BNP Paribas, which said last week that their exposure to the US subprime market was "absolutely negligible", set off a major retreat in the markets today when they froze three of their hedge funds because of credit concerns. The Dow Jones Industrial Average fell 387 points, 2.8%, and the S&P 500 fell nearly 3%. The NASDAQ managed to pull off a morning rally back into positive territory before getting mauled by the bears, ending the day down 2.16%. The VIX (Volatility Index) hit 26.90, its highest point since 2003. Declines outnumbered advances 4 to 1 on the big board.
On my end, I lost over $3,200 today, my worst market performance to date. About half of that came from Apple, whose shares fell 5.7%. Beta of 1.1, my ass!
There are a couple bright spots, however. Most of the analysts on CNBC seemed to agree that the most recent bear attack was mostly fear-related. There's not really anything wrong with the economy or the stock market, it's just people started panicking.
I also recently discovered a way to cash in on the bears without having to resort to tricky options or risky margins. The relatively new Proshares Ultrashort ETF series uses short-selling to make money when the market is down. I only discovered them this afternoon, too late to really recoup much of my losses, but I now know that I can ride out bear markets and still make a profit.
Tomorrow should be fun. Not. The Dow has closed down the last three Fridays, and ended last week with a massive 300 point drop. I'll need to wake up early to follow the action all day.