HOLY SMOKES : Did i read this right? Dow below 10,000 S&P;1,100 Nasdaq 1500. Is this possible by October?

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[quote author="PANDA" date=1221538010]Stocks fall sharply following Lehman bankruptcy, Merrill sale; Dow falls more than 500 points



http://biz.yahoo.com/ap/080915/wall_street.html



Alright my fellow IHBloggers, I am going to be brutally honest with all of you. Panda is now starting to get a little scared. Mother of all creatures! DOW is down more than 500 points, I've never seen this type of drop since 9/11.



OK, Panda is scared.</blockquote>


And Muzie is very happy today :-)...



It's certainly odd to profit when others are losing... But frankly in the market I would rather lose money based on genuine fundamentals than gain money based on hopes & accounting malpractice... To me, this is a welcome sign that the market will acknowledge the problems and perhaps stop looking the other way. I'm sure Awgee is relieved as well.



Don't be scared, as long as you're not holding credit-related stocks or banks, and preferably not companies that have huge capital needs, then your investments will be fine in the end.
 
Nikkei down 500 points on the open.



<strong><span style="font-size: 15px;">Seoul Plunges 6%, Tokyo Falls 4.5% as Asia Gets Mauled</span></strong>



<a href="http://www.cnbc.com/id/26727113">CNBC link</a>



<em>Program trade on South Korea's KOSDAQ, the equivalent of the NASDAQ, was halted 10 minutes into the session after the index dropped as much as 8 percent in the opening minutes of trade.</em>
 
[quote author="muzie" date=1221543955][quote author="PANDA" date=1221538010]Stocks fall sharply following Lehman bankruptcy, Merrill sale; Dow falls more than 500 points



http://biz.yahoo.com/ap/080915/wall_street.html



Alright my fellow IHBloggers, I am going to be brutally honest with all of you. Panda is now starting to get a little scared. Mother of all creatures! DOW is down more than 500 points, I've never seen this type of drop since 9/11.



OK, Panda is scared.</blockquote>


And Muzie is very happy today :-)...



It's certainly odd to profit when others are losing... But frankly in the market I would rather lose money based on genuine fundamentals than gain money based on hopes & accounting malpractice... To me, this is a welcome sign that the market will acknowledge the problems and perhaps stop looking the other way. I'm sure Awgee is relieved as well.



Don't be scared, as long as you're not holding credit-related stocks or banks, and preferably not companies that have huge capital needs, then your investments will be fine in the end.</blockquote>
Agreed, if you own companies like McDonald's and Coke you should be fine.
 
[quote author="muzie" date=1221543955][quote author="PANDA" date=1221538010]Stocks fall sharply following Lehman bankruptcy, Merrill sale; Dow falls more than 500 points



http://biz.yahoo.com/ap/080915/wall_street.html



Alright my fellow IHBloggers, I am going to be brutally honest with all of you. Panda is now starting to get a little scared. Mother of all creatures! DOW is down more than 500 points, I've never seen this type of drop since 9/11.



OK, Panda is scared.</blockquote>


And Muzie is very happy today :-)...



It's certainly odd to profit when others are losing... But frankly in the market I would rather lose money based on genuine fundamentals than gain money based on hopes & accounting malpractice... To me, this is a welcome sign that the market will acknowledge the problems and perhaps stop looking the other way. I'm sure Awgee is relieved as well.



Don't be scared, as long as you're not holding credit-related stocks or banks, and preferably not companies that have huge capital needs, then your investments will be fine in the end.</blockquote>


Muzie - I have been expecting this and written about it more than once. I will profit from it; immensely. But, IMO, most people will be hurt greatly. If the Dow stays at 10,000, but the dollar devalues to 50% of what it is now, it is the same as the Dow dropping to 5000. And I do not give a hoot what the dollar index is. I am speaking of the buying power of an FRN. Unemployment is surging. Personal savings and wealth are deflating. And there is no assurance that all the pain will bring about the correct change.
 
