Wednesday, September 17, 2008

Who Will Be Next?

I was swamped again all day, which accounts for the lack of blog posts. I really thought today would be better after the AIG bailout news last night. But today they went after Morgan Stanley (MS), and that seemed to unravel any inkling of positive sentiment.

The raids on these stocks that have driven large financial institutions to the brink of insolvency on little fundamental news is amazing. I don't know how to remedy the situation, but someone should come up with something regarding these credit derivative swaps.

Panic selling is taking hold, so remember to keep your emotions in check. The volatility index (VIX), or the "fear index" rose another 20% today, closing at 36.22. This is the first time the VIX has closed above 30 for 3 straight days since the bear market of 2002 ended.

The Goldman Sachs (GS) CFO said on their conference call yesterday that the world is awash with liquidity, but that fear is overwhelming participants willingness to put money to work. But when this bout of fear subsides, and it will, the huge amounts of cash on the sidelines could help things bounce back pretty quickly.

I did trim any of my hedges further today, nor did I put any cash to work. I am still waiting for signs of stabilization. But I know when the dust settles, there will be plenty of bargains, so keep your powder dry.

Have a good night.


At 11:44 PM, Blogger OT said...

Everyone of these CFO/CEOs on Wall st is mentioning how liquidity is not an issue, but we keep seeing bail outs, failures every week.

Every firm 4 weeks prior to their demise has mentioned that there is no problem, then crumbles.

I remember when they set Amazon price target of $1000. I'm beginning to think that they sometimes lie!!


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