Posted on 08/05/2007 5:43:15 PM PDT by shrinkermd
Diversification -- not putting all one's eggs in the same basket -- has long been a mainstay of investing safely. But it works only so long as all the baskets don't tumble at once.
In recent weeks, assets around the world have fallen in lockstep. Stocks, corporate bonds, emerging-market debt and a host of derivatives backed by mortgages and other types of borrowing have been hit hard. Even commodities such as gold and other metals, which investors turn to precisely because their prices typically don't move in sync with other assets, dropped along with everything else in late July.
The result is that investors who spread their money across different assets are finding they were less protected than they thought.
"It is becoming more difficult to find assets that aren't highly correlated. Over short periods of time, property, commodities, equity and bonds are all moving together in similar directions," said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh which has about £140 billion, or $285 billion, under management.
Concerns about risky bonds sent U.S. stocks tumbling Friday. The Dow Jones Industrial Average fell 2.1% to 13181.91. Although still up 5.8% this year, the Dow is now nearly 6% below its record close of 14000.41 on July 19, little more than two weeks ago
(Excerpt) Read more at online.wsj.com ...
More than several hedge funds and other major institutions must be selling everything to raise cash. 60-80% of trades on NYSE are by hedge funds and other institutions.
The Fed's charter is to protect the value of the currency not to bail out insolvent gamblers.
The only way to be diversified in this market is to take short positions. When the market has been going down, all sectors have been going down.
I think we are doomed...Ive got doom insurance though
And where was the Wall Street Journal to warn about this problem as it grew and grew over a period of years?
At 20:00 hours CST the Dollar Index sits at .80. To me this suggests a potential cut in interest rates is in the offing. In the last several weeks the 2,5,10 and 30 year treasuries have, on the average, had a 3/8 point decline in interest rates. Maybe the Fed will affirm what has already happened.
In any case a break below .80 on the dollar index is bound to have consequences. Brrrrr. cold up here on a Summer day.
The good old Certificate of Deposit is doing just fine.
You would think these companies should have seen this coming a mile away. Giving ARMs for 100% of a home’s value (or more) to people on the margins is a formula for disaster if anything goes awry with the economy—which it will, sooner or later. The stupidity of people in positions of (supposed) authority never ceases to amaze me.
You would think these companