US Debt Downgraded - Where Do We Open Monday??

IMHO the next thousand points on the Dow is down; maybe the next 2000 points, barring some unforeseen and somehow effective government intervention.

One of my favorite charts ever (after spot corn):

http://www.multpl.com/

We're still well above the mean of 15x. A crash was pretty apparent looking at this chart, spot corn, oil, and NYSE margin rates - all were setting up exactly like 2008. There is no reason for stocks to increase 35% in value when the world economy is slowing to a halt. All it was was an asset bubble.

This "crash," if that's what it is, didn't have to happen, had the bubble not been created to begin with. Now they're all in a tizzy at CNBC (again, though I'm getting used to it) without putting into perspective that the market was up over 50% in two years.

Something had to give.

Wait! Lest I fail to post my de-rigeure link to the Fast Money page from Friday:

"Market Indicator with Perfect Record Just Signaled 'Buy'"

http://www.cnbc.com/id/44038676/

You can't make this stuff up, people.

ionada - it was for fun, so I got 2 out of 3. I understand completely how bonds/equities are related.

UD, I was tongue-in-cheek on calling you silly. One would of course expect a ratings downgrade to lead to a drop in the bond if things were "right" in the world.

No the rise in treasuries makes total sense. The U.S. cannot default. We've always known that u.s treasuries represent flight to quality, so seeing Gold and Treasuries go up together in this environment is not a surprise.

"flight to quality" simply reflects the horrible state of the world's economy - in this case "quality" is relative

Guys, the whole point here was to make predictions before the market traded, not to play Monday morning quarterback after the numbers came out.

My rationale, anyways, was that this puts pressure on govt to cut spending / raise taxes, which is a negative for the economy and therefore stocks. Bonds rally because the weakened economy leads to deflationary tendencies. Gold rallies because the gold buyers' fears are increased.

This whole discussion cracks me up. Even with the crash in recent weeks, the S&P is ONLY WHERE IT WAS IN NOVEMBER, and it is still well above the 52-week low.

That is ample demonstration of the nuttiness of the rise in the first place.

That said, on a technical level this is a key support, which if we break through it (and we will) the next level is full retracement of the QEII bubble. S&P at about 1035. After that, we'll see.

the US will never default, we can just print our way to fulfill our obligations. The downgrade was in regards to the a) unsustainable path we are on, call it a debt/gdp trajectory thing, and b) our govt's lack of will to come up with a reasonable plan to fix item 'a' and implement that plan.

On the Dow, still 13% above the 52-week low, excluding dividends.

What are people expecting?

Next downgrade very probably in the next 6 months

As far as equities are concerned, I don’t see a bottom for at least 2-4 years. If there is a new administration starting in early 2013 and things get stabilized.

The more pertinent discussion here should be about projected Manhattan real estate values. Here’s what I think, so please add your forecasts since I have no idea.

NYC value probability:

12/31/11
-0-3% - 60%
-3-5% - 25%
->5% - 15%

12/31/12 change from previous year
-0-3% - 60%
-3-5% - 30%
->5% - 10%

12/31/13 change from previous year
-0-3% - 80%
-3-5% - 10%
->5% - 10%

12/31/14 change from previous year
+0-5% - 50%
-`0-3% - 25%
->5% - 15%

I predict NYC RE will go down by at least 10% -20%

Actually, this is starting to feel like some sort of short term capitulation. Pundits on tv point out that summer sees lower volume with some participants away from the game. By the ay, does anyone agree with the thought that the administration and congress did a poor job of responding over the weekend. We just got more finger pointing and silly stories about accounting errors from s&p

"Pundits on tv point out that summer sees lower volume"

Did you LOOK at the volume, RS, rather than parroting Fox Business? It is 10:46 a.m. and the NYSE volume, on a -332 point down day, is already greater than the average daily volume for the entire run-up. Ditto the 500-point swoon last week.

And we're STILL 10% above the 52-week high.

It's nothing but a predictable unwind from a bubble. Gee, all of a sudden oil is getting cheap! How did that happen?

HEY EDDIE WILSON?! WHERE ARE YOU NOW! YOU JUST PUT ALL YOUR MONEY BACK TO WORK, YOU TOLD US....

Eerily silent, eh?

I don't think it's short term, it was meant to happen. There was a stock bubble that needed to be deflated. It was just a matter of when it will happen. The downgrade is the trigger.

