightening we saw in the 1980s and early 1990s, but business should be prepared for it to happen," Trien said. "I've been telling my clients to watch out."
Michael Bergmann, an economist with AMG National Trust Bank, said small businesses definitely are finding lenders applying more stringent standards.
"People who have good credit will be able to get loans, but it won't be cheap," he said. "Credit for small business has not dried up, but marginal borrowers won't get loans, and all institutions will be more demanding."http://www.chron.com/disp/story.mpl/business/6012041.html
Here's another example of adaptive real estate in this kind of market.


The slowing economy and tight lending environment could delay things.
"You're definitely seeing a lot of pushback from retailers," Gregory said. "But in Texas, we're still seeing very good things — good job growth, good relocations and solid sales from retailers."http://www.chron.com/disp/story.mpl/business/sarnoff/6039392.html
SBA's and other entities who seek loans for startup and continued operation will find that its harder to get loans, on that I agree, but loans are not completely gone, they just go to the businesses which are run more efficient and smarter. What a great motivator to manage one's business wisely.



Or maybe you'd like to buy a pool
Grats, you've just used a regional problem to represent your suggestion that the issue is national. Even with our gross business in closing new loans down almost 11% this year (from last year) in the Houston area - I'm still going to have one of the busiest months of closing existing home purchases, new home purchases, and refinances (both rate/term and HELOC) that I've had in 7 months. In fact, 2 of my closings have financing for swimming pool additions. Home equity is the most common denominator in securing a loan for a pool. In housing markets where the value of real estate has not fallen through the floor from bloated inventories, poor lending laws/practices, and rampant defaults there still is a market to have pools built. Again, a regional 'affectation'.



Any other sectors you'd like to look at? Pause for a minute and realize that the national economy goes a little further than your back yard. I'll be happy to look at any mainstream data that represents joe blow taxpayer - because thats what the politicians and news media hype as experiencing the brunt of a 'credit crisis' with our economy. And yet I'm closing loans on others as well as getting loans myself that contradict your evidence. And neither myself or the clients I close represent anything 'extraordinary' from middle-class America.

Then also please use data that represents national figures, not regional news stories (not from your backyard). Because my back yard is doing quite well to be the 4th largest city in the nation. So the data that I represent and experience on a daily basis conflict greatly with your 'regional' anecdotes that you just posted here in this thread.

Bottom line, part of the credit 'crunch' is a simple correction of the lending market that is shifting availability away from borrowers who now are viewed as an undesirable risk rather than simply 'subprime'. I welcome the tightening so as to force borrowers and other entities to have their shit together in order to borrow money. Think of it as a barrier to entry necessary to require investors not to throw money away on bad investments (borrowers) and then dump it off on others to take the loss which do nothing but come back to bite the taxpayer in the ass.

Message from the lender: Have your shit together and we'll lend you money to finance your endeavor. Irresponsibility will not be allowed nor tolerated.

Long gone are the days of the old saying, "No credit? No income? No problem!". And thats a good thing.

So bottom line, sure credit is sparse in some areas, but not in all areas or in all sectors. If anything, credit is plentiful for those who are worthy. For those who arent - it gives them (a good) something to strive for.

[diethx]

I bet you showed boobs.

I wish I could get several grand just for flashing my boobs. I'd do it all the damn time.

[Clove]

So bottom line, sure credit is sparse in some areas, but not in all areas or in all sectors. If anything, credit is plentiful for those who are worthy. For those who arent - it gives them (a good) something to strive for.Europe is reporting 21% decrease in car sales this month over last year. Canada is reporting construction slumps (much like the swimming pool article I quoted). Incidentally if you want the source just paste the quote into Google. Essentially your answer is "we can't have a shortage of milk because... I still have it."

It's not regional or hype when problems exist from Connecticut to Arizona or from Canada to Germany.

In some cases credit qualifications are tightening up, in others there is less equity to secure loans but it goes beyond underwriting. You can call it a correction if you like, but you're just being an ostrich if you think there isn't a credit scarcity now or if that scarcity doesn't have a damaging effect on our economy.

[Clove]

I wish I could get several grand just for flashing my boobs. I'd do it all the damn time.You can if you flash them enough.

[Gan]

You can call it a correction if you like, but you're just being an ostrich if you think there isn't a credit scarcity now or if that scarcity doesn't have a damaging effect on our economy.

I never said it was not damaging. And it will be until the markets adapt. In the meantime, we're reaping what we've sowed on Wall Street.



Long gone are the days of the old saying, "No credit? No income? No problem!". And thats a good thing.

[Parkbandit]

I just got a large increase on my World of Warcraft credit card (and it's a source of great joy to use in front of my wife) .. without calling the bank to get it. Granted, I'm not the typical middle class American... since I live well within my means, don't rack up any debt and have a very high credit score (something I've had to actively work on for the past 10 years).

Credit is readily available to those who qualify for it.

NOW.. if I needed a loan to expand my business.. then I would have to PERSONALLY back it in order to qualify for it, since my main business is only 4 years old and doesn't really deal with enough creditors to establish excellent credit.

[Clove]

I just got a large increase on my World of Warcraft credit card (and it's a source of great joy to use in front of my wife) .. without calling the bank to get it. Granted, I'm not the typical middle class American... since I live well within my means, don't rack up any debt and have a very high credit score (something I've had to actively work on for the past 10 years).

Credit is readily available to those who qualify for it.

NOW.. if I needed a loan to expand my business.. then I would have to PERSONALLY back it in order to qualify for it, since my main business is only 4 years old and doesn't really deal with enough creditors to establish excellent credit.Yeah my credit limit expands every year without asking for it too. It's called "Christmas".

Credit is not readily available. Just read FFS.

[Clove]

The more optimistic reporting indicate why loan scarcity/=no loans.


