1 / 5

Just another post 416 point drop day - NOT

Just another post 416 point drop day - NOT. Just another post 416 point drop day - NOT.

keelia
Download Presentation

Just another post 416 point drop day - NOT

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Just another post 416 point drop day - NOT

  2. Just another post 416 point drop day - NOT In the late “90’s U.S. markets were wagged by worries over Russian currency. As if there was ever any value to the ruble, how in the world could it have adversely effected the US economy? Globally integrated or not, it was just an excuse to take some air out of the sails. You know, and I know, that every talking head, every expert, has their own read on what moves the markets. Something that moved the market one day according to one, is just as likely to move the market in the opposite direction the next day. Look at job statistics. One minute it’s good news, then the next minute those numbers are bad news. Go figure. The market has a mind of its own. Don’t try to rationalize and overanalyze. As some wise pundit once said “Rage with the Machine” 2001 was different, though. Very different. There were plenty of reasons to think that the US economy would be dealt a severe blow by the events of September 11. But, it didn’t really work out that way, did it? I’m certain your portfolio is much better off now than it was on September 10th, 2001. It had been more than 4 years since even a 2% correction. That is, until yesterday, when the Chinese markets decided to wag us. We were moving along quite well until the Chinese market lost 9% of its cap. So what happened around the world? You know the answer, everything went south, although, here in the US, it may have been as much a reaction to the Chinese drop as it was a breakdown of the new hybrid system on the NYSE.

  3. Szelhamos Rules The Blogs Now what exactly makes the Chinese stock market such a worldwide power? Sure, market capitalization borders on huge, but how much quality is there? What’s the closest thing they have to Sarbanes-Oxley? Not that I would wish Sar-Box even on unrepetent communists. How much transparency is there in China? Numbers don’t lie, do they? Do you really believe that these “public” companies in China actually have the freedom to release real data? What’s that expression about a house of cards? It takes awhile for a foundation to set. The Chinese stock market is still in its infancy, but look at all of the capital flowing in. It’s almost like giving the keys to your Porsche to a 6 yearr old. They may be able to get that car moving, but watch out. So what if the Chinese market tanked yesterday. So far, only the Chinese and US markets had the smarts to shrug it off today. All of the pundits warned that today’s trading would be just like all of the other “day after” big drops and warned us to stay away. Everyone agreed that the market would go up in the early hours and then fall to new lows as buyers dried up. They didn’t count on Uncle Ben, though. The anti-Greenspan. He speaks English. People like English. Even the Chinese “capitalists” speak English. “They (the markets) seem to be working well. Normally.” That’s pretty re-assuring.

  4. Szelhamos Rules The Blogs Advancers to decliners were 7 to 4. Up volume was nearly twice that of down volume. And it appears to be holding up in the after hours. 2.25 Billion shares on the NYSE today and we survived to see another day. What’s next for us? I look for more upside movement in the next week or so. Merrill Lynch just downgraded the big three – Goldman Sachs, Lehman Brothers and Bear Stearns. Merrill should be downgrading Merrill. Talk about sub-prime!!!! Time to pick up some more Goldman. The real winner or loser in the next couple of weeks will be the New York Stock Exchange (NYX – NYSE – where else?? NASDAQ?). If the hybrid system is really part of the culprit in yesterday’s meltdown, look for lots up pressure to increase operating expenses at the NYSE. Translate that into re-hiring people. Real people. Also translate that into a drop down to the 60’s. But if the hybrid system withstood its first real test, forget about all that concern about the upcoming end to its restricted stock sales suppressing price. There will be so much demand that NYX will test 100 in the near future. Buy it now and write some options at different prices, as the stock begins its upward climb. At a closing price of $84.90, the March 85 option premium is $2.50. That’s a 3% return for just 12 trading days.

  5. Szelhamos Rules The Blogs Sure there’s downside, especially if you think that there were systems failures yesterday, but if not, and you have the means, 300 shares of NYSE with an immediate write of a March 85 call option. Then, if there is upside movement, write some March or April 90, and if continued upside, write a March or April 95 contract. If the underlying stock moves against you, close out the options positions, take your profits and wait for the next round of option writes, once the underlying stock moves back up. Try it, you’ll like it. And don’t forget. If you “Rage with the Machine”, it won’t let you down.

More Related