Ironic, It was only a few months ago that Bernanke thought QE2 would be a good idea and pointed to how good it would be if stock prices rose. In some ways he set us up.

http://finance.yahoo.com/blogs/breakout/u-gets-downgrade-deserves-133206142.html;_ylt=Am.d2e1bGnwS52H1R.VYTEu7YWsA;_ylu=X3oDMTE5ampoOXVxBHBvcwMzBHNlYwNGUEJyZWFrb3V0QmxvZwRzbGsDdXNnZXRzdGhlZG93

Bernake is a fool, RS: he quoted the Russell 2000, which is a high-risk indicator, weighted as it is toward small caps.

switel is right - EVERYTHING was a bubble. I return to my fave, spot corn: chart looked just like 2008.

We'll have a 100% retracement of the QEII bubble, but note: the exact same thing happened after QEI, and that's when we had the Flash Crash. Nothing is different; the bubble just got bigger, which means that it has further to fall.

Technically, Dow 10,600 is the target based on the head-and-shoulders chart pattern, which is highly reliable. The only real difference between this fall and others is that this one is faster. But then again, so was the rise.

whats amazing is the finger pointing now with the debt issues and the downgrade, teaparty, republicans, dems, etc..

let us not forget that the Federal Reserve & The Gov't stimulated and basically shifted huge losses and mispriced assets in the private sector, onto public balance sheets as part of multiple bailouts (AIG, maiden lane 1,2,3, citigroup), GSEs in conservatorships, QE1 & QE2 (talf, tarp, taf, ppip, and many other asset buying/swap programs), housing tax credits, HAMP, too many things to even talk about. And here we are. Are we really surprised that our public debts are this high?

Noah,
You sound like an Austrian!

Where's Eddie Wilson?

And again, this is NOT a surprise. Lots of people - besides my humble self - have been saying "bubble" for a long time: Jeremy Grantham, Peter Brimlowe, among others.

S&P is now WAY below the November support: next stop down 1040, which is the 52-week low, 100% retracement. Where it goes from there - we'll see.

Eddie: Who's sorry now?

can someone explain to this simplistic civilian why this CAN"T be another intentional trick, but one meant to improve us's long term export/manufacture future and make it more competitive against the export/manufacture leading nations? it stings the ego, sure, but why is it NOT the first step of an intentional agenda?

s&P offices in Italy raided by police:

http://www.huffingtonpost.com/miles-mogulescu/a-corrupt-s-p-uses-shock-_b_920719.html

and Manhattan real estate??

On its way to $500-700 sq ft depending on area.

Hey progressives, How's that hope and change working out for you?

Hey Tea Party, how's that brinkmanship working out for you?

"stevejhx
about 8 months ago
Gold has no untapped intrinsic value; it is worth only what people are willing to pay for it. And lately, many people have been only too willing.

http://www.marketwatch.com/story/why-gold-is-a-bad-investment-2010-11-12

Spot on. Crickets are more valuable than gold come the crash that people who buy gold think is coming: at least you can eat them."

Great thinking steve..

Spot on. I'll buy crickets before I buy gold, and the more expensive it gets, the less likely I am to buy it.

WTF are you going to do with your gold? It don't work in bubblegum machines.

lets play...there are markets out there for tangible items that are not currency. Houses, exotic cars, art, antique furniture, etc. Its all a matter of liquidity for these items. Generally, liquidity is poor if you have to sell. But gold has not seen any liquidity issues lately and the bid has been steadily rising. Granted, the bid may disappear and liquidity may dry up, in which case the ask will fall and fall hard, but isnt that case for any tangible asset you buy outside of treasuries? Houses? Art? Gold? There is no bid for crickets now, nor will there be one in the future.

The problem with gold is precisely what is happening today in stocks - its value tends to disappear overnight. It has no real industrial use; it's just a figment of the collective imagination.

And it makes for lousy money. See Economic History of the 19th Century for details.

That's the very beauty of crickets: they are easily harvestable, and dippable in chocolate. The downside is you have to catch a lot of them to make a meal.

Flmaoz. Urbandigs, with all this mambo jambo about mkts and your intimate knowledge of mkts, you'd think you'd be right about your chosen nyc re field. What do you think about my $500psf call now?