Just yesterday I talked to Rodney Howard, director of First Metro Bank in Muscle Shoals, Ala. He told me that in terms of small business lending, "by and large we're going on as we always have" at his bank over the past few weeks, despite all the broader financial turmoil. Has there been a drop-off in lending? "Not as far as we're concerned, no."

How can this be? Isn't the financial system completely interdependent?

I asked Howard how the situation with large upstream banks has affected him. He said: "The subprime loans—we don't hold any of those. We by and large try to keep the proper amount of liquidity and organize our balance sheet differently than these large regional guys have done. So we've just not been affected in an adverse way."

The real problem is, if problems continue at large financial institutions, small banks won't be able to carry the burden of providing credit for our entire economy. But we haven't gotten to that point.Note the writer still admits that trouble could still be brewing; and it is.

[Parkbandit]

Yeah my credit limit expands every year without asking for it too. It's called "Christmas".

Credit is not readily available. Just read FFS.


Actually, I've had this credit card for less than a year.. and have purchased very, very few things from it, so I'm pretty sure Christmas had nothing to do with it.

And for those who have lived responsibly within their means and have worked to keep their credit reports clean... credit is very readily available. Show the banks you can afford the loan and boom, cash in hand.

[Kranar]

I think the point being made is, and it's one I agree with, is that yes credit is on the decline, but that it should have been on the decline to begin with because a lot of the debt people took upon themselves was for a dead cause to begin with.

There are two ways to look at this, mostly equivalent semantically but with different implications, the psychological emotional way is that credit is on the decline and that the stock market is done for.

The more rational way in my opinion is that the stock market should never have been this high and a lot of people who were getting credit in the past should never have been given such vast amounts of debt.

A lot of this bubble in the stock market is a result of debt, money created literally out of thin air and pumped into the stock market. I mean I'm sure you Clove know about how monetary policy works, but the average person in the U.S. doesn't and I think they'd be shocked if they knew just how money is created and where it comes from.

This is how these corrupt financial institutions work. Literally, when 1 dollar worth of paper is printed by the Federal Reserve, it gets put into a bank account where the bank then uses a fractional reserve system to create another 90 cents on top of it for a total of $1.90. From that additional 90 cents that was created, another 81 cents is created from it for a total of 2.71 dollars now created from 1 dollar printed. This process continues until finally from that 1 dollar initially printed, banks create 10 dollars in total.

But that's not all. Now with that 10 dollars, financial institutions leverage that money upwards of 25 to 1 and invest that leveraged money into the stock market. In total, this means that from 1 dollar of printed money, using a convoluted system of fractional reserves and leveraging, 250 dollars is created to invest in the stock market.

And people wonder why we have stock bubbles? All that's happened is that a lot of these institutions that were multiplying fictional dollars beyond belief took a huge gamble on sub prime borrowers, and then poof, that fake money they were using got blown out, disappeared, and they had to liquidate their assets. But those assets were purchased using leveraged money to begin with.

If you're a person who has used common sense, you live within your means, the only reason you have to be screwed is because someone you're connected to, maybe you're employer or your financial institution did not engage in the same common sense and discipline as you did, and now they need your money to pay off their crisis and they want the average person to get scared if they are not bailed out.

This is the greatest scam in the history of scams and I can't believe how many people are not royally pissed off about it. It's like the average hard working person has simply come to accept that these rich guys in suits are the masters of the financial universe and we should all be willing to bend over backwards for them or suffer otherwise.

[Gan]

Excellent post Kranar (and no I'm not kissing ass).

Oh... (off topic).
Any update on the reputation thingy?

[Gan]

The more optimistic reporting indicate why loan scarcity/=no loans.


The real problem is, if problems continue at large financial institutions, small banks won't be able to carry the burden of providing credit for our entire economy. But we haven't gotten to that point.

Note the writer still admits that trouble could still be brewing; and it is.

Since there are no barriers to entry, perhaps we'll see a resurgence of small local banks. Capitalism. Gotta love it. ;)

[Clove]

Banks and the fractional reserve are the engine that creates money in our economy which means our cash is dictated by debt. In our current situation we are seeing a "credit bubble" because of over-investing in subprime mortgages.

That these loans shouldn't have been made in the first place doesn't change the fact that as investment banks fail and cash becomes scarce the issue falls away from an underwriting and becomes a "first come, first served" issue. Smaller banks are shouldering the load for now, but they won't be able to service all the good loans indefinitely.

I'm confident the markets will adjust after Warren takes his fill and the dust settles; but there's a lot more dust to come. When businesses are facing failure because clients with good credit can't get large enough loans because the value of their property has declined drastically to pay for a new roof, updated heating systems, swimming pools, etc. you have a problem. A problem with credit. Hence a credit crisis. 100k sales drop in the US and a 21% drop in Europe in September car sales due to lack of available financing also indicates a credit scarcity.

[Clove]

As Big Banks Borrow, Economist Suggests No Long-Term Fix From Discount Window
Four major U.S. banks said they have each borrowed $500 million from the Federal Reserve’s discount window, becoming the first to say they have taken advantage of the central bank’s latest attempt to add liquidity to the credit markets. Citigroup Inc. said it borrowed “on behalf of clients.” Minutes later, J.P. Morgan Chase & Co., Bank of America Corp. and Wachovia Corp. issued a joint press release saying they also borrowed $500 million each.

The trio said while it has “substantial liquidity and the capacity to borrow money elsewhere on more favorable terms, the companies believe it is important at this time to take a leadership role in demonstrating the potential value of the Fed’s primary credit facility and to encourage its use by other financial institutions.”

The Fed’s use of the discount window to try and restore liquidity to the credit markets prompts Joseph Mason, an economist at Drexel University, to draw unfavorable conclusions to previous uses of the discount window during financial crises. Discount loans, he argues in an e-mail commentary, were used both in the Great Depression and the savings-and-loan crisis, and in neither instance did they solve the underlying problem. One caveat: the current crisis differs in that the Fed is offering the discount loans to healthy institutions, i.e. banks, not insolvent institutions, in hopes the banks will in turn lend the money to creditworthy borrowers under stress for lack of liquidity.

