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Credit Market Bubble of 2007

Ugh.  Stupid French.

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.



( 5 pieces of cheese — Leave some cheese )
Aug. 9th, 2007 11:23 pm (UTC)
I just can't get into stocks. It's too much like a pyramid scheme, to me.
Aug. 10th, 2007 12:54 pm (UTC)
Yeah, it's been ugly alright. Today could be even uglier...
Aug. 13th, 2007 06:02 am (UTC)
Always update your stoplosses.
Aug. 16th, 2007 04:02 pm (UTC)
I sold all my positions this morning. I can't stay long when the bears are stampeding. I simply don't have enough cash to spare to be able to stay in and wait for things to turn around. Best for me to get out now while I was still ahead...
Aug. 22nd, 2007 10:43 am (UTC)
I got back in on Monday. ;-) I'm only going to hold positions until I net $2k, though, then cash out, and repeat. If I can do that just once a month, that will cover my expenses. I know now I'm not going to get rich with stocks, but they can help keep my head above water until I find gainful employment again, which hopefully won't be too much longer...
( 5 pieces of cheese — Leave some cheese )