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

NEW -> Contingent Buyer Assistance Program
[quote author="optimusprime" date=1221863073]Frozen as in my sells this morning aren't going thru, I sent them all pre-market :/



I'm up like 10-15% right now.</blockquote>
We have a <a href="http://www.irvinehousingblog.com/forums/viewthread/3068/P50/">Panda Challenge</a> Thread. You may want to post there.
 
[quote author="awgee" date=1221859723][quote author="blackvault" date=1221823226]



As far as gold? It's been hovering at its highs for a long time...</blockquote>


No, you do not point to a number, but you say that gold is hovering at it's highs. You are comparing apples to oranges. Is GS hovering at it's highs? What was GS in 1980? GE? XOM? JPM? To be honest you must compare apples to apples.



Inflation adjusted, the high for gold would be $2300 in 1980 dollars. Gold has not been hoveing near it's highs.</blockquote>


I'm not going to get into a inflation debate with you because I was giving an example of how to trade options.



I think you just failed to see the concept of my post and you are pin-pointing little technical things for whatever reason.



In that case...you win.
 
[quote author="blackvault" date=1221867556][quote author="awgee" date=1221859723][quote author="blackvault" date=1221823226]



As far as gold? It's been hovering at its highs for a long time...</blockquote>


No, you do not point to a number, but you say that gold is hovering at it's highs. You are comparing apples to oranges. Is GS hovering at it's highs? What was GS in 1980? GE? XOM? JPM? To be honest you must compare apples to apples.



Inflation adjusted, the high for gold would be $2300 in 1980 dollars. Gold has not been hoveing near it's highs.</blockquote>


I'm not going to get into a inflation debate with you because I was giving an example of how to trade options.



I think you just failed to see the concept of my post and you are pin-pointing little technical things for whatever reason.



In that case...you win.</blockquote>


Sorry, I did understand the concept of your post and it was informative. I was pin pointing a small technical detail. Sorry.



By the way, nice trades on the Panda Challenge. Do you normally trade that successfully, or was that a bit of luck also?
 
Nude,



But still my point is that the money didn't stop existing. 2 million from Countrywide (or whoever) went to agents, taxes, fees, previous mortgage holder, seller's equity, etc. 2 million exchanged hands.



Countrywide says I'll give you 2 million dollars, and you pay it back to me. But they really gave it to another party on the agreement that you would pay them the money back (with interest). Then you don't. Countrywide is screwed but the 2 million dollars didn't stop existing. It's now out there in the world somewhere else. It's just not in Countrywide's ledgers anymore. What we're doing is pushing paper around. With houses falsely increasing in value, more paper got pushed around in the housing market rather than some other market (like fish or gold, or whatever).



The amount of greenbacks has not lowered physically. The only way to change the physical amount of greenbacks is:



1) If people stop transferring greenbacks around (stuff them in a mattress and take them out of circulation for later use). (Or, more likely, if banks or some other financial bigwigs buy up dollars therefore pulling them out of circulation).

2) If new greenbacks are printed (upping circulation, but devaluing the value of greenbacks as a whole?)

3) If computers all fail miserably and the digital version of greenbacks are lost (upping everyone elses value as the money has literally disappeared).



The Gold standard was so we had a physical value tied to the greenback. Now it just floats along based on the idea of what it is. Right?



So, right now, we are in a psychological game or a banking game (probably both).



The psychological game is: will people across the globe continue believing the dollar has value? Will they believe it is more precious, or worthless, or about the same in value?

1) Worthless: people lose faith (in America, in America's bankers, in the financial system). Greenbacks aren't worth the paper they are printed on and can be traded for nothing. (in comparison to other currencies)

2) All currencies are worthless: Globally people lose faith in the entire financial system. Paper isn't worth what it is printed on. Massive global financial market and bank failure. You are only worth what you physically own and can do with your own hands. (Or what you physically have in your house).

3) Very precious: Wealthy people are losing their shirts, people feel panicked. People start hoarding their very precious greenbacks in order to make it through years and years of hardship. Greenbacks become scarce. People are desperate to earn money, and so commodities devalue, as there is no way to trade without a dollar in your hand.

4) Very precious global: same as three, except on a global scale.



And you have all the varieties in between. That's the game we are playing right?



But add that to the banking game. The people in charge of printing greenbacks and other currencies see this psychology at play. People hoard currency, so they print currency (changing the physical amount of greenbacks, fixing the circulation problem). People lose faith that their currency is worth anything, and the banks do things to depress the price of commodities i.e. make currency more precious (didn't they just do that? By buying up dollars to make them scarcer or something? I know they did something but I'm vague on it.)



Isn't this why they stopped printing that data about who controls which amount of wealth? Wasn't there some graph floating around here that showed that a lot of wealth was now in the control of private hands instead of in banking hands? M1, M2, M3 or some such stuff like that? They stopped publishing it about a year ago. Essentially aren't they playing a psychological game "We CAN control the market. We DO have enough participation in the market to keep people psychologically faithful." And isn't the massive transfer of wealth from banking hands to private hands because of houses? Banks gave these gigantic loans (AAA rated! Completely secure! Insured!), and transferred wealth into the hands of homesellers, and then lost that money from the ledgers.



Am I right? What do you think?
 
[quote author="awgee" date=1221870329][quote author="blackvault" date=1221867556][quote author="awgee" date=1221859723][quote author="blackvault" date=1221823226]



As far as gold? It's been hovering at its highs for a long time...</blockquote>


No, you do not point to a number, but you say that gold is hovering at it's highs. You are comparing apples to oranges. Is GS hovering at it's highs? What was GS in 1980? GE? XOM? JPM? To be honest you must compare apples to apples.



Inflation adjusted, the high for gold would be $2300 in 1980 dollars. Gold has not been hoveing near it's highs.</blockquote>


I'm not going to get into a inflation debate with you because I was giving an example of how to trade options.



I think you just failed to see the concept of my post and you are pin-pointing little technical things for whatever reason.



In that case...you win.</blockquote>


Sorry, I did understand the concept of your post and it was informative. I was pin pointing a small technical detail. Sorry.



By the way, nice trades on the Panda Challenge. Do you normally trade that successfully, or was that a bit of luck also?</blockquote>


No biggie. Luck always plays a part when investing. You have to get lucky to win big. But you also have to do homework and anticipate money flow in the market so you can best position yourself for the big gains. Did I expect GS to crash 30 bucks or so a share yesterday? no...Did I expect it to go down? yes. So my plan was to make a gain, but I got lucky that it went down that much. I didn't expect it and news didn't back it. So I turned around and bought calls. Did I know governemnt was announcing a plan later on? no...but I positioned myself due to a previous examination of the stock and market. I expected it to rebound..even if it was temporary, but the news I didn't expect. But as I said...I did position myself. You can't do these things though if you are not always aware of whats going on in the market or anticipate money flow. So by doing so it gives you that edge to position yourself properly. How much things will move is up in the air.



But yeah, I day trade on my personal account on a daily basis. Then I copy what I do in the Panda Challange to an extent...but its a bit frustrating because timing of it is pretty bad. For example I sold 2 GS calls this morning for 21 or so but in Pandas managed to get only 10.70. Still great, but just a bit frustrating.



Now I only need to man up and place a 50K bet on something like this so I can make half a mill. But I dont have the stomach...so I play around with a grand or two...sigh...



This is my passion ;) I read bout it, live it, breathe it, eat it etc...anything to give me an edge. I can't wait till the day they open the markets to 24hrs. That will be my dream come true...I bet PEET and SBUX stock goes up if that happens.
 
[quote author="jefa" date=1221870577]Nude,

(stuff)

Am I right? What do you think?</blockquote>
I think you aren't looking far back enough to the source. Try it this way... You lend me 2 million dollars through a bank to buy a house from Fred. Fred and his realtor and bank are now in possession of your two million dollars (plus my 400 thousand down payment), but you don't worry because you know that the bank is going to collect small payments from me that will pay you back your two million dollars (plus interest) as I earn/create them. But the housing market tanks and now my 2 Million dollar home is only worth 1 Million. On top of that my income level changed and now I can't afford more than a 1 million dollar house. So the bank calls you and says "The guy can't pay you back all of your money, so we sold it at foreclosure for 850 thousand dollars". You gave them 2 million, they gave you back 850 thousand, and you lost 1.15 million dollars on the deal. You could look at this as a net gain in the money supply and come up with a total of 3.25 million dollars, or you could look at it like a personal loss of 1.15 million dollars.

Yes, fiat money is only worth what we believe it is worth, but money is fundamentally a medium for the exchange wealth. That exchange usually includes a winner and a loser, but the value of the medium can be inflated or deflated by whomever controls it. When you only look at the medium it appears that it just floats from point to point endlessly. But when you look at it from an exchange point, it's destruction is evident. In the example above, you no longer have the buying power you did before the loan, even though there has been a net gain in the money supply. I also suffered a loss in buying power because my down payment is gone. The bank is no longer receiving payments from me, so that revenue stream is gone, reducing the buying power of the bank. Continue on down the stream and the loss in buying power eventually spreads to the guy who split up the 2.4 million I paid for the house, because his new house isn't worth what he paid for it. Eventually, everyone has to devalue their asset to what someone will pay for it, and in that process a lot of wealth is being destroyed. As wealth is measured by the common medium of exchange, 'money' is being destroyed.
 
