[stockstradr]

We have all our retirement accounts, a large portion of our assets in E*TRADE. I looked closely at E*TRADE financials last night, and concluded the company is effectively INSOLVENT. The CEO of E*TRADE is writing they “…could absorb an immediate write down in excess of $1 billion and still remain well capitalized.”

Except there is one problem, look at E*TRADE balance sheets: there appears to be a lot more than a billion in write downs in store for E*TRADE. The numbers don’t look pretty.

This week the markets finally spooked me, shook me to the core, that this finanical melt down could get real ugly. Major banks could collapse.

Just one example, a best friend of mine works in a very senior position in a very large Wall St. investment bank.

I wrote him, “What’s the feel of the markets, from the inside?”

He Blackberry’s me back,

“Be afraid, be very afraid. I’m now at a insider financial conference and very senior managers are discussing Worst Case Scenarios. There is real fear in the air even among very seasoned finance industry professionals.”

Today I submitted request to have ALL our family assets tranferred out of E*TRADE. It takes about 7 days to complete. I cannot imagine E*TRADE would collapse, but they certainly could lock our accounts up for a long time. WHO KNOWS how this all will play out for security of major financial institutions?

I think gold is looking more and more attractice. The gold market LOVES financial instability.

[stockstradr]

We have all our retirement accounts, a large portion of our assets in E*TRADE. I looked closely at E*TRADE financials last night, and concluded the company is effectively INSOLVENT. The CEO of E*TRADE is writing they “…could absorb an immediate write down in excess of $1 billion and still remain well capitalized.”

Except there is one problem, look at E*TRADE balance sheets: there appears to be a lot more than a billion in write downs in store for E*TRADE. The numbers don’t look pretty.

This week the markets finally spooked me, shook me to the core, that this finanical melt down could get real ugly. Major banks could collapse.

Just one example, a best friend of mine works in a very senior position in a very large Wall St. investment bank.

I wrote him, “What’s the feel of the markets, from the inside?”

He Blackberry’s me back,

“Be afraid, be very afraid. I’m now at a insider financial conference and very senior managers are discussing Worst Case Scenarios. There is real fear in the air even among very seasoned finance industry professionals.”

Today I submitted request to have ALL our family assets tranferred out of E*TRADE. It takes about 7 days to complete. I cannot imagine E*TRADE would collapse, but they certainly could lock our accounts up for a long time. WHO KNOWS how this all will play out for security of major financial institutions?

I think gold is looking more and more attractice. The gold market LOVES financial instability.

[stockstradr]

I placed my bets (on the downside of market) many months ago, and everything is proceeding perfectly on plan and that is a wonderful feeling.

I view it as inevitable we’ll see 1300 on S&P 500 within six months.

I see 1300 before the year’s end as distinct possibility, but I’m not counting on it happening.

My portfolio:
20% GLD
The rest is a mixture of very aggressively bearish put option positions on indexes, some 2X leveraged bear funds, some 1X leveraged bear funds, and a few puts on oil. Yes that is an insanely risky portfolio, but it IS paying off.

Everything is sunny except those oil puts, and those will turn around during the next twelve months as the unfolding global recession reduces demand for oil.

[stockstradr]

I placed my bets (on the downside of market) many months ago, and everything is proceeding perfectly on plan and that is a wonderful feeling.

I view it as inevitable we’ll see 1300 on S&P 500 within six months.

I see 1300 before the year’s end as distinct possibility, but I’m not counting on it happening.

My portfolio:
20% GLD
The rest is a mixture of very aggressively bearish put option positions on indexes, some 2X leveraged bear funds, some 1X leveraged bear funds, and a few puts on oil. Yes that is an insanely risky portfolio, but it IS paying off.

Everything is sunny except those oil puts, and those will turn around during the next twelve months as the unfolding global recession reduces demand for oil.

[stockstradr]

I placed my bets (on the downside of market) many months ago, and everything is proceeding perfectly on plan and that is a wonderful feeling.

I view it as inevitable we’ll see 1300 on S&P 500 within six months.

I see 1300 before the year’s end as distinct possibility, but I’m not counting on it happening.

My portfolio:
20% GLD
The rest is a mixture of very aggressively bearish put option positions on indexes, some 2X leveraged bear funds, some 1X leveraged bear funds, and a few puts on oil. Yes that is an insanely risky portfolio, but it IS paying off.

Everything is sunny except those oil puts, and those will turn around during the next twelve months as the unfolding global recession reduces demand for oil.

[stockstradr]

I placed my bets (on the downside of market) many months ago, and everything is proceeding perfectly on plan and that is a wonderful feeling.

I view it as inevitable we’ll see 1300 on S&P 500 within six months.

I see 1300 before the year’s end as distinct possibility, but I’m not counting on it happening.

My portfolio:
20% GLD
The rest is a mixture of very aggressively bearish put option positions on indexes, some 2X leveraged bear funds, some 1X leveraged bear funds, and a few puts on oil. Yes that is an insanely risky portfolio, but it IS paying off.

Everything is sunny except those oil puts, and those will turn around during the next twelve months as the unfolding global recession reduces demand for oil.

[stockstradr]

My cynical comment on stock options is that I usually hang onto the fancy granting certificate because years later I know it will be valuable…

…valuable that is to take with me camping, to help start a campfire, OR wipe my ass with in the woods if I’ve run out of TP.

I’ve always gotten stock options from the “Premier”

*cough*
*cough*

Blue Chip employers I’ve worked for. Invariably I’ve found those options end up worthless.

My new employer gave me nearly 10,000 options on company stock, vesting in like 4 years, or whatever. Those options remain out-of-the-money.

Of course, if you happen to get some options on the ground floor in a tasty start-up company that becomes wildly successful, you can become a multi-millionaire. I live in Silicon Valley and see plenty of VERY high end sports cars driving around here as proof of that!

[stockstradr]

My cynical comment on stock options is that I usually hang onto the fancy granting certificate because years later I know it will be valuable…

…valuable that is to take with me camping, to help start a campfire, OR wipe my ass with in the woods if I’ve run out of TP.

I’ve always gotten stock options from the “Premier”

*cough*
*cough*

Blue Chip employers I’ve worked for. Invariably I’ve found those options end up worthless.

My new employer gave me nearly 10,000 options on company stock, vesting in like 4 years, or whatever. Those options remain out-of-the-money.

Of course, if you happen to get some options on the ground floor in a tasty start-up company that becomes wildly successful, you can become a multi-millionaire. I live in Silicon Valley and see plenty of VERY high end sports cars driving around here as proof of that!

[stockstradr]

My cynical comment on stock options is that I usually hang onto the fancy granting certificate because years later I know it will be valuable…

…valuable that is to take with me camping, to help start a campfire, OR wipe my ass with in the woods if I’ve run out of TP.

I’ve always gotten stock options from the “Premier”

*cough*
*cough*

Blue Chip employers I’ve worked for. Invariably I’ve found those options end up worthless.

My new employer gave me nearly 10,000 options on company stock, vesting in like 4 years, or whatever. Those options remain out-of-the-money.

Of course, if you happen to get some options on the ground floor in a tasty start-up company that becomes wildly successful, you can become a multi-millionaire. I live in Silicon Valley and see plenty of VERY high end sports cars driving around here as proof of that!

[stockstradr]

My cynical comment on stock options is that I usually hang onto the fancy granting certificate because years later I know it will be valuable…

…valuable that is to take with me camping, to help start a campfire, OR wipe my ass with in the woods if I’ve run out of TP.

I’ve always gotten stock options from the “Premier”

*cough*
*cough*

Blue Chip employers I’ve worked for. Invariably I’ve found those options end up worthless.

My new employer gave me nearly 10,000 options on company stock, vesting in like 4 years, or whatever. Those options remain out-of-the-money.

Of course, if you happen to get some options on the ground floor in a tasty start-up company that becomes wildly successful, you can become a multi-millionaire. I live in Silicon Valley and see plenty of VERY high end sports cars driving around here as proof of that!

[stockstradr]

My reply will surprise many on this forum who have seen 2+ years posts from me always advising, “SELL SELL SELL”

However, I think everything has really changed in the last three months. The real estate market fell off a cliff.

I advise you DO NOT SELL because now it is too late to sell. Six months ago (before the cliff) I would have advised you to sell.

Also, I’ve found (in advising friends in similar situation) this logical advice is a MOOT point anyway, because your emotions will always dominate the decision, specifically the shell shock you’ll experience if you try to sell your home into a real estate market that is going to kick your pricing expectations to shreds.

I know several families who during last couple months ignored my “too late, don’t sell” advice and then tried to sell into THIS market. They have been so emotionally / psychologically devastated by how low the market priced their house, they pulled their house off the market and ran for cover.

Let’s say you really think your home is worth $950,000. Imagine buyers laughing in your face. Imagine the few offers you get are all at least three hundred grand below what you think your home is worth. Imagine deals fall through because no financing available. This market is pure hell for a seller. Very few sellers have the emotional fortitude to complete a sale into this market.

Of course, there are still a few areas in CA where this in not the case. The high end in the Bay Area still is going strong, for example.

