DOW down 223 points in 1st hour of trading

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Trooper_IHB

Trooper_IHB

New member
What's going on? I don't have a t.v. here....thought the quarter point cut was supposed to make investors happy ! :)
 
The Big Bad "Credit Crunch" is raising its head. Citi Bank is rumbling about some serious losses. All the financial stocks are off about 5%. Looks like the subprime and CDO writedowns are coming out of the closet finally.
 
Wow, Lots of red on my screen. DSL Downey Savings. Down 12%. WM Washingtom Mutual off 8.5%. C Citicorp Down 7%.

Banking and housing stocks are getting creamed today. The question is what effect will it have in China. The Chinese stock market has tripled in a short period of time.
 
<p>I love my DOG... no seriously... look up DOG ... he he... i knew this was coming. I didn't have too much invested just a few shares.... But a 2% jump in one day is nice... i'm gonna sell out my shares now. </p>

<p>yep, it looks like there might be a nice future out there for people looking to get into the financial sector . The question is when to buy in a year or two... or three.</p>
 
I picked up some SNP this morning when it dipped under 160/s. I'm bored and that's not a good reason to invest your hard-earned $$. Don't do what I do unless if you're bored and feel like throwing some $$ into the slot machine. I limit my purchases to 100 shares per stock.





Other purchases in Oct:


LDK -- this is a big gamble, not recommended for faint of heart


CMI -- will hold





Currently eying:


COH -- want to gamble on good/bad Xmas season?
 
<p>rickhunter - Gosh. Where to start?</p>

<p>CDS - Credit Default Swap</p>

<p>Next, read about credit default swaps in wikipedia and I will give you my take on why they are important.</p>
 
<p>Shorted KLAC at opening</p>

<p>And did anyone else see what happened to CROX? I had been watching for a few weeks for an opening to short it, but WHAM, it got hit this morning before I even knew what had happened.</p>
 
<p>According to Yahoo, investors are afraid that the Fed gravy train has ended and that no more rate cuts are coming. </p>

<p>Oh yeah, the $96/barrel of oil had something to do with as well.</p>

<p>No crack for you!</p>

<p><a href="http://biz.yahoo.com/ap/071101/wall_street.html">http://biz.yahoo.com/ap/071101/wall_street.html</a></p>
 
awgee - I actually know what Credit Default Swaps are. We used to sell protection. Some of the buyers actually collected and we started to buy protection has a hedge...LOL!



The analysts at my company do not believe the CDSs are a concern as you have put it in your statement.

I just wanted to hear your side of this.



Thanks
 
My side is that huge fees and commissions have been taken out of what should be a zero sum equation. The CDSs are carried on balance sheets as values which have no basis in reality. They are completely unregulated, therefore there is no reason to think the losing side of a default will be able to make good. The OTC derivative market is all based on debt and leverage. No one knows who holds what, how much, and whether the losing parties are solvent or will be solvent if they try to make good.<p>


CDSs are without regulation, without listing on public exchanges, without standards, therefore not in the least bit transparent, and therefore without an open market of the bid/ask type. CDSs are dealt in by private treaty negotiations and without a clearinghouse. They are unfunded without financial guarantee of any kind, functioning as contracts of specific performance. The financial character or ability to perform is totally dependent on the balance sheet of the loser in the arrangement. CDSs are evaluated by computer assumptions made by geek, non market experienced mathematicians who assume religiously that all markets return to their normal relationships regardless of disruptions.

Now in the credit and default category alone considered by accepted authorities as totaling more than USD$20 trillion in notional value. Notional value becomes real value when the agreement is forced to find a real market for ending the obligation which is how one says sell it.<p>


rickhunter - I am confused. If you knew what CDSs are, why did you ask me as if you did not know? Why did you not just ask me why I considered them important? Why the smokescreen?
 
<a href="http://cagle.com/caglecards/main.asp?image=/news/StockMarketDown/images/summers.jpg"><img height="418" width="600" align="bottom" border="0" naturalsizeflag="3" alt="" src="http://cagle.com/news/StockMarketDown/images/summers.jpg" /></a>
 
awgee - what you said was exactly the sentiment or the definition of how it can go bad. it's not regulated and you dont know what will happen when you have to make good.
 
<i>"The analysts at my company do not believe the CDSs are a concern"</i><p>


I would be very curious to know specific reasons why the analysts at your company do not believe the CDSs are a concern.
 
A down and dirty explanation for everyone. A CDS or credit default swap is an insurance policy taken out on a CDO, CMO, ABS, corporate bond, or just about any contract for performance. One party pays for insurance against default; kind of like private mortgage insurance. There is no government agency or private organization regulating or listing these "insurance policies". I forget how big the forex market is, but it is possible the over the counter derivative market is the largest market in the world. Isn't it kind of amazing that most of us have never even heard of credit default swaps? Heck, we just learned of collateralized debt obligations in the last year or so and look at the effect that is having on people's lives. And don't think it doesn't matter because we are talking about trillions of dollars and somebody knows what they are doing and is taking care of things. No body knows and no body is in control, least of the federal reserve.
 
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