Panda challenge is fun... but nothing like real life, really. It's very easy to go all in when the portfolio is just numbers in a fictional account. Investing is not just about brains, but about holding on to your positions as well.



That 22% gains I bragged about 2 days ago? Mostly all gone now. My hands were shaking for a while there and I had trouble to sleep. There's nothing like the feeling the government has just declared open war on your portfolio positions yet the market is closed and you can only wonder how many thousands of dollars you will have lost right at the open.



I had to liquidate most of my positions - after 5 consecutives 5% up/down days on the Dow, I couldn't take the stress anymore :-P. Need a break.



Anyway... just felt like ranting. Good luck with the challenge!



(Are shorts still allowed in this challenge?)
 
[quote author="muzie" date=1221881428]Panda challenge is fun... but nothing like real life, really. It's very easy to go all in when the portfolio is just numbers in a fictional account. Investing is not just about brains, but about holding on to your positions as well.



That 22% gains I bragged about 2 days ago? Mostly all gone now. My hands were shaking for a while there and I had trouble to sleep. There's nothing like the feeling the government has just declared open war on your portfolio positions yet the market is closed and you can only wonder how many thousands of dollars you will have lost right at the open.



I had to liquidate most of my positions - after 5 consecutives 5% up/down days on the Dow, I couldn't take the stress anymore :-P. Need a break.



Anyway... just felt like ranting. Good luck with the challenge!



(Are shorts still allowed in this challenge?)</blockquote>
I totally agree. My heart can't take the stock market. My husband does the investing because he can roll with the punches. I lose sleep when it drops. My husband loves it when it goes up and when it goes down. He says there is opportunity in both directions.



I manage our CDs very well. ;-P
 
[quote author="muzie" date=1221881428]Panda challenge is fun... but nothing like real life, really. It's very easy to go all in when the portfolio is just numbers in a fictional account. Investing is not just about brains, but about holding on to your positions as well.



That 22% gains I bragged about 2 days ago? Mostly all gone now. My hands were shaking for a while there and I had trouble to sleep. There's nothing like the feeling the government has just declared open war on your portfolio positions yet the market is closed and you can only wonder how many thousands of dollars you will have lost right at the open.



I had to liquidate most of my positions - after 5 consecutives 5% up/down days on the Dow, I couldn't take the stress anymore :-P. Need a break.



Anyway... just felt like ranting. Good luck with the challenge!



(Are shorts still allowed in this challenge?)</blockquote>


Muzie is 100% correct. Nothing like it. If you can't conquer or you don't have the ability to control your emotions which lead to irrational decisions then don't watch it. :P



Stock market is like poker.



You have a great hand (meaning you did research and spotted a good opportunity).

You bet big (you make a sizable investment).

Your opponenent goes all in (stock crashes)

You fold (You cave in and sell your position)

You see the river card and realized you would have had a full house (stock just shot up 30% but it doesn't matter...youre not in it...sucker)



Thats basically how it works.



It takes time though to get used to the market. My first two years of trading I remember going through numerious emotional breakdowns. But its ok...you learn from it and move on. The more time you invest with it the easier it will come. One day your emotions will be so cold that the stock can drop 10% in a given day and you won't even flintch...you'll probably buy more. Meaning you bet, your opponent reraised...and you went all in.



If you really want an emotional rollercoaster...options and futures are your friends.
 
<strong><span style="font-size: 14px;">No bull: Police lasso bull on NYC's streets </span></strong>



<em>NEW YORK -It looked like an urban rodeo on the streets of New York City.

Police say a young bull made a dash for freedom through the streets of Queens on Wednesday night but suddenly died before he could be taken to an animal sanctuary.

Police cars tried to steer the bull off the crowded roadways but the several-hundred-pound animal hit and damaged a squad car. An NYPD officer with urban cowboy skills lassoed the bull and it was tranquilized.

New York Center for Animal Care and Control spokesman Richard Gentles says the bull died less than an hour after it was brought in. He says veterinarians found no signs of what had caused the bull's death.

An NYPD spokesman says it's not known where the bull had been kept.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

2008-09-18 22:23:55</em>





Ok, so the bull is out and running around......but dies. Sad, but does anyone else see the irony in this story ?