And did you tell any of your clients to sell and/or not buy the last 3 years, even after basically the credit bubble showed it's hand?

I saw it?, why didn't so many ohers not?

Bullshit economy based on trading assets. Labor creates value.

Hey Eddie Wilson - I just sold some of my short ETF's, made a handsome profit.

How're ya doing on that "putting your profits back to work"?

"What do you think about my $500psf call now? "

i think its a cop out. $500psf for what? coop studios? park avenue classic 7s? Tribeca condos?

flmaozhdlfuebhsisoqkap

"The problem with gold is precisely what is happening today in stocks - its value tends to disappear overnight."

Talk about mumbo jumbo. I don't have much affinity for investing in gold either, but your whole argument against is based on the supposed "logic" of owning gold at all, when the fact (yes, the fact, Esteban) of the matter is that in the several years you've derided it, plenty of people have done quite well with it. Of course, now you seem to be saying the same thing with equities (their value "tends to disappear overnight"). What should one infer from your advice then? Not to invest in gold or equities? Where to park your money then? Certainly not real estate, we know that. Money market? Under your Sealy's?

"i think its a cop out. $500psf for what? coop studios? park avenue classic 7s? Tribeca condos?
flmaozhdlfuebhsisoqkap"

Noah, comment of the month!

Don't get pissed. It doesn't jive with your cerebral analysis of the mkt 'persona'. $1000 psf was touted by every brokerage firm in 2007. Let's say 50%off from highs for all classes. :)

same thing with junk bonds in the 80s, the asian dragon markets in mid 90s, tech stocks in early 2000, houses in 2006, mortgage back securities in mid 2007. Granted it has minimal industrial use, its perception as a monetary precious metal especially in times like these, is unquestioned. I never said its use is as a currency for trade. Nonetheless there is a market for it. There is no market for crickets. I have 20 crickets right now, I want to sell them and raise dollars. Where can I go to hit a bid for crickets? I know where to go to hit a bid for gold.

There's a lot of logic to W67's $500psf call & for sure, prices are down from the bubble. However, I also see a lack of new listings coming onto the market, so many of those on the market are over priced due to lack of supply/competition.
It's like everyone knows psf prices are declining, but that scares sellers, so many don't sell & those who do sell know there's low supply, so they sell at inflated prices.

The other contrary thing I see: Millions of dollars worth of renovations on newly purchased townhouses. Are these owners betting their values will rise due to costly renovations or they have so much $, they don't care?

dwell, directionally there's a lot of logic to the call, there's not much doubt about that. I would, for once, like to see the number crunching that got him to $500psf, even though I fully suspect it's purely from the gut, and not a little influenced by his playing to the character/persona he's so ardently developed here on SE. Flmaozasdas.

Yes, Noah, but come the MMAfia Armageddon, we'll all be scavenging for crickets, and tulip bulbs! You know, Planet of the Apes Prequel, the Roddy McDowell version.

As I've said, gold is a trade if you're inclined to take the risk, but it's a crappy investment historically. However, the dynamics of history may now be changing, and I may be proved wrong about that. I don't think so, but it's possible that we are effectively signaling returning to a de-facto gold standard. It would be a mistake, but it could also be true.

So nice to have bjwdrip grayed out....

WHERE'S EDDIE WILSON, who's spent 9 months laughing at me when I predicted a crash? I'm doing mighty well, Eddie, just made a neat little profit on some of my ETF's, holding onto the rest for the rest of the way down.

Yes, bjw2103, I'd like to see a prognostication of future psf based on location & size. However, doesn't lack of supply skew value?

w67th - well, im on record saying that I do not think a future slowdown will be as sharp and fierce as what we saw in early 2009. So I guess we need to clarify. DOes your 50% off the peak call include a long drawn out drop where we are stuck on the bottom for years, think late 80s, early 90s..OR, does your 50% off the peak call include a sharp, fierce fall like we saw in early 2009 where the bottom lasted only 2-4 months and volume was so low that not many at all were able to get those steep discounts; either because sellers wouldnt hit those low bids or buyers were not even submitting bids higher than 30-40% off.

Two very different things. We experience the former 20 yrs ago, we experienced the latter 2 yrs ago...I have a feeling you think its the 20yr old version that we are in for?

seems like gold is a timing thing: if you get out before the bubble bursts, you could make alota $, like flipping houses during the bubble.