Mr. Mason’s comments:

Let’s be direct. While markets may have been temporarily assuaged by Friday’s Discount Rate cut, the problem at the heart of current credit difficulties is over-leverage. Structured finance conduits (like subprime) are failing because they sold too much high-rated credit and not enough risky credit. That is, they over-leveraged. CDOs bought those over-leveraged structures and then leveraged the structures some more. Hedge funds bought the CDOs and then borrowed to buy more, leveraging themselves 10 or more times over in the process. Over-leverage is a condition of over-borrowing. While discount window lending to insolvent institutions as a broad based bailout policy was attempted in the Thrift Crisis and the Great Depression in the US, and many times elsewhere, it has never once meaningfully addressed industry-wide problems of over-leverage or help restore banks to solvency.

The point is, over-borrowing has not once been reconciled through more borrowing, whether through the discount window or elsewhere. Here are two relevant articles. One is the Federal Reserve Bank of St. Louis’ Homer Jones Memorial Lecture given by Anna Schwartz (Milton Friedman’s co-author on the Monetary History of the United States) in 1992, and one is authored by myself, published in 2001. Both show the frivolity of discount window lending in cases of industry-wide difficulties. Discount window policy will help the industry weather a few weeks of transitory market difficulties, but discount window policy is unlikely to help in the long term. Given the magnitude of interest rate resets increasing well into 2008, more meaningful policy geared toward providing transparency toward RMBS, CDO, Hedge Fund, and Mutual Fund holdings needs to be developed in the few weeks we have bought with the discount window policy. Financial panics tend to happen in the fall, and that time is soon upon us.

Permalink | Trackback URL: http://blogs.wsj.com/economics/2007/08/22/commentary-history-suggests-no-long-term-fix-from-discount-window/trackback/

Loan discounting through the Fed is one of the ways banks "create money". What's important to note here is that while the writer isn't criticizing the Fed for discounting loans to strong institutions, he cautions about the uselessness of loaning to weak ones. This essentially what the 700 billion dollar bail-out does.

[ClydeR]

Loan discounting through the Fed is one of the ways banks "create money".

I think that's also how the new commercial paper funding facility (http://www.thestreet.com/story/10441044/1/fed-unveils-plan-to-buy-commercial-paper.html) will work. Instead of borrowing money to lend to commercial paper issuers, the Fed will just print the money, thereby increasing the money supply and contributing to inflation.

[Clove]

I think that's also how the new commercial paper funding facility (http://www.thestreet.com/story/10441044/1/fed-unveils-plan-to-buy-commercial-paper.html) will work. Instead of borrowing money to lend to commercial paper issuers, the Fed will just print the money, thereby increasing the money supply and contributing to inflation.Don't get me started.

[TheEschaton]

One day, I'll be discussing economics, and someone'll be "Wow, where'd you learn this?" and I'll have to be like, "On a message board for an online roleplaying game."

Thanks, guys.

[Parkbandit]

I don't want to say I told you so.. but another 500+ drop today.

We're still not at the bottom btw.

[Warriorbird]

It is bad when there's bipartisan opposition to something economic. When people with totally different views can agree that something's wrong for different reasons... there's probably something wrong.

[Parkbandit]

Another 400+ drop today.

And hopefully people listened to me when I said the bottom hasn't been reached yet.

[NocturnalRob]

it'll be down 500 at least by close

[Gan]

I hope its not reached bottom yet.

I hit a snafu with my ETrade account and they said it wont be until Monday for it to clear me to buy. :(

[Parkbandit]

You'll be fine... I think a 7500 Dow is within reach. That's my imaginary 'bottom' and as long as there aren't any other indicators that the shit hasn't stopped flowing, that is when I'm positioning myself to go all in.

[NocturnalRob]

it'll be down 500 at least by close

-678...wow.

[Some Rogue]

Sell your computer and move into a cardboard box please.

[Kranar]

Alright I plead ignorance, will someone explain to this Canadian some details about a 401K?

Do you get to manage it yourself or is it managed by an institution? Can you use it to take a short position or use it for short ETFs? Can you use it for options?

I know there are tax benefits as well employer sponsored benefits, when I was at Google they matched 50% but I could not take advantage of it at the time. I guess the overall question is can you directly manage that money yourself or do you have to let a financial institution manage it for you?

[ElanthianSiren]

As far as I know, you can't do options or shorts with a 401K.

You can manage it yourself or have a firm do it for you.

[Bokertal]

My company -9.10 today. Can't help but say Ouch.

[Trouble]

Alright I plead ignorance, will someone explain to this Canadian some details about a 401K?

Do you get to manage it yourself or is it managed by an institution? Can you use it to take a short position or use it for short ETFs? Can you use it for options?

I know there are tax benefits as well employer sponsored benefits, when I was at Google they matched 50% but I could not take advantage of it at the time. I guess the overall question is can you directly manage that money yourself or do you have to let a financial institution manage it for you?

It depends on your specific 401k. Most 401ks give you a set of choices, like 6-12 funds ranging from money market to aggressive growth and usually including an index fund. You tell them, usually using percentages, which fund(s) you wand your monthly contribution to go. You can change the percentages and/or reallocate your positions amongst the set of funds at any time. There is usually no management from the 401k company.

Some 401ks allow purchasing of stocks (especially individual 401ks) and therefore, ETFs (and short ETFs). I haven't personally heard of one that allows regular shorting though.

[Kembal]

You'll be fine... I think a 7500 Dow is within reach. That's my imaginary 'bottom' and as long as there aren't any other indicators that the shit hasn't stopped flowing, that is when I'm positioning myself to go all in.

You may lose money doing that. Nothing indicates that the credit markets will loosen up next week. LIBOR is shooting up ridiculously fast, and that's the rate banks lend to each other at. Until you start to see that coming down, I would assume the market will be on a downward trend.