Was this Merrill's mascot or something ? Did he get laid off too ? No HAY for YOU !
 
[quote author="blackvault" date=1221885811]If you really want an emotional rollercoaster...options and futures are your friends.</blockquote>


Well, where do you think most of that 22% came (and disappeared from?). :-P



I had puts on MS, GS, LEH, WM, GE, LM, shorted AIG. Frankly I was amazed last week at how lucky (a tad bit of skill perhaps too? just a bit) I was in having puts on all these banks that were actually completely imploding. Took my profits on those, but any profits on the others evaporated in the last 24 hours.



I'm about 66% cash now. Got my gold, silver, a few commodities, a few miners, stock of my employer... That's it now. Went from 50 positions to about 10. Also bought some emerging markets (EEM) yesterday to hedge this ludicrous rally, but got it on a tight stop so it doesn't go bad on me.



Amazingly I'm still up 3% in the month. But now right back tracking the index at -14% YTD.



This market is broken. There are talks that options markers will actually not sell puts anymore at all. The market's purpose is no longer to be a medium of exchange for its participants, but rather a manipulated tool to artifically instill confidence in its listed companies.



Wachovia has doubled in two days. Presumably this reduces the specter of margin calls on the bank that I'm assuming would be triggered by its diminishing market cap/stock pice. Is the bank different at all from two days ago? Of course not. It still has all that bad debt. This is gaming the system simply to avoid triggering of contractual obligations.
 
I wouldnt mind short selling going away, but at the same time I would mind options going away. Only for the mere fact that I use it as insurance on most stocks I buy. Combining puts with stocks(long) is a very powerful strategy.
 
I'm not going to participate in whatever ensues now.



I've spent a lot of time researching the implications of the housing crisis and how banks would be affected. I'm no expert still, but that was a time sink, and I built my portfolio positions accordingly. To no avail.



At this point I am convinced, even if every single homeowner in the USA, every single one of them, defaults on his mortgage, it will not matter as far as the banks are concerned. The government has already crossed lines I didn't think they would cross. Spending most of the Fed balance sheet to take in the toxic loans, nationalizing private companies - and now we have come to the point where they are literally printing money.



The bigger the issue becomes, the bigger the bailout solution will be. I thought Congress would intervene way before we reach the 1T$ in total costs this is now taking shape to cost - but no one has blinked. We're throwing T$ around as if they were peanuts now. Not so long ago, our entire deficit was just a couple of these T$, and it took us decades to accumulate it.



So what if even more loans go bad? At this point, why not simply nationalize all banks in trouble? Or rewrite reserve and disclosure requirements so that banks can effectively have quasi-infinitesimal reserve requirements? Or why not simply declare all stock prices for banks are fixed at the current price as they work through the problems? Do these sound outrageous? They don't, not anymore, to me.



All this bailout money, we could have spent it to fund free health care for our entire nation for a decade. Can you imagine how much good that could have done? And yet we spend it all in this futile attempt to restore confidence. The money in those loans is gone, it was never used for productive used, it disappeared, that's all. And yet we still go through all these balance sheet vehicles, all this to hide away one thing - you can't recover the lost money without creating new money out of thin air.
 
[quote author="muzie" date=1221896299]I'm not going to participate in whatever ensues now.



I've spent a lot of time researching the implications of the housing crisis and how banks would be affected. I'm no expert still, but that was a time sink, and I built my portfolio positions accordingly. To no avail.



At this point I am convinced, even if every single homeowner in the USA, every single one of them, defaults on his mortgage, it will not matter as far as the banks are concerned. The government has already crossed lines I didn't think they would cross. Spending most of the Fed balance sheet to take in the toxic loans, nationalizing private companies - and now we have come to the point where they are literally printing money.



The bigger the issue becomes, the bigger the bailout solution will be. I thought Congress would intervene way before we reach the 1T$ in total costs this is now taking shape to cost - but no one has blinked. We're throwing T$ around as if they were peanuts now. Not so long ago, our entire deficit was just a couple of these T$, and it took us decades to accumulate it.



So what if even more loans go bad? At this point, why not simply nationalize all banks in trouble? Or rewrite reserve and disclosure requirements so that banks can effectively have quasi-infinitesimal reserve requirements? Or why not simply declare all stock prices for banks are fixed at the current price as they work through the problems? Do these sound outrageous? They don't, not anymore, to me.