I do enjoy that even though Steve claims to have ignored me, he still feels the need to mention it every time he sees (or doesn't see?) my name pop up. I know obsession when I see it - not pretty.

dwell, lack of supply definitely does - inventory seems to have dropped off a cliff lately, though at this point I think it's purely seasonal: http://www.urbandigs.com/chart.php?t=Market+Trends&s1=Active

steve, we are almost back to 1110 where you called a triple top in the S&P and started shorting. You are almost even.

Well, the markets are ignoring the S&P and flooding bonds. The crises is a confidence crises in the US and world economies, not the debt (Europe mostly with US, but, frankly, China has a big problem in its death embrace with America). Over the next 5-10 years the debt isn't a worry. Rates are almost negative, and deflating. Investors are scared ^^%less about stocks because they are waking up to the reality that there has indeed been another stock bubble (FED created), and the fundamentals of the economy are bad and predict very poor growth. Austerity measures will further cripple any hopes of recovery, so the Western economies are blasting a hole in their leg with these policies.

Obama has been a very poor leader, and not much of an economic progressive as believed, but a slightly to the right centrist. Congress is paralyzed by Republican tax phobia, and both parties are to a large extent in the pockets of big money. 400 citizens control more assets than 150 million Americans. This is banana republic levels folks, and you should expect nothing less than banana republic behavior in the economy, politics, and culture.

As for Manhattan real estate, it has benefited uniquely from the trillions of tax-payer money in the bailouts and secret bailouts that have floated this log far too long. Unless money comes from somewhere to inflate again (where now, I don't know), the last legs are being sawed out from under this table as I write this. Thick legs. Will take a while, but, honestly, on what can the cash flow be supported anymore?

These people never end:

http://www.cnbc.com/id/44060901/

I never called a triple-top on the S&P at 1110. I said it was a head-and-shoulders pattern (not that there's much of a difference) and that the Dow could be considered a triple-top. I said that at Dow 12,600, quite some time ago.

I think you've been at the 420 too much.

stevejhx
about 12 months ago
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According to today's data, the recession was worse than previously thought, and the economy is slowing down rather abruptly. I believe that 500,000 jobs must be added each month just to keep up with population growth; we've been adding about 150,000. Foreclosures have hit an all-time high and are getting worse, yet property prices - except for foreclosures - remain sticky. Unemployment has gone down, but only because more people have stopped looking for jobs; whatever growth there was in the economy last quarter was due principally to increased inventories, and not to consumer sales.

It's not often that I agree with Fast Money, but this time I think Guy Adami is right: what's coming for the next 2 quarters looks ugly - a triple-top on the S&P 500, the end of the fiscal stimulus, and deflation. I have seen some anecdotal evidence in my building that landlords are trying to raise rents, but I have also seen that it's not working.

bob420
about 12 months ago
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Where is that triple top on the SPX?

stevejhx
about 12 months ago
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From June, at around 1100. Briefly above twice, just shy once, can't hold on.

http://streeteasy.com/nyc/talk/discussion/21952-rents-up-thank-you-satc

“can someone explain to this simplistic civilian why this CAN"T be another intentional trick, but one meant to improve us's long term export/manufacture future and make it more competitive”

Lucille, I can explain this as I contract manufacture advanced telecommunications products in China. From what I see here all posters are brokers, analysts, or people working at home but not in the day-to-day business of selling an actual product.

We started our company about 12 years ago and the model was to manuf in Asia and not even attempt to do so here in the US.

This may sound like hubris but we destroyed our competition and have been successful since.

Here is what I see – if there was a 50% tariff on imported goods or the dollar was devalued 50% it would not even put a dent into what has and is happening. The Chinese gov has seen to it that whatever the circumstance a way will be found to always have the best deal and at the end the day that is all that matters. This policy was heavily supported by this and past administrations, so you could say that our gov has sold us down the river and there is no return.

I don’t have the foggiest notion of what could change this situation. It will take decades to unwind and I think that you previously hinted at war as an outcome. The probability as small as it might be is greater today than ever before.

I think you have misread the "1100" comment - the S&P still isn't at 1100 (it's at 1130), so there can't have been an 1100 triple top. The target would be around 1100.

You were saying a triple top at 1100 in June 2010 BEFORE the 200+ point run up to 1371.