This downward spiral is strictly a confidence issue at this point, both in the state of the financial system and the strength of the real economy. Until any indicator (LIBOR, VIX, or others) that can measure confidence starts retreating from the high points they are at now, I would expect it to continue. Confidence in the strength of the real economy will not return until credit is available again to businesses, and credit won't be available again until confidence returns to market players about the state of the financial system.

[Parkbandit]

You may lose money doing that. Nothing indicates that the credit markets will loosen up next week. LIBOR is shooting up ridiculously fast, and that's the rate banks lend to each other at. Until you start to see that coming down, I would assume the market will be on a downward trend.

This downward spiral is strictly a confidence issue at this point, both in the state of the financial system and the strength of the real economy. Until any indicator (LIBOR, VIX, or others) that can measure confidence starts retreating from the high points they are at now, I would expect it to continue. Confidence in the strength of the real economy will not return until credit is available again to businesses, and credit won't be available again until confidence returns to market players about the state of the financial system.

I'll never actually "lose" money, unless you are implying that the S&P will never recover. It'll be a long term investment, so if I don't predict the absolute bottom on the exact day, I'll still be ok long term.

[Kembal]

It depends on your specific 401k. Most 401ks give you a set of choices, like 6-12 funds ranging from money market to aggressive growth and usually including an index fund. You tell them, usually using percentages, which fund(s) you wand your monthly contribution to go. You can change the percentages and/or reallocate your positions amongst the set of funds at any time. There is usually no management from the 401k company.

Some 401ks allow purchasing of stocks (especially individual 401ks) and therefore, ETFs (and short ETFs). I haven't personally heard of one that allows regular shorting though.

If your 401k is through your company, your company usually picks the set of investment choices, via a 401k committee. (I sit on my company's committee.)

[Kembal]

I'll never actually "lose" money, unless you are implying that the S&P will never recover. It'll be a long term investment, so if I don't predict the absolute bottom on the exact day, I'll still be ok long term.

Gotcha. Yeah, as a long term investment, you should be fine, presuming your principal doesn't get wiped out first. I'm liquidating all of my long-term investments in the next week in order to prevent that.

[Tea & Strumpets]

Alright I plead ignorance, will someone explain to this Canadian some details about a 401K?

Take off, you hoser. That income isn't taxed (unless you pull a Backlash and withdraw it all before retirement) and then there's the whole company matching x percent thing, eh.

[Kranar]

The market hasn't even opened yet and already it's down a crap load.

Buy buy buy, because historically a recession is a great time to invest, the market will turn around any second now.

I'd take PB's advice... if you're not involved in this mess, stay out until the bottom, and that doesn't mean predict what the bottom will be, that means wait for the market to actually stop going down every single day and let it go up for a little bit before you get involved, although it could be awhile before that happens. If you are involved in this mess and not about to retire, well start hedging your position against volatility, and if you're about to retire, what the heck are you waiting for? Get the hell out of it.

This isn't a confidence issue, you hear that on T.V. a lot but it makes no sense. This is what happens when institutions turn 1 real dollar into 250 magical dollars, invest that 250 magical dollars in the stock market so they can get their end of year bonus and their yacht, and then get blown out on one bad gamble and suddenly upwards of 249 dollars disappears from the face of the earth.

Those 249 magical dollars that were being used to inflate oil, gold, food, real estate, and the stock market ain't coming back anytime soon.

And as I type this, boy am I happy I shorted AIG at $5. Just as I'm typing this AIG has hit a new 52 week low at $2.05. I think it was CRB but it might have been someone else who said this thing was going to go back to being a 180 billion dollar company (that would mean a stock price of $60) and the government was going to profit off of this colossal failure and this whole banking crisis would be over before Christmas. Umm... yeah...

[NocturnalRob]

yeah, when global markets are down at least 5% (the nikkei down 9.6%), prepare for the US markets to bend over and present their poopchutes.

this will be a bad day.

[Parkbandit]

I'd take PB's advice...

This is a sound strategy, no matter what subject we're discussing. I better get LOADS of fucking positive reputation for this.

[Allereli]

semi-related:


Market woes affect $42 million lottery winner
Story Highlights
Michigan lottery winner wants winnings in annuity instead of lump-sum payment

Lottery winners usually take a lump-sum payment with plans to invest it

Confidence in the market has dropped due to financial crisis

LANSING, Michigan (AP) -- A winner of a $42 million Mega Millions jackpot in Michigan may do something almost unheard of: receive the money in installments rather than getting a smaller, one-time cash payment.

The winner of the October 3 jackpot indicated a preference for taking the annuity. State lottery spokeswoman Andi Brancato says she can't remember a Mega Millions winner in Michigan ever doing that since the game was launched in 2002.

The winner will be announced Friday at a news conference.

Lottery winners typically take a lump-sum payment with plans to invest it, but confidence in the market has dropped with the current financial crisis. The Dow has lost nearly 40 percent since closing at its all-time high a year ago.

http://www.cnn.com/2008/US/10/10/lottery.winner.ap/index.html

[diethx]

semi-related:



http://www.cnn.com/2008/US/10/10/lottery.winner.ap/index.html

Is taking the annuity option really such a rare occurance? I always buy cash option tickets but I always figured if I won a large jackpot, i'd just take annuities so I didn't blow any of it right off the bat on stupid shit, and so I could count on a huge salary for the next 20 years. And that way, I could pay off my student loans and just retire. I could buy what I need and always do something smart with the rest every year.

[Trouble]

Is taking the annuity option really such a rare occurance? I always buy cash option tickets but I always figured if I won a large jackpot, i'd just take annuities so I didn't blow any of it right off the bat on stupid shit, and so I could count on a huge salary for the next 20 years. And that way, I could pay off my student loans and just retire. I could buy what I need and always do something smart with the rest every year.


Up until the recent crash, most people thought they could beat the 5% return from the annuity by investing in the stock market.