All this bailout money, we could have spent it to fund free health care for our entire nation for a decade. Can you imagine how much good that could have done? And yet we spend it all in this futile attempt to restore confidence. The money in those loans is gone, it was never used for productive used, it disappeared, that's all. And yet we still go through all these balance sheet vehicles, all this to hide away one thing - you can't recover the lost money without creating new money out of thin air.</blockquote>


I understand exactly how you feel. I'm frustrated at the whole situation. Basically the reckless get a X-mas gift on the expense of those who were responsible all along. I hear you.

At the same time you have to understand the situation you are in. I don't one second believe that our governemnt WANTS to bail out companies. I don't believe that they want to throw away "Ts" on investments/assets of almost no value. But our government had/has no choice but to do this. They were hoping that bailing out Bears, FFs, AIG etc would solve the problem, but it didn't solve anything, instead markets were continuing to panic and dow was dropping 400 pts a day for 2 days straight. Which in my opinion is nothing as it can easily drop to 3-4K



Its easy to say lets not spend the money and let things ride and see "what happens", in essence lets open the pandoras box and see what happens. Maybe nothing will happen after all. However the chances were that if banks collapse (which they were going to) then everything will collapse.



It will start with banks going down. Imagine all banks completely failing to the point where there ARE no banks. They are gone...POOF. All our businesses thrive on the ability to borrow. Our whole economy revolves around the fact that you can borrow and start your own business...or borrow to continue business. Well now since there are no banks, all new businesses cease to exist and big ones come to a grinding halt. In order to cut costs they first stop using services and so will you. So all areas that are in the service industry will go out of business and those people will be out of jobs. Then when that doesnt work they will continue to cut on other areas and that is employees. Don't be suprised unemployment to jump to 20, 30, 40, 50% etc. That will only make things 10x worse.



Your 401K would go POOF, your savings will be monopoly money, and you will wonder how you will pay for next months groceries. You might think that you wouldn't be affected...but trust me...you will be. Forget buying a house because there are no banks, and even if you do have the cash...its monopoly money due to inflation.



As a result of all this crime rates would rise on a great scale and riots will break out. Remember the Great Depression? well it practically took a war to get us out....do you want to go to a nuclear shootout with Russia or China and have a global superpower reshuffle to see who comes out on top? I don't.



Everything rides on confidence. Confidence is the single sole item that drives our economy. THen that spills over to lending. Think of it this way. You give 100K to a bank who only legaly has to hold about 6K of that. They loan out 94K to another bank at a higher interest who holds about 4-5K (cause they have to legaly) and loans out 89K to another bank or whoever, who loans out about 84K to a consumer for a home. Meaning your 100K just go leveraged about 4-5 times into money that doesn't really exist. That is how our economy operates. So when banks fail, it has a chan effect all around. Thats essentially what happend to Merril and Lehman. THEY WERE 30-40 times leveraged then what they actually had.



Point you have to think about all the things that would be affected. Am I happy about the bailouts? Excuse my language but F*** no I'm not. I'm outraged personally, but I DO NOT want the alternative which has a very good probability of happening. I would rather pay the rest of my life for some idiot CEOs 500 million dollar salary that helped cause all this, then go through a 10 or 20 year depression, where I might be picking up coal from the streets or standing in a food line. NO thanks.
 
[quote author="blackvault" date=1221899248]

Point you have to think about all the things that would be affected. Am I happy about the bailouts? Excuse my language but F*** no I'm not. I'm outraged personally, but I DO NOT want the alternative which has a very good probability of happening. I would rather pay the rest of my life for some idiot CEOs 500 million dollar salary that helped cause all this, then go through a 10 or 20 year depression, where I might be picking up coal from the streets or standing in a food line. NO thanks.</blockquote>


I choose 10 year depression followed by the 50 years of prosperity that followed. I'm tired of 5 years cycles of booms and busts (the bust part seems worse and worse each time).



Those 500 million dollar salary CEO's were from Ivy league schools. They can take care of themselves.
 
Anyone check out Berk A today? About the safest investment out there and it moved 18% today! Holy crap that's gotta be the biggest one day gain in their history. It's also a $19K move in the stock. Wow, I'm speechless. Almost makes tech stocks seem tame.
 
[quote author="norcaljeff" date=1221905712]Anyone check out Berk A today? About the safest investment out there and it moved 18% today! Holy crap that's gotta be the biggest one day gain in their history. It's also a $19K move in the stock. Wow, I'm speechless. Almost makes tech stocks seem tame.</blockquote>


I think Berkshire is one of those companies of the list of 799 that you can't short.



Who the hell would short Berkshire??
 
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