Stock Market Tanking
Didn't we JUST go through all this? PEOPLE! The S & P downgrade is bullshit. Okay,,, you don't like
the U.S. Treasury Note? Where you gonna put your money?
Earnings on most companies coming in exceeding expectations.
The two big downers are unemployment and Europe. But the former is stagnant...no cause for a downturn and
the latter is, in a way, once removed as a problem.
Comments
Short wall street.
For example, looking at the foreign markets yesterday, I suggested to some people they look at shorting the bank industry that got us in this mess.
I suggesting buying FAZ, which is a triple leverage short fund (one that rises as the bank stocks decline) and it was up 17 points, or 27%
Cakewalk.
Jules
We wish we had more control over our 401K...We're somewhat limited in what we can invest in, and then to make changes we have a 48hr lag before the change becomes effective...So helpful...Grrrrrrr
AN
BOB
Brian Coffman
And do we agree with Buffett's comments??
Jules
The banks were silly and listens to the greed of wall street. They packed your good lone of 90k with you making 100k a year with my horrible loan of 300k with me making 10k a year.
They were put into baskets per se.
These baskets were then graded by ratings agencies, and for whatever reason the ratings agencies, gave these silly, unreliable baskets, the best (AAA) rating they could.
Then Wall Street firms (like the vile folks at Goldman Sachs) began to trade the shitty baskets. So, when I default on my loan, the basket gets all shaken up. This is what caused the wall street clusterfuck in '08.
Then the government bailed them out.
So, a few years ago before this boondoggle happened, the banks NEVER should have loaned someone like Matt Chill 300k and the ratings agencies never should have rated these shitty baskets (default swaps) AAA.
As for the buffet comment, yea I agree. I tend to agree with 75% of what Buffet says. If you read Snowball, an official biography, you'll learn a great deal about the guy. He's a really simple guy and he invests the same way. If he likes the business, likes the model and he thinks it's simple he buys it.
Snowball is a must-read for any Buffett fan.
So, with the cumulation of some shitty job reports, steadily shitty unemployment and most importantly when one of the most respectable rating agencies downgrades the U.S. economy bond rating over the weekend I was pretty sure it was a sure bet at the point.
Another technical indicator is how the foreign markets reacted to the news of the shitty debt ceiling deal and the S&P downgrade. These markets, like Asia and Greece, open before the U.S. stock market. When they tanked based on us, I was certain.
Another great indication is the way the futures market are looking before the market opens. (Futures trade all the time [I think]) These are future predictions of a stock or market. People guessing the "future" value will increase or decrease. Something up or down a few points is normal. But when they're trading a few hundred points below, prepare for a shit storm.
In order to gain value on a stock while it's going down you get a "short" position.
Shorting is when you are loaned the stock at a certain price and buy it back at a later time for the price it is when your selling back.
For example, if I borrow stock in GAW News Bureau when it's trading at $100 per share and "return" it a week later when it's valued at $80 I've made a $20 profit because it's decreased from the price I agreed to return it at ($100)
Likewise, if I shorted GAW news stock, agreeing to return it at pay the difference of the value, and the stock increased to $120 I've lost to pay for the amount in increased.
So the stock I suggested, FAZ is a fund that is short the banking industry.
(Note, this is was a triple leveraged fund, these sort of thingys are not supposed to be held more than like a day or two. They're more swing trade utilities than anything.)
I really hope that makes sense.
Someone please point out flaws if anything I've written is wrong. I want to make sure that's correct.
Brian C
Brian Coffman
Brian, FAZ is a Direxion fund ETF.
They hold the exposure and are traded just like a stock.
Now if we're talking about the options market I steer everyone away from them. Just like futures, there is enormous risk and they are confusing as hell.
Stock predictions for the rest of the week?
Hmmmmmm. I got my parents moreAAPLE Apple Computers at something like 356.00.
I still think AAPLE is a good choice right now.
Netflix isn't bad.
If you want risk, I've got a very long position in Linked In. Everyone in the world will tell you that it's a terrible play, but I think they're just holding on to their asses after the last tech bubble.
I'm sticking with AAPL and LNKD for the rest of the week.
Linked In @ 83.47
Apple @ 374.00
Those are my choices, but I didn't have a nationwide downgrade to tip me off ahead of time.
you guys may be wise to look at some small caps as well.
Brian Coffman