[Parkbandit]

Christ.. what a day! It was down 700 at one point.. really rallied.

We still haven't reached the bottom imo.

[Gan]

That shit better stay flat until Tuesday. I might get cleared to buy on Monday if E*Trade gets their shit together and fixes my account in time.

[Mistomeer]

And as I type this, boy am I happy I shorted AIG at $5. Just as I'm typing this AIG has hit a new 52 week low at $2.05. I think it was CRB but it might have been someone else who said this thing was going to go back to being a 180 billion dollar company (that would mean a stock price of $60) and the government was going to profit off of this colossal failure and this whole banking crisis would be over before Christmas. Umm... yeah...

Yeah, AIG is going to make a killing for the government...

Supposedly the actual value of the market is around 7200, but who knows how far it will drop? You have to consider too that the amount invested in sub-primes and credit default swaps could be as high as $60 trillion so I wouldn't be surprised to see it keep dropping for months to come. You also have to consider that more banks will fail (National City, Regions, etc) and that will continue the downward spiral.

While I agree with PB, it is a really good time to pick up long positions. You look at how cheap companies like GE are and it's hard to resist.

[Clove]

Has the market hit bottom yet PB?

[Parkbandit]

Has the market hit bottom yet PB?

I'm not in yet, except a small stake in one stock. Yesterday was a huge surprise to me though.. I felt it was going to go up, but had no idea it would go up 900+

I still believe there will be a correction.. but it's not looking like it will happen today either.

[Clove]

I'm not in yet, except a small stake in one stock. Yesterday was a huge surprise to me though.. I felt it was going to go up, but had no idea it would go up 900+

I still believe there will be a correction.. but it's not looking like it will happen today either.Yeah. I guess my point was, if you see shirts on sale 2 for 1, you buy. You don't say "Oh that's for suckers, I'll wait until I see them at 3 for 1."

I think we'll be seeing corrections in the future too but the recent dip was a good time to buy some bargains.

[Parkbandit]

Yeah. I guess my point was, if you see shirts on sale 2 for 1, you buy. You don't say "Oh that's for suckers, I'll wait until I see them at 3 for 1."

I think we'll be seeing corrections in the future too but the recent dip was a good time to buy some bargains.

Well, to be perfectly honest, when you posted this:


Buy.

The Dow fell another 1800 points from that time to it's lowest. It's still more than 500 points down from the point you said to "buy".

I guess that was my point.

[Kranar]

Yeah. I guess my point was, if you see shirts on sale 2 for 1, you buy. You don't say "Oh that's for suckers, I'll wait until I see them at 3 for 1."


The question is... do you take your own advice?

People see one day where there was a giant rip that gave back less than half of what was lost and you watch on T.V. (CNBC) some of the dumbest people thinking "Oh yeah, maybe this crisis is over now."

Even the Depression had its ups.

[Keller]

The question is... do you take your own advice?

People see one day where there was a giant rip that gave back less than half of what was lost and you watch on T.V. (CNBC) some of the dumbest people thinking "Oh yeah, maybe this crisis is over now."

Even the Depression had its ups.

I was actually reading up on the Depression last night and it's sort of eerie how similar this is.

Hopefully the actions taken by govts around the world will effectively shure up the banks.

[Gan]

The question is... do you take your own advice?

People see one day where there was a giant rip that gave back less than half of what was lost and you watch on T.V. (CNBC) some of the dumbest people thinking "Oh yeah, maybe this crisis is over now."

Even the Depression had its ups.

I just picked up 100 shares of a Texas based petroleum company with the expectation that if they get even close to their pre-market collapse levels will net at the very least double my return.

I decided not to hit Apple right now because I'm more interested in watching what happens with GM/Chrysler. If I purchase here it will be for a longer position.

[Gan]

For what its worth, when we started seeing the meltdown in sub-prime lending earlier this year the instances of new home loans with 2nd mortgages disappeared. It was either 20% down or better or financing more than 80% through a single lender. No 2nd lenders were willing to participate for any reason. This goes for conventional loans as well as jumbo.

I have 2 deals on my desk right now with 2nd lenders on conventional loans (not sub-prime).

I would equate this to a very faint breeze on a hot still day. Possibly a good indicator? Too early to tell. But it does deserve notice.

[Clove]

I was actually reading up on the Depression last night and it's sort of eerie how similar this is.

Hopefully the actions taken by govts around the world will effectively shure up the banks.It's more alarming IMO than eerie.

[Clove]

The question is... do you take your own advice?

People see one day where there was a giant rip that gave back less than half of what was lost and you watch on T.V. (CNBC) some of the dumbest people thinking "Oh yeah, maybe this crisis is over now."

Even the Depression had its ups.I'm not saying the crisis is over, I'm saying a bargain is a bargain. And I think everyone can see them.

[Keller]

It's more alarming IMO than eerie.

There's not much I can do about it.

I try not to stress. I'm just enjoying the ride.

[Parkbandit]

The question is... do you take your own advice?

People see one day where there was a giant rip that gave back less than half of what was lost and you watch on T.V. (CNBC) some of the dumbest people thinking "Oh yeah, maybe this crisis is over now."

Even the Depression had its ups.

Bingo.

I was laughing at the "journalists" saying such nonsense.

[Parkbandit]

I'm not saying the crisis is over, I'm saying a bargain is a bargain. And I think everyone can see them.

Specific stocks perhaps.. but the market still has some correcting to do. Why buy shirts that are 2 for 1 when you can already buy them for 3 for 1 and you believe they will go for 4 for 1 later on?

Long term investments or intra-day investments are the only way I am currently playing in the market.

[Parkbandit]

Wish I had the business sense required for investing. I'll just stick to "safe" mutual funds.. if I played around with direct stocks, I'd probably blow it.

