Friday, August 10, 2007

Aug 10 No Trading

Got work early this morning, no trades taken.

When is a good time to buy this market slump?
I would say, based on technical analysis, when we make a higher lower and when volatility decreases. Until then, lets just pretend that we live a a backwards world were we get up every morning and expect the market to go down, because that's what bear markets do. You ever notice that when the markets made big gains that there never had to be a solid reason for it, but when we selloff there has to be a reason for it, so that investors feel that what is happening to there stocks is not a normal occurrence, and as soon as problem X is fixed the market will start going back up for them in an orderly fashion, a market where you can just buy a stock and not have to worry about losing money because the market always goes up.

I heard an average joe talking about the credit crisis and housing bubble while I was getting food at subway the other day, he also brought up some words that he just learned, called "shorting stock". I'd be interested in knowing how much the short interest has grown on all those housing related stocks. Are all these companies going to go out of business, leaving the US with no mortgage lenders and millions of US citizens without homes and further reducing the avg. US credit ratings, or is it possible that everyone is jumping on board and shorting these stocks with herd like mentality and bringing negative psychological thoughts which ends up spreading bringing the rest of the market down with it. What about the hedge funds? Didn't we see this happen in February when the carry trade unwound for a couple weeks, bringing quick losses to all those funds that relied on their computer models to make money for them, except of course for that one statistical anomaly that occurs out of nowhere, right? So who is making all money in the current market environment? Do you ever hear about the bear funds blowing up when the market tears up? Not really, you normally only hear about the long funds that get hit when the market goes down. Diversified? Please.......

Have a good weekend ya'll.


Jon on 8:52 PM said...

Very insightful post. I think your experience at Subway is a good sign of where the "herd" might be heading.

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