a 77% tumble for B of A

yup, those tools will poke fun. I'm going to keep buying as they scream running for the exits. Yup index is down about 10%, I kept buying and my balance just past it's all time high when it started to fall. The post slowdown upside will have them saying "when should I have bought"?
 
well, the 5.2 billion in earnings a year ago, could have been inflated with what they were making off the subprimes still...perhaps? As super said, they still MADE a profit ty, thank goodness for them!

but i did hear, not understanding it, that the amount of subprime loans each of these monsters are holding, is hidden somehow....they are pooled with other things...???? i don't know what this means, thus me hoping one of you guys will, and explain what this could mean.....i think the words - in hedgefunds and derivatives? was used too...but hell if i know what these finance guys were talking about????
*
thus the market's volatility.....can't price it ALL in, they don't know what ALL is.....basically.
 
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Topspin said:
yup, those tools will poke fun. I'm going to keep buying as they scream running for the exits. Yup index is down about 10%, I kept buying and my balance just past it's all time high when it started to fall. The post slowdown upside will have them saying "when should I have bought"?
Click to expand...

Dow, Wilshire and S&P 500 all broke technicals to the upside. All broke their downward trendlines. All are sitting on at least a double top breakout.

Base on all three is building up quite nicely.

Right now negative news appears to be priced in to the overall market. Before anyone spouts off.... this does not mean there won't be any individual stocks that get hit from here. This is in reference to the overall market.

The only thing I can see sending us back down and breaking below technical support would be something of the magnitude of removing the dollar as the reserve currency.
 
Care4all said:
well, the 5.2 billion in earnings a year ago, could have been inflated with what they were making off the subprimes still...perhaps? As super said, they still MADE a profit ty, thank goodness for them!

but i did hear, not understanding it, that the amount of subprime loans each of these monsters are holding, is hidden somehow....they are pooled with other things...???? i don't know what this means, thus me hoping one of you guys will, and explain what this could mean.....i think the words - in hedgefunds and derivatives? was used too...but hell if i know what these finance guys were talking about????
Click to expand...

Couple different things care...

1) Hedge funds run by the banks may be holding on to a lot of this debt. We don't know how much because they are not required to report in the same manner.

2) The CDO/SIV debt is a mess. Many of the banks weren't even sure what they owned exactly and also had no clue how to price this debt... which is another reason analysts didn't know the extent to which this would hit each financial institution.

To explain a CDO, think of a mutual fund. A mutual fund is a collection of individual stocks and/or bonds. A CDO is a collection of collateralized debt (mortgages would be an example). As an example... the banks would take a pool of similar mortgages (typically sorted by interest rate and quality) and bundle them together as an investment. Similar to how a mutual fund manager pools together a collection of stocks. It makes it easier for investors to invest in various sectors of the market.

The end problem with the CDOs when the shit hit the fan was.... How do you price them? Say you had a collection of sub-prime loans and the overall rate of default was the national average of 2%.

Do you price down just that 2% to zero and leave the other 98% priced at par?
Do you price the entire loan bundle down to reflect the increased risk in the sector due to the credit environment?

If you do the latter, how much do you price it down?

This is what led to all of the confusion.
 
You added to your post care after I responded.... in response to the last line... true, they can not price it all in exactly... but they can price in the bulk of the negative news and in the case of BAC, they were pretty accurate given the price of the stock today is above where it was on April 15th.

There was a run on Friday ahead of the news that drove the stock up... but not by much.
 
I've been adding mostly Chevron, to the retirement but I'm going to have to start adding S&P 500 as the PE is nearing 17.
 
Superfreak said:
Couple different things care...

1) Hedge funds run by the banks may be holding on to a lot of this debt. We don't know how much because they are not required to report in the same manner.

2) The CDO/SIV debt is a mess. Many of the banks weren't even sure what they owned exactly and also had no clue how to price this debt... which is another reason analysts didn't know the extent to which this would hit each financial institution.

To explain a CDO, think of a mutual fund. A mutual fund is a collection of individual stocks and/or bonds. A CDO is a collection of collateralized debt (mortgages would be an example). As an example... the banks would take a pool of similar mortgages (typically sorted by interest rate and quality) and bundle them together as an investment. Similar to how a mutual fund manager pools together a collection of stocks. It makes it easier for investors to invest in various sectors of the market.

The end problem with the CDOs when the shit hit the fan was.... How do you price them? Say you had a collection of sub-prime loans and the overall rate of default was the national average of 2%.

Do you price down just that 2% to zero and leave the other 98% priced at par?
Do you price the entire loan bundle down to reflect the increased risk in the sector due to the credit environment?

If you do the latter, how much do you price it down?

This is what led to all of the confusion.
Click to expand...

Thank you Super, this is finally starting to make more sense to me!

Care
 
Topspin said:
yup, those tools will poke fun. I'm going to keep buying as they scream running for the exits. Yup index is down about 10%, I kept buying and my balance just past it's all time high when it started to fall. The post slowdown upside will have them saying "when should I have bought"?
Click to expand...

I learned everything you know about economics in GWTW-- the book, not the movie top.

In it, Scarlett learns that there is as much money to be made from the fall of a civilization as the rise of one.

I think it’s fitting that you should remind me of Scarlett O’Hara. Have you made any suits out of your drapes yet?
 
I think the stock markets showing signs of bullishness lately. im wonder if the recession is priced out now.
 
I would say priced in, as in the market has priced in a shallow recession. If the economic news gets to be a major recession a huge tumble in the market follows.
 
Chapdog said:
I think the stock markets showing signs of bullishness lately. im wonder if the recession is priced out now.
Click to expand...

As mentioned, the technicals have broken bullish for the Dow, S&P and Wilshire. It appears as most of the negative news has been priced in. I think we will likely continue building on the base while the media puts forth one negative story after another.

As for a recession.... the market seems to have priced in a mild recession. The fourth quarter numbers holding at 0.6% growth surprised me. I thought it would be revised to negative. I think first quarter was negative, but will have to wait for the revisions to be sure. Second quarter looks to be close... just not sure if it will be a slight pos or slight neg.

But technicals breaking barriers last week and holding today are a good sign. The market is typically about 4-6 months ahead of the media. So look for more negative stories in the coming months, but with a neutral to positive market.

Aggs are a good place to be. Especially grain contracts. We are in for another big run in grain prices, unless we wake up and stop using 15% of our production on ethanol.
 
I just read 70% of economist think first qtr will be slightly positive.
I like mrk and HD here, but I'm all in already
 
It's been stable and it's earnings were good even though they had a drop in sales on a few drugs. They have so many drugs that they are able to recover if one has a bad report, which that happened and its price is cheap right now.
 
I keep hearing the pipeline is week.
But I know the new blockbuster they have still has training wheels on it.
I did good with Merk in the late 90's
 
Superfreak said:
Aggs are a good place to be. Especially grain contracts. We are in for another big run in grain prices, unless we wake up and stop using 15% of our production on ethanol.
Click to expand...

any good suggestions? I am looking at:
RJA
DBA
MOO
FUE
FDFAX
 
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