Although, I've noticed (pre-madness) that my own company's stock fluctuates (as I imagine most do) by a few dollars each day. Is it real time enough that I could buy, say, 100 shares of stock at $44 and then re-sell at $46 for a profit, or is there too much of an overhead? @_@

Really not that difficult. I'm no Kranar by any means.. but I invest in companies I believe in and think are sound and undervalued.

One thing I can say is that I've never lost money on a stock.. but I've left plenty of money on the table by selling too early.

[Trouble]

(CNBC)
To be fair, (as of last night) even Jim Cramer was telling people to sit tight, or at most buy a portion of their final position if any weakness continues. Even then he's advising people to stick with the recession stocks (eat it, drink it, smoke it, wash with it, etc) when possible.

Personally, I think we have some time yet to go down or at least be relatively flat. If I had to call a date to buy back in I'd guess early spring time, but if there is some momentum I might buy in sooner.

[Ignot]

Really not that difficult. I'm no Kranar by any means.. but I invest in companies I believe in and think are sound and undervalued.

One thing I can say is that I've never lost money on a stock.. but I've left plenty of money on the table by selling too early.

That's probably why you are so successful. Most people have a clear strategy on getting in but fail to create an exit strategy which is just as important. Leaving money on the table sucks but you still gotta pull the trigger sometime.

[Parkbandit]

Personally, I think we have some time yet to go down or at least be relatively flat. If I had to call a date to buy back in I'd guess early spring time, but if there is some momentum I might buy in sooner.

After 850 BILLION dollars being poured into the market.. it'll be before spring.

[Parkbandit]

That's probably why you are so successful. Most people have a clear strategy on getting in but fail to create an exit strategy which is just as important. Leaving money on the table sucks but you still gotta pull the trigger sometime.


The real successful people are those that sell at the right time. I know with stocks like Apple, I left another 10 bucks on the table per share. Granted, I made $80, but $90 is better than $80.

[Ignot]

The real successful people are those that sell at the right time. I know with stocks like Apple, I left another 10 bucks on the table per share. Granted, I made $80, but $90 is better than $80.

You know how it goes. The real successful people only talk about their success and never their failures.

[Parkbandit]

hey Clove.. How are those shirts you got 2 for 1? Looks like they are now selling for 4 for 1...

Thankfully, I'm not one of those type of people who says they told you so...

[Clove]

hey Clove.. How are those shirts you got 2 for 1? Looks like they are now selling for 4 for 1...

Thankfully, I'm not one of those type of people who says they told you so...I've told you a million times not to exaggerate. I stand behind my statement that when the Dow was down 1800 points it was a good time to buy.

[Parkbandit]

I've told you a million times not to exaggerate. I stand behind my statement that when the Dow was down 1800 points it was a good time to buy.
I guess I'll stand by statement that the bottom hasn't been reached and that if you wait, the bargins would be far better.

And who was exagerating? The Dow is down what, another 1500 from your "buy" announcement? Good luck finding some sucker to buy those shirts for the price you paid.

[Trouble]

Another wonderful day for the market, down 7-9%.

The question is, will we have another super rally tomorrow? it would be nice to get in on that...

[Keller]

I've told you a million times not to exaggerate.

Literally a million times.

[Keller]

Another wonderful day for the market, down 7-9%.

The question is, will we have another super rally tomorrow? it would be nice to get in on that...

Doubtful.

[Kranar]

The question is, will we have another super rally tomorrow? it would be nice to get in on that...


It took world leaders to assemble and come up with trillions of dollars to pump into the banking system to cause the 10% rally we saw on Monday.

It took virtually no news for that entire rally to go down the toilet today.

There's only so many announcements involving trillions of dollars that world leaders can make.

[Kranar]

Oh and I forgot... Obama might become President, this stock market is bound to collapse.

[Keller]

What I don't get, on a very fundamental level, is where those trillions of dollars are going?

Are we issuing bonds and turning around and using the proceeds of those bonds to buy bonds issued by another country?

[NocturnalRob]

It took virtually no news for that entire rally to go down the toilet today.

eh, wrong.

retail sales in september dropped by almost double what was expected. if consumer spending (read: confidence) is down, obviously the market will suffer. this drop will be magnified by current events and the recent volatility.

also, didn't the beige book get released today? i'm sure that contained all sorts of good news...

[Kranar]

I didn't say no news happened today, I said the stock market just took a dump as a result of no news. News happens all the time, the question is how much of an effect does that news have, and historically a drop of 0.3% from the expected value for one month worth of retail sales does not cause the market to move down even close to 10%.

Now world leaders gathering to pump in trillions of dollars into the banking system, that should cause a big move. But yet here today, heck let's say for the sake of argument you're right, news of a dip of 0.3% below expectation in retail sales just wiped out all the gains we saw as a result of the world leaders announcing that they will pump TRILLIONS of dollars into the banking system.

It doesn't equate, and there's only so much money that governments can dump into the banks and if every time they pull a stunt like this the gains get wiped out over the beige book or retail sales going down by 0.7%, we're in for some very difficult times.

[Allereli]

It doesn't equate

I only need those three words to describe the stock market

[NocturnalRob]

news of a dip of 0.5% below expectation in retail sales

fixed, but i see your point. i really do think, at this point though, that the market is going to be uber-sensitive to any bad news and less responsive to good (with the exception of global governments dumping almost a trillion dollars into the economy which is a clear exception).

edit: and i fully expect the market to shit itself again tomorrow.

[Parkbandit]

It's looking like a horrible day on the market today. Futures were stopped here.. Russia had to suspend all trading...

Buckle your seat belts folks... it's going to be an ugly, scary ride.

[Kranar]

Holy crap what the hell happened overnight?!

A 10% drop in the stock market before trading even begins? I don't think I've ever seen anything this bad before.

[NocturnalRob]

the market is going to eat a shit sandwich today. should be fun!

[Mistomeer]

Futures frozen at -550.

[Keller]

Enjoy your weekend!