So,will Manhattan RE still be protected, or will this current loss of faith in the financial markets have repercussions on the financial capital of the world's lofty homes and apartments? In six months, where do you see RE in Manhattan?

No, I don't think so 420. The S&P hasn't been at 1100 since September of last year.

What does triple top mean to you?

You said

"a triple-top on the S&P 500"

You posted that in July or August of last year. Look at the chart for S&P. It was touching/slightly breaking through 1100 from June 2010 to August 2010. You specifically said:

From June, at around 1100. Briefly above twice, just shy once, can't hold on.

Unless triple top means something else to you, you were saying that it wouldn't hold that level and by all definitions of triple top, it would sell off. It didn't. It went to 1371.

am no anti-Krugman Krank, and think the Nobel-winning economist continues to write some of the best practically-minded economic commentary out there, but this sort of thing from him drives me mad.

S&P declared that US debt is no longer a safe investment; yet investors are piling into US debt, not out of it, driving the 10-year interest rate below 2.4%. This amounts to a massive market rejection of S&P’s concerns.

via Aaauuuggghhh! Market Commentary Edition – NYTimes.com.

C’mon Paul. You know that’s utter bullshit.

http://paul.kedrosky.com/archives/2011/08/wherein-paul-krugman-drives-me-mad.html

420, sorry, not possible. Unless it was a typo, because the market hasn't been anywhere near that point in a year, and there was never a triple-top formation at that price level. Ever.

No, RS - it's true. The downgrade was just an excuse to unwind QEII.

Yes, possible. You wrote it last summer. OVER A YEAR AGO. When you said in June at 1100, you were saying June 2010 and the S&P was bouncing around 1100. I specifically questioned your triple top call.

Read the thread and see how many months ago it was

bob420
about 12 months ago
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Where is that triple top on the SPX?

stevejhx
about 12 months ago
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From June, at around 1100. Briefly above twice, just shy once, can't hold on.

http://streeteasy.com/nyc/talk/discussion/21952-rents-up-thank-you-satc

"OVER A YEAR AGO"

Oh! You mean before QEII?

Move on, go away. The stock market did, in fact, fall significantly from that point:

http://www.marketwatch.com/investing/index/SPX/charts?countryCode=US&submitted=true&intflavor=advanced&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=9&freq=1&comp=Enter%20Symbol%28s%29%3A&compidx=aaaaa~0&compind=aaaaa~0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013

I was absolutely right A YEAR AGO.

Really, grow up.

Ha. So you were calling a triple top last summer and the market rallied over 20%.

Now we are almost back to where you were calling a triple top. Nice Call!

Oh 420 - you're being a bjw silly-billy! Look closely at the chart from a year ago and there was a triple-top, and the market did fall. You really don't know anything about anything, do you?

I guess had I made the prediction in 1928 that stocks would fall in 1929, you'd say that I made a bad call b/c they're up since then.

HAHAHAHAHA!

"Oh! You mean before QEII?"

Yeesh, so you mean you would have been right except for that thing that happened that made it so you were wrong?

bob420, as someone who's been there, you're wasting your time with Esteban. He will NEVER admit anything, even if you show him his own words in black and white. Not to say it isn't entertaining to watch him try to weasel out of it.

steve: "WTF are you going to do with your gold? It don't work in bubblegum machines."

I'm going to sell it, and make a pile of money. That's the point here, right? The trade?

"The problem with gold is precisely what is happening today in stocks - its value tends to disappear overnight."

Really? Overnight? The biggest single down day for gold is around 10% or so (which is certainly what happened to many stocks today). So if that type of reversal suddenly happens, I'm only up 90%+.

"gold is a trade if you're inclined to take the risk, but it's a crappy investment historically."

It's returned an annual ROR of over 14%. For the past 13 years.

you guys could just say lucille that's stupid, please stop talking. you don't have to ignore me! that's so mean! except columbiacounty.

At Noah,
I sure called today wrong!

Nice to have bjw grayed out....

Hey RS: check out those "light summer volumes" today: 4x the average on the way up.

WHERE IS MY EDDIE WILSON?! SOMEWHERE ELSE, WHO JUST PUT HIS "PROFIT BACK TO WORK" and now has a huge capital gains bill to pay when all he has is capital losses, WHERE ARE YOU?!