[stockstradr]

My reply will surprise many on this forum who have seen 2+ years posts from me always advising, “SELL SELL SELL”

However, I think everything has really changed in the last three months. The real estate market fell off a cliff.

I advise you DO NOT SELL because now it is too late to sell. Six months ago (before the cliff) I would have advised you to sell.

Also, I’ve found (in advising friends in similar situation) this logical advice is a MOOT point anyway, because your emotions will always dominate the decision, specifically the shell shock you’ll experience if you try to sell your home into a real estate market that is going to kick your pricing expectations to shreds.

I know several families who during last couple months ignored my “too late, don’t sell” advice and then tried to sell into THIS market. They have been so emotionally / psychologically devastated by how low the market priced their house, they pulled their house off the market and ran for cover.

Let’s say you really think your home is worth $950,000. Imagine buyers laughing in your face. Imagine the few offers you get are all at least three hundred grand below what you think your home is worth. Imagine deals fall through because no financing available. This market is pure hell for a seller. Very few sellers have the emotional fortitude to complete a sale into this market.

Of course, there are still a few areas in CA where this in not the case. The high end in the Bay Area still is going strong, for example.

[stockstradr]

My reply will surprise many on this forum who have seen 2+ years posts from me always advising, “SELL SELL SELL”

However, I think everything has really changed in the last three months. The real estate market fell off a cliff.

I advise you DO NOT SELL because now it is too late to sell. Six months ago (before the cliff) I would have advised you to sell.

Also, I’ve found (in advising friends in similar situation) this logical advice is a MOOT point anyway, because your emotions will always dominate the decision, specifically the shell shock you’ll experience if you try to sell your home into a real estate market that is going to kick your pricing expectations to shreds.

I know several families who during last couple months ignored my “too late, don’t sell” advice and then tried to sell into THIS market. They have been so emotionally / psychologically devastated by how low the market priced their house, they pulled their house off the market and ran for cover.

Let’s say you really think your home is worth $950,000. Imagine buyers laughing in your face. Imagine the few offers you get are all at least three hundred grand below what you think your home is worth. Imagine deals fall through because no financing available. This market is pure hell for a seller. Very few sellers have the emotional fortitude to complete a sale into this market.

Of course, there are still a few areas in CA where this in not the case. The high end in the Bay Area still is going strong, for example.

[stockstradr]

Myself I’m mostly in cash, gold, and TIPS, with a few speculative bets against the American consumer (SCC, retailer put options). My expectations include continued dollar decline, falling discretionary consumer spending during the winter gradually developing into recession, eventually second round of credit crunch, this time driven by mass defaults in Prime/Alt-A sectors. When the dust settles, time will come to buy a house and move into stocks.

Brilliant. Totally agree, with minor exception that I have far more than “a few speculative bets” on the American Consumer (stopping their credit card / refi spending, causing a recession and and stock market collapse)

Weeks like this one are 7% (up) weeks for my portfolio. Yes, I understand the risks (and benefits!) of LEVERAGE. However, in the spirit of “full disclosure” I admit I’m getting my butt kicked on the Bear positions I took on oil at $82/bbl.

Regarding future Dow moves…
Let that American Consumer go home now and get frightened from reading scare headlines about how the Dow dropped 3.5% this week, ahead of the 1987 Crash anniversary. Let some tasty panic build ahead of Mondays market open. A 500+ point drop in the Dow on Monday would be just what the Doctor ordered. I’m not predicting it, just saying it is within the realm of possibility.

[stockstradr]

Myself I’m mostly in cash, gold, and TIPS, with a few speculative bets against the American consumer (SCC, retailer put options). My expectations include continued dollar decline, falling discretionary consumer spending during the winter gradually developing into recession, eventually second round of credit crunch, this time driven by mass defaults in Prime/Alt-A sectors. When the dust settles, time will come to buy a house and move into stocks.

Brilliant. Totally agree, with minor exception that I have far more than “a few speculative bets” on the American Consumer (stopping their credit card / refi spending, causing a recession and and stock market collapse)

Weeks like this one are 7% (up) weeks for my portfolio. Yes, I understand the risks (and benefits!) of LEVERAGE. However, in the spirit of “full disclosure” I admit I’m getting my butt kicked on the Bear positions I took on oil at $82/bbl.

Regarding future Dow moves…
Let that American Consumer go home now and get frightened from reading scare headlines about how the Dow dropped 3.5% this week, ahead of the 1987 Crash anniversary. Let some tasty panic build ahead of Mondays market open. A 500+ point drop in the Dow on Monday would be just what the Doctor ordered. I’m not predicting it, just saying it is within the realm of possibility.

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