[ClydeR]

For several years academics thought that the stock market performs better under Democrat presidents than under Republican presidents. A new analysis shows that there is very little difference.


Figure 2 illustrates that since 1853 the average annual returns during a Democratic presidency versus a Republican presidency have been nearly equal. Democratic presidencies have yielded 8.97% over 16 terms. Republican presidencies, on average, have yielded 8.66% over a total of 23 terms. Small differences in the average returns in Figure 2 are statistically insignificant2. Moreover, it can be concluded that neither risk nor return varies significantly across the presidential cycle3.

More... (https://advisors.vanguard.com/VGApp/iip/site/advisor/researchcommentary/news/article?File=IWE_NewsPresElections)

[nub]

Sad face bump

[Parkbandit]

I've told you a million times not to exaggerate. I stand behind my statement that when the Dow was down 1800 points it was a good time to buy.


http://www.karimtemple.com/haha/owl-orly.jpg

[Daniel]

Remember that time I said we were going into a recession and I got accused of the R-team of fear mongering about the economy?

Good times. Good times.

[Parkbandit]

Remember that time I said we were going into a recession and I got accused of the R-team of fear mongering about the economy?

Good times. Good times.


Quotes for both instances? The only conversation I remember was that you were trying to redefine the term "Recession" to meet your own criteria.

[Daniel]

Daniel's problem is: He would like to label the current economic downturn as a recession since it sounds scary... and he is desperately willing to cling to anything or anyone that claims it is.

Unfortunately for him, the actual term "recession" is already defined... as has been posted in this very thread at least 10 times.

Poor little bitch.

Too easy. It sounds so scary!!!

[Parkbandit]

Too easy. It sounds so scary!!!

Thank you for proving MY point.

[Daniel]

Thank you for proving MY point.

Lol.

Yea. Absolutely. I think this definitively proves the argument I was making in that thread: that the definition of recession being used to say that the economy was fine was erroneous and that different, more appropriate analytic methods should be used. As our economy was not okay.

As yourself this: Was the current economic downturn *not* a recession? Were we doing okay 4-5 months okay and then suddenly something happened to change all that? No. Not at all. We were in a recession then, just as we are now.

But hey! Cling to that notion that you were right about this. I know you've had a rough few months.

[Parkbandit]

Lol.

Yea. Absolutely. I think this definitively proves the argument I was making in that thread: that the definition of recession being used to say that the economy was fine was erroneous and that different, more appropriate analytic methods should be used. As our economy was not okay.

As yourself this: Was the current economic downturn *not* a recession? Were we doing okay 4-5 months okay and then suddenly something happened to change all that? No. Not at all. We were in a recession then, just as we are now.

But hey! Cling to that notion that you were right about this. I know you've had a rough few months.

Actually, I've faired very well through the past few months. As I have stated before, I pulled out all my stocks well prior to the crash. But hey, thanks for worrying about me. And since I was smart enough to see the global warming 'crisis' religion reaching orgasmic levels, I created 3 businesses to take advantage of it. I made more last month than you'll make all year... so seriously.. don't cry for me Argentina... I think I'll manage.

Once again.. you were trying to redefine what a recession was in July. You weren't saying we were headed FOR a recession.. your argument was that we were already IN a recession.. completely dismissing the accepted definition of what a recession is. The entire thread is about the definition of a recession.. not that you were some soothsayer proclaiming we were headed for a recession.

Revisionist history much?

[Keller]

The entire thread is about the definition of a recession.. not that you were some soothsayer proclaiming we were headed for a recession.

What's funny is that that thread was about some of us saying "we're FUBAR'd whether we're in a technical recession or not," and the R-team was burying their head in the sand and repeating, "NO NO NO."

From the third post, where it began:


How does comparing the tax burden on the wealthiest 1% in 1980 to the burden today have any relevance to the Bush tax cuts?

The Bush tax cuts were absolutely a tax cut for the wealthy. They've been heralded as such and given the justification that the increased take-home pay will create jobs.

Beyond that irrelevant article -- LOL at you saying "we're not in a recession" and then saying "I think some liberals think that if you repeat something enough times it becomes true." It's splitting semantic hairs at this point to say that, ignoring inflation, we're not in a recession. Further, it's extremely demeaning for some Couvosier conservative like Gramm to tell Coors Light conservatives that they are in a psychological recession.

[Parkbandit]

Some of my favorite quotes from that thread were:


There is no standard economic definition of recession, dipshit.



After McCain said that he was pretty much ignorant on economic matters, I doubt he wants to go down the economic path. His strength will be on Iraq, especially since his idea of the surge seemed to work.. and Obama has banked the last 2 years that the war is lost in Iraq. Obama needs the economy to continue to tank and tie McCain with Bush on the economy.

[Daniel]

Actually, I've faired very well through the past few months. As I have stated before, I pulled out all my stocks well prior to the crash. But hey, thanks for worrying about me. And since I was smart enough to see the global warming 'crisis' religion reaching orgasmic levels, I created 3 businesses to take advantage of it. I made more last month than you'll make all year... so seriously.. don't cry for me Argentina... I think I'll manage.

Once again.. you were trying to redefine what a recession was in July. You weren't saying we were headed FOR a recession.. your argument was that we were already IN a recession.. completely dismissing the accepted definition of what a recession is. The entire thread is about the definition of a recession.. not that you were some soothsayer proclaiming we were headed for a recession.

Revisionist history much?

I wasn't trying to redefine anything. I was pointing out that the country was currently in a recession and the metric that you were using was inappropriate given the current circumstances. To which you said OMG ur just making shit up to fear monger! We're okay! It'll be alright!

The point for fact is: I was right. You were wrong. We were in a recession. It's not my fault you wedded yourself to the only measure that said otherwise, despite all evidence to the contrary.

[Daniel]

Some of my favorite quotes from that thread were:

I like that my quote was true as well. That's awfully big of you.

[Kranar]

There is no standard economic definition of recession, dipshit.