I do know you were posting all kinds of news and reasons why the market would fall, called a triple top and then proceeded to keep telling everyone the market would tank as the S&P went up over 250 points. The market is still higher right now than when you were saying it would fall and that is after a 20% correction.

I agreed and still do agree with your reasoning but your timing was way off. All I ever said was that it was dangerous business to fight the trend as you were doing. You missed out on 22% upside while holding shorts that are now coming back to even. I would think an experienced trader like yourself would want to catch a piece of that 22% up and 20% down.

why can you only talk about daily calls and movements, does no one have an opinion about the longer term future they can express and defend in an intelligent way?

because, you know, that just makes you sound like a bunch of degenerate gamblers.

Me, 2 hours ago: "I do enjoy that even though Steve claims to have ignored me, he still feels the need to mention it every time he sees (or doesn't see?) my name pop up. I know obsession when I see it - not pretty."

Steve, now: "Nice to have bjw grayed out...."

Esteban, like Jane Lynch in the 40 Year Old Virgin, I apparently haunt your dreams. Wish I could help.

Must say Goldman looks real smart here. Back in July they announced that they scaled back risk in a major way in the 2nd qaurter.

steve likes you. he LIKE likes you. he wants to marry you and buy a cottage in the country and garden, have dogs, and spend your nights enterntaining your close eclectic group friends and gazing at the beautiful open skies while reading the classics aloud and drinking local organic wine. well, his would be non alchoholic. steve wants you to rock his world.

I'm having trouble finding crickets to buy. I've run all over Manhattan asking people where I can buy crickets and they all look at me with a condescending pity that's just too much. One clerk at Gristede's patted me on the shoulder sympathetically and suggested I try Whole Foods. At Whole Foods people were running around frantically looking for the right person to ask. I'm mad at stevejhx. I think he's hoarded the city's supply of crickets so that he could charge more to people like me who are really worried. Either that or his blogging has sparked a run on crickets that has completely cleaned out the shelves. GRRRRR.......

NOW you're talking more sense 420, though not related to that triple-top which, in fact, was a triple-top. I've already indicated that I totally missed the power of the uptrend, and that was MY BAD. However, it had nothing to do with your post. Timing is a difficult thing to do, and that was my worst timing ever. Many times I thought about reversing course, but all I could see in my mind was this crash.

However, my positions are up, and I took some profits today, not because I think the market is going back up anytime soon, but because I want to make sure that whatever happens, I have enough cash on hand to buy a nice two bedroom condo in Ft. Lauderdale all in greenbacks, no mortgage. Now I have that.

RS - Goldman still has a 1400 handle on the S&P by December. How likely do you think that is?

@lowery: You have to go to Brooklyn for fried bugs since that West Village sushi place closed down: http://menupages.com/restaurants/chiles-chocolate/menu

lowery, go to PetSmart on Broadway - there's a box full of crickets in the back. It's not even locked!

The problem with crickets is they throw their voices - very hard to find the little bastards, sometimes.

i sold some dxd today when Dow was down 510, but I did add some TBT to a losing position. getting a bit hurt on that one

I can't predict how low anything will go technically but I can do the old fashioned way of going out and seeing for myself how many people are unemployed, how much debt I personally know people have, how many open storefronts I see, how many people are simply walking around with no future in sight. Let me tell you it is ugly. I don't care how often Obama comes on TV and tells us things are getting better. I see none of it here in the city. So I'll be like those little old ladies who used to invest in things they knew - like chocolate. Does anyone remember them and their little investment group from years back? Basically things suck and are only getting worse. DONE.

Noah, you as a former trader should know never to add to a losing position....

Rule #2, which I have violated regularly, and gotten burned each and every time.

I know I know...Although its a losing position, I dont have a big position in it. The plan was to buy a little, and plan to buy a bit more if it fell. That worked ok, until last 4-5 trading sessions. Ive been burned real bad before, so when I look at what I call 'a bit hurt' today, I sometimes laugh at how wimpy a trader I am these days. Back in the day, FDRY and JNPR were my undoing in the six figures

"Basically things suck and are only getting worse. DONE."

but...it could be on purpose so that in the long term it's attractive to do business here. or at least look like it's attractive? i mean the confusion about the math behind the downgrade and possible subsequent downgrades? maybe? maybe i just want to believe someone has the wheel. what a scary day. what's funny is most sahms i talked to today were planning to make their husband's favorite meals for dinner tonight. i did too. mr. lucille will be in a foul mood.

I can appreciate that, UD - been there, quite recently. :0

Which is why I have gone back to Trade School Basics: I have my targets, take them when they're met, and reassess, even if I think the medium-term is down.

The recent market activity is a blessing, actually: oil down to $80 a barrel! When it's back down to $60 - where it should be more or less - I'll start changing my opinion of the future direction of all asset classes.

Rents are also down - rapidly. It's been boiling up for the past month, but in my Dumpy Rental they've lowered asking prices 15%, and it's the August peak.

This correction is nothing but the popping of a bubble; as long as asset prices stayed inflated, the economy would slow to a halt. Once prices realign to demand, things will start to get better.

It was pure speculation, driven by negative real interest rates, high leverage and low volumes. Funny how how volume has been over the past few days.

WHERE IS EDDIE WILSON?! EDDIE! EDDIE! YOU JUST PUT YOUR MONEY TO WORK 1000 DOW POINTS AGO. THAT IS, LAST THURSDAY. How's your brilliant SSO strategy working out for you? Must be 2 x 6% = 12% down in three days.

Eh?

"how how" = "how high"

Oops!

eddie!!! eddie!! i want half, eddie!!

agree on the oil call..a tax cut for many but it still needs to fall to $60 as you point out, and still needs time to ripple through to gas prices and other energy costs by consumers and small biz

honestly, If this turns into the kind of rout that some have talked about for a while now, I think it will be the buy of a lifetime. Although we may have higher rates down the road, I dont buy into the fact that 3.5% 10yr ARM rates are what stimulates housing - thats where we are now, nobody is buying. rates are low because shit is so bad out there, the issues are deep. Get through one more deleveraging cycle, and we might just purge enough shit to be able to realistically talk about a potential growth phase down the road. Granted, the down cycle will hurt for few years, then muddle for year or two, so we are talking 5 yrs or so down the road. I dont think it will be another 10, I know many do.

are you talking about equities or real estate?

Urbandigs, it's all semantics. "adding to a losing position" or "legging into a position". The latter is standard for value players, institutional or not. I've used it to make a truckload. Not sure that I'd want to be in TBT right now, but....I've been eyeing it like a hawk.
I'm on ignore.

UD, though we may disagree on economic theory (and of course I'm right and you're wrong - HAHAHAHA!) I fully agree with you, though I don't think it needs to be 10 years. The best thing that ever happened to the economy was Paul Volcker, who unfortunately got undone by Saint Ronald and George II and Voodoo Economics. I remember the wrenching times in 1982 b/c that's the year I graduated college and couldn't find a job. Two years later, BINGO!

That's why I think that we will retest the 2009 market lows, and why I think the best thing the Fed can do right now is NOTHING. Simply let the deleveraging and pain happen, rather than postponing it and making it hurt more. The past year has felt like running a marathon with a broken leg: you might eventually finish, but it's gonna hurt like hell.

I think ultrashort Treasuries is not timely right now - there ain't anything else out there.

Legging into a position is likewise not something normally recommended in the textbooks.

Noah,
We're not at the buy of a life time. We would need 74/75 valuations to justify that. That said if we fall below 10K on the DOW I'll tip toe.

OK, bjw, I'll run over to Pet Smart and trade my gold fillings for those crickets out back, but....... will they REALLY be worth even MORE tomorrow? What if the price goes down? How much will Mellon Bank charge me for the honor of depositing them there? It's all just too much, this crash business. I think real estate's simpler. Just buy anything on high ground.

Stevejhx, legging into a position, maybe for you I can call it building a position. It was a method that in 2009 made me 375K in Textron (TXT), 130K in PBY (Pepboys), shall I go on? To each his own.

gaongaon, so if you are so good should i buy call or put option tomorrow morning?

Gao - I didn't say it doesn't work, I only said that it's not a highly recommended strategy if you're building a losing position.

RS - tiptoe with trepidation.

WHERE IS EDDIE WILSON?! EDDIE! EDDIE!

Sorry, switel, I don't know. I have, though, covered 70% of my short position. Part of my leg in, leg out methodology. I'm sure I left a truckload on the table. Also, I never do options. I never do margin. Bought some NOK today. Let's see.

Same howling as when they released the petroleum reserv:

http://www.cnbc.com/id/44035012/