I just read that the Fed executed a <strong>$50 billion</strong> repo today. And the Dow still lost 500 points.



I guess it got lost in all the other news. If the market loses 500 points while the Fed is pumping $50 billion in to the economy ... Geez, what will tomorrow bring?
 
Nikkei down 632.



The U.S. dollar [JPY-TN 104.34 -0.30 (-0.29%) ] slipped to 104.31 yen after ending overnight in New York around 104.54 yen. <em>It had its biggest single-day decline against the yen on Monday in <strong>nine years.</em></strong>



<a href="http://www.cnbc.com/id/26727113">Asia gets mauled</a>
 
[quote author="awgee" date=1221560406][quote author="muzie" date=1221543955][quote author="PANDA" date=1221538010]Stocks fall sharply following Lehman bankruptcy, Merrill sale; Dow falls more than 500 points



http://biz.yahoo.com/ap/080915/wall_street.html



Alright my fellow IHBloggers, I am going to be brutally honest with all of you. Panda is now starting to get a little scared. Mother of all creatures! DOW is down more than 500 points, I've never seen this type of drop since 9/11.



OK, Panda is scared.</blockquote>


And Muzie is very happy today :-)...



It's certainly odd to profit when others are losing... But frankly in the market I would rather lose money based on genuine fundamentals than gain money based on hopes & accounting malpractice... To me, this is a welcome sign that the market will acknowledge the problems and perhaps stop looking the other way. I'm sure Awgee is relieved as well.



Don't be scared, as long as you're not holding credit-related stocks or banks, and preferably not companies that have huge capital needs, then your investments will be fine in the end.</blockquote>


Muzie - I have been expecting this and written about it more than once. I will profit from it; immensely. But, IMO, most people will be hurt greatly. If the Dow stays at 10,000, but the dollar devalues to 50% of what it is now, it is the same as the Dow dropping to 5000. And I do not give a hoot what the dollar index is. I am speaking of the buying power of an FRN. Unemployment is surging. Personal savings and wealth are deflating. And there is no assurance that all the pain will bring about the correct change.</blockquote>


Gold showed substantial strength today. In fact was probably the only asset class to go up today (commodities were down).



It is indeed reassuring to see gold is still linked to the "fear" trade. You were right.



I've added some gold in the past few days and in light of this positive action am likely to add more. Would like to have a bit of a pullback as it's been closing up several days in a row.



Gold miners - not working so good. I shall probably replace those in my portfolio with the real asset instead.
 
Looks like I got my wish:



<a href="http://www.reuters.com/article/goldMktRpt/idUST20268420080916">Gold falls 1 percent as safe-haven demand fades</a>
 
If some type of help doesn't come to AIG they will be gone by tomorrow.



Point is either help will come pushing the stock up, or no help collapsing the stock. Perfect straddle situation and i'm taking advantage of it.



EDIT: never mind...
 
So what will happen if they are gone tomorrow? No government bailouts? More job losses from the largest insurer in the nation? More economic turmoil? Wamu fails later this week, who's left?
 
[quote author="Shooby" date=1221612552]So what will happen if they are gone tomorrow? No government bailouts? More job losses from the largest insurer in the nation? More economic turmoil? Wamu fails later this week, who's left?</blockquote>


Not sure what to tell you other than the fact that we are in early stages of economic turmoil. What you are seeing is failure of the banking systems. Other industries are not having a ball right now, but the trickle down effect hasn't hit them fully yet. Tech stocks like AAPL are coming down slowly, but if things continue to go south then buying an Ipod won't be #1 on peoples list anymore, paying for a roof and bread will.



But every rise and every fall has opportunities. Market is extremelly volitale right now, and that favors straddles. You can make easy money that you normally can't in a much less volitale market. So go get em.
 
If FED keeps rates unchanged, what does that mean for U.S. stocks and commodity prices? Do you guys think that the FED made the right decision?
 
[quote author="PANDA" date=1221617355]If FED keeps rates unchanged, what does that mean for U.S. stocks and commodity prices? Do you guys think that the FED made the right decision?</blockquote>


Man you are right Panda...I can't keep away from the forums :P



I think the decision is finally a good one. If you think about it...lowering rates by 1/4 or so really won't do anything. It's not like the past gazillion cuts fixed the economy so neither will this one.



So by lowering rates you trade off a small short term stock market boost for the possibility of hurting inflation and putting breaks on the rising value of the dollar. (which is the only good thing going for us now). Not worth the trade off IMO and the market didn't think so either as it is up considerably since the news.
 
It was a good call for the Fed to hold... at least in terms of their own mental well-being.



The Fed wants to feel as if it has some bullets left in the gun so they can take 'action' if (when) things get really out of hand. That potential 'action' is equal to 2.0% by last count. The Fed did not want to spend their bullets at this time in order to maintain the illusion that they can 'do something' later on. This illusion of control helps them sleep better at night, but little else.



In terms of the Fed, the only thing that really matters is the day that the general public realizes that 'control' has been lost.
 
It amazes me that folks are so intent on the discount rate.



The Fed executed $120 billion in repos in the last two days.



Libor is screaming.



And AIG needs $90 billion.
 
[quote author="blackvault" date=1221611582]If some type of help doesn't come to AIG they will be gone by tomorrow.



Point is either help will come pushing the stock up, or no help collapsing the stock. Perfect straddle situation and i'm taking advantage of it.



EDIT: never mind...</blockquote>


It looks like you got the help. And unless I am mistaken, the common stock is now worth zero.
 
[quote author="awgee" date=1221634445][quote author="blackvault" date=1221611582]If some type of help doesn't come to AIG they will be gone by tomorrow.



Point is either help will come pushing the stock up, or no help collapsing the stock. Perfect straddle situation and i'm taking advantage of it.



EDIT: never mind...</blockquote>


It looks like you got the help. And unless I am mistaken, the common stock is now worth zero.</blockquote>
The funny thing is that the market will probably rally big time tomorrow because of this even though when you peel the onion back it only shows that things are getting worse and worse...another opportunity to load up the shorts on banks like Wachovia.
 
[quote author="awgee" date=1221634445][quote author="blackvault" date=1221611582]If some type of help doesn't come to AIG they will be gone by tomorrow.



Point is either help will come pushing the stock up, or no help collapsing the stock. Perfect straddle situation and i'm taking advantage of it.



EDIT: never mind...</blockquote>


It looks like you got the help. And unless I am mistaken, the common stock is now worth zero.</blockquote>


Yeah I sold the calls when the stock pushed 4 a share. Got a 240% return less whatever I get from the loss on puts. I kept them for the hell of it. We'll see what happens tomorrow, but I doubt puts will rebound as Fed gave AIG the 85B they needed.



I doubt common stock will be zero, but I wouldn't mind ;)
 
[quote author="blackvault" date=1221646948][quote author="awgee" date=1221634445][quote author="blackvault" date=1221611582]If some type of help doesn't come to AIG they will be gone by tomorrow.



Point is either help will come pushing the stock up, or no help collapsing the stock. Perfect straddle situation and i'm taking advantage of it.



EDIT: never mind...</blockquote>


It looks like you got the help. And unless I am mistaken, the common stock is now worth zero.</blockquote>


Yeah I sold the calls when the stock pushed 4 a share. Got a 240% return less whatever I get from the loss on puts. I kept them for the hell of it. We'll see what happens tomorrow, but I doubt puts will rebound as Fed gave AIG the 85B they needed.



I doubt common stock will be zero, but I wouldn't mind ;)</blockquote>


Government gets 80% ownership through emission of warrants. This, while not a conservatorship, is similar to FNM/FRE.



I think your puts are safe.
 
If you are playing the Panda Challenge, I would recommend that you stay away from options. More than half of the orders do not execute and they only execute at a terrible market price. As far as I can tell, you can not put in a limit order on options, thus making spreads almost impossible. I had put orders on RIMM, GE, MS, and GS and none of them executed.
 
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