Daniel is correct about there not being a standard definition of a recession and it's a very tricky state to identify in advance.

You hear on the news a lot (CNBC mostly) that a recession is defined as two consecutive economic quarters of negative growth, but if you just think about it, that definition is so flawed and illogical it's surprising that it's still widely quoted by the media. According to that simple definition, you could have an economy go to 0 without there ever being a recession, but more importantly, there have been several recessions that did not involve two consecutive quarters of negative growth, the last one being in 2001.

When the economy goes bad, there is usually heavy volatility, that volatility can easily allow for one quarter to have a small positive growth, followed by a huge negative growth, followed by small positive growth etc... basically a zig zag of small ups and big downs... this would not constitute a recession according to the commonly quoted definition but it would drive the economy down the crapper.

Anyhow, that's my continued rant on why one should be very skeptical of mainstream financial news (like... CNBC). It sounds very easy to digest a simple definition like "two quarters of negative growth constitutes a recession" and make decisions based on it, but the reality is that both historically, and just using basic reasoning, that definition is incredibly flawed.

[Kranar]

And on another note... while we haven't had huge one day losses, my God the stock market is just getting hammered. It's like a slow and painful destruction of back to back losses.

I know I sound like a dick rubbing this in, but man the people who posted in this thread thinking it was a good time to buy how wrong they were... but more importantly, the big shots who tried to claim everything would be alright and encouraged people to buy big near the beginning of a major economic slump, those guys deserve a kick in the balls.

Buffett told people to buy and his two biggest plays just got absolutely smoked. He took 5 billion dollars worth of GE at $25, it's now worth $13. Buffett told people to buy Goldman Sachs when it was at $125 and took $5 billion worth for himself and it's now sitting at $51.

How low can it go...

[Jorddyn]

How low can it go...

I'm not sure, and that's why I've been trickling money in via my 401k and Roth consistantly. Timing the market isn't how I'm going to retire.

I did, however, toss a couple grand in individual stocks this morning for the very first time. It's money I can afford to lose, and I think some stocks have been over-abused.

[Daniel]

I'm not sure, and that's why I've been trickling money in via my 401k and Roth consistantly. Timing the market isn't how I'm going to retire.

I did, however, toss a couple grand in individual stocks this morning for the very first time. It's money I can afford to lose, and I think some stocks have been over-abused.

I'm in the same boat. I'm continuing to put money into my 401(k) because of the tax benefits and matching (which means I'm not losing too much money) but I'm pulling things out of my Roth to pay down other debts or pay off my mortgage faster.

[Kranar]

I'm not sure, and that's why I've been trickling money in via my 401k and Roth consistantly. Timing the market isn't how I'm going to retire.


If you ask me... consistency and diversity is a sound strategy. I don't invest, but when friends or people ask me how to take advantage of a situation like this, I usually just say be consistent over a long period of time, regardless of whether the stock market is going up or down.

I just get so frustrated when you hear people, especially the so called big shots, say now is the time to buy when things are so cheap. They have no idea how irresponsible statements like that are and because they're so rich anyways, they don't really feel the impact or the consequences of their mistakes. So what if Warren Buffet just lost a crap load of money? He's still eating well.

But the many people who heard his one sound bite on a news network and trusted his information just got, and are continuing to get absolutely burned.

[Gan]

I just bought in another block of shares of an oil company based in the permian basin/barnet shale area of Texas. This is for a long position.

Eventually I'd like to see the market level out. However, in the meantime, I'll keep adding (dollar cost averaging) until I run out of non-sleep factor money or until it starts to pick up.

[Jorddyn]

I did, however, toss a couple grand in individual stocks this morning for the very first time. It's money I can afford to lose, and I think some stocks have been over-abused.

And just to show how smart I am, I'm currently down 10%.

Luckily, I'm not planning on selling today. We'll see how it looks a year from now.

[NocturnalRob]

My friend just unloaded his Sears holdings. Been holding on to those for WAY too long.

[Gan]

And just to show how smart I am, I'm currently down 10%.

Luckily, I'm not planning on selling today. We'll see how it looks a year from now.

I have an overall amount that I'm going to spend on stocks; however, with the market still trending down - I'm buying in sections so I can average down while the market is doing the same.

[Jorddyn]

I have an overall amount that I'm going to spend on stocks; however, with the market still trending down - I'm buying in sections so I can average down while the market is doing the same.

That's a smart way to do it, but I know myself. I'd not add anything as the market continued to go down.

I'm trying to get to the point where I'm comfortable with anything other than the mutal funds that fill my Roth and 401k because I know that I need to strive for a little bit of tax diversity, especially if I retire early. But, it's a scary world out there, so I grabbed a couple grand and figured I'd see how it goes.

[nub]

I have a good amount of money in mutal funds that I was planning on taking out shortly as part of the money I am using on a downpayment of a house.

My stocks have been hit pretty hard, but luckily, where I live, home prices have dropped by more of a % than my money has gone down (and in reality because the % of the house is a lot more than the money I have, I will be saving quite a bit, if that makes sense). So it is not all that bad for me.

Example....
House was $400k, now it is $200k... I save 200k (although it was really never worth that 400k but that is a different matter).

Let's pretend I had 50k in stocks, it went down 30% to 35k, I only lose $15k but save $200k.

[nub]

On that note, I believe home prices have hit, or are near hitting the bottom. This has been evident from research I have done over the past year. Although prices have declined by as much as 30%-50%, the sales have directly been impacted by the decreases. In Broward County sales have been up 30% since last year.

This is also due to the high amount of foreclosures which opens up to more afforadable housing, but the prices being paid are still market prices. So if you have money sitting around, interest rates are still reasonably low, I would invest in Real Estate.

[Jorddyn]

Real estate is highly regional, though. Where I am, we've seen modest declines in the price of houses, but there's a huge glut of houses on the market. I expect either a stalemate for at least another 6 months, or an additional 10% decline in prices.