I don’t know what your models are saying, Chris

[HereWeGo]

An explanation of the events of the past two weeks (heck perhaps the last month):

Pisani

Don’t know if it’s over just yet … it all depends on how much bad paper is still out there.

[HereWeGo]

An explanation of the events of the past two weeks (heck perhaps the last month):

Pisani

Don’t know if it’s over just yet … it all depends on how much bad paper is still out there.

[superfly19]

Does anyone have any suggestions on good shorting candidates at this time? What are you guys looking at today? I’ve been in and out of CFC a few times and made some money. LEND, AHM and others crashed in the last couple of days. What is out there today that I can put some money into Puts on? What’s next??

[superfly19]

Does anyone have any suggestions on good shorting candidates at this time? What are you guys looking at today? I’ve been in and out of CFC a few times and made some money. LEND, AHM and others crashed in the last couple of days. What is out there today that I can put some money into Puts on? What’s next??

[HereWeGo]

homebuilders bumped up today. You could always take a shot at the investment banks and brokers as well. They have some serious inertia at this point and a lot of room to fall, maybe buy the puts on an uptick.

There are some nice call opportunities as well … maybe mastercard, it seems more than a little oversold. Who knows, though, but I don’t see consumer credit as the problem at this point.

[HereWeGo]

homebuilders bumped up today. You could always take a shot at the investment banks and brokers as well. They have some serious inertia at this point and a lot of room to fall, maybe buy the puts on an uptick.

There are some nice call opportunities as well … maybe mastercard, it seems more than a little oversold. Who knows, though, but I don’t see consumer credit as the problem at this point.

[anxvariety]

Does anyone have any suggestions on good shorting candidates at this time?

Check the Yahoo stock message boards. You can find some stocks that others are looking at. Obviously do your own due diligence as theres alot of crap posted on the boards.

Also when you’re looking at a stock like CFC you can click on ‘Industry’ or ‘Competitors’ and it will list companies in same space along with their P/E, Cap, and YTD.

One I started looking into yesterday is Legg Mason(LM) but I don’t know enough yet to buy.

I upped my KBH puts today since their stock was up 3%.. but be careful in homebuilders there’s been rumors of buyouts that have made some of these stocks a little more volatile. I like to look at total cash and debt, mostly just for fun but you can get some clues as to who has the most debt to service.

I’m am amatuer, I’ve been doing very well the last month, but still an amatuer.

[anxvariety]

Does anyone have any suggestions on good shorting candidates at this time?

Check the Yahoo stock message boards. You can find some stocks that others are looking at. Obviously do your own due diligence as theres alot of crap posted on the boards.

Also when you’re looking at a stock like CFC you can click on ‘Industry’ or ‘Competitors’ and it will list companies in same space along with their P/E, Cap, and YTD.

One I started looking into yesterday is Legg Mason(LM) but I don’t know enough yet to buy.

I upped my KBH puts today since their stock was up 3%.. but be careful in homebuilders there’s been rumors of buyouts that have made some of these stocks a little more volatile. I like to look at total cash and debt, mostly just for fun but you can get some clues as to who has the most debt to service.

I’m am amatuer, I’ve been doing very well the last month, but still an amatuer.

[HereWeGo]

anx-
You might want to compare LM vs. MER, LEH, GS, and BSC. It’s a most revealing plot.

[HereWeGo]

anx-
You might want to compare LM vs. MER, LEH, GS, and BSC. It’s a most revealing plot.

[Coronita]

Does anyone have any suggestions on good shorting candidates at this time?

 

If you believe in a coming recession that hits average middle class americans and below, consider low-end retailers..

 

I'm waiting for a dead cat bounce in the equity markets, and then I think I'm going buy put options for walmart, Home Depot, Lowes, target. 

I guess I'm contradictory, because I'm long on other sectors like technology…namely, because the crap corporations are using these days are so outdated, it needs to be updated some time in the future imho. Companies have penny-pinned IT departments way too long to the point that the operations are starting to hurt now..The hardware in most companies are long overdue imho. People are starting to notice…We, for example, are going to be spending more on hardware this year since we haven't spent so long.

 

[Coronita]

Does anyone have any suggestions on good shorting candidates at this time?

 

If you believe in a coming recession that hits average middle class americans and below, consider low-end retailers..

 

I'm waiting for a dead cat bounce in the equity markets, and then I think I'm going buy put options for walmart, Home Depot, Lowes, target. 

I guess I'm contradictory, because I'm long on other sectors like technology…namely, because the crap corporations are using these days are so outdated, it needs to be updated some time in the future imho. Companies have penny-pinned IT departments way too long to the point that the operations are starting to hurt now..The hardware in most companies are long overdue imho. People are starting to notice…We, for example, are going to be spending more on hardware this year since we haven't spent so long.

 

[davelj]

Chris Scoreboard,

I think what some of the posters are getting at with the “this time it’s different” and “throw the models out” mantra is that we’ve only had three similar credit contractions like the current one in the last 20 years. So, while the “models” may “properly correlate” – to simplify the terminology – 90% of the time, serious credit contractions are fairly rare and throw everything into a tailspin. The late-80s S&L crisis (credit contraction I) wafted into the early-90s recession (credit contraction II); then we had the 1998 LTCM debacle (contraction III). The Fed basically stayed out of the way – correctly, in my opinion – for I and II, so we got a nice cleansing recession followed by some nice growth. We probably needed a recession and some financial distress in ’98/’99 to remind people that with reward comes risk, but the Fed arranged a bailout, thus engendering the “Greenspan Put” which has lasted until recently (we’re waiting to see if there’s a “Bernanke Put”). The point in all of this is that credit contractions of this magnitude are fairly rare and this one is particularly rare because it involved trillions of dollars of structured finance and derivatives, much of which existed on a MUCH smaller scale at the time of the last contraction. In other words, this one is shaping up to be MUCH larger than the previous three. Therefore, we are, in fact, in uncharted waters. That is why I believe that, in fact, “this time it’s different.” To quote Charles Barkley, “I could be wrong, but I doubt it.” Many people like to say that “this time it’s different” are the four most expensive words in investing, and 90% of the time that’s correct. But sometimes things are a little bit different… and when they are the “models” – generically – often miss it. Again, we could start a mega-bull market on Monday – I ain’t no trader man – but I think these problems have been brewing beneath the surface for several years and are just now starting to percolate to the surface. I think we’ve just scratched the surface of the ultimate damage to stocks.

[davelj]

Chris Scoreboard,

I think what some of the posters are getting at with the “this time it’s different” and “throw the models out” mantra is that we’ve only had three similar credit contractions like the current one in the last 20 years. So, while the “models” may “properly correlate” – to simplify the terminology – 90% of the time, serious credit contractions are fairly rare and throw everything into a tailspin. The late-80s S&L crisis (credit contraction I) wafted into the early-90s recession (credit contraction II); then we had the 1998 LTCM debacle (contraction III). The Fed basically stayed out of the way – correctly, in my opinion – for I and II, so we got a nice cleansing recession followed by some nice growth. We probably needed a recession and some financial distress in ’98/’99 to remind people that with reward comes risk, but the Fed arranged a bailout, thus engendering the “Greenspan Put” which has lasted until recently (we’re waiting to see if there’s a “Bernanke Put”). The point in all of this is that credit contractions of this magnitude are fairly rare and this one is particularly rare because it involved trillions of dollars of structured finance and derivatives, much of which existed on a MUCH smaller scale at the time of the last contraction. In other words, this one is shaping up to be MUCH larger than the previous three. Therefore, we are, in fact, in uncharted waters. That is why I believe that, in fact, “this time it’s different.” To quote Charles Barkley, “I could be wrong, but I doubt it.” Many people like to say that “this time it’s different” are the four most expensive words in investing, and 90% of the time that’s correct. But sometimes things are a little bit different… and when they are the “models” – generically – often miss it. Again, we could start a mega-bull market on Monday – I ain’t no trader man – but I think these problems have been brewing beneath the surface for several years and are just now starting to percolate to the surface. I think we’ve just scratched the surface of the ultimate damage to stocks.

[Chris Scoreboard Johnston]

Dave and everyone else,

I do agree with most of what everyone says about the big picture issues, or I would not be here. If everyone goes back in the archives you will all see that I repeatedly called for a nasty decline beginning about August 1st. I probably said that in here 10 or more times. I was off by one week, however, that was just a prediction 6 months ahead of time. When it came down to it, and it is still the case today, my longer term large swing method still says to be long, so I am staying long.

I do wish I had gone with my gut and exited a few weeks ago when I had a huge profit ( but I do not trade with emotions ), but if I had, I would definitely be buying back now, and most of my stocks are still above where I bought them. There is no question we are in a panic sell off at this point, yet the commercials have now gone to the largest long position they have had all year, and bonds are rallying. This is a texbook buy signal, albeit not a day trade type of setup. These types of buys can take awhile to work because they are fundamentally and not technically based. As a result, I think a sharp bounce will happen very soon, and that is where I am likely to exit.

If we just freefall, then I guess I am stuck riding it down. I am short the futures in the S&P right now in my short term trading, and up a bundle on that trade ( I shorted the open today ). Very interesting times we live in, and congrats to all who shorted the high, you have out done me on this decline by a ton. My models have served me too well to desert them now just because it did not catch the exact high, it is not designed to.

The sell signals usually get generated on a bounce after an initial drop like this, so I think that is what will happen. In the meantime, it is still a T-bill margined trade that has a 4.89% gain in interest and about 5% in stock profits, plus about 1% in dividends so almost 11% still, so not a total disaster yet.

If we do not get the bounce, I will completely admit that I was totally wrong as I always do when I am. As a trader there is no hiding, the proof is in the results not the talk. I know what crow tastes like!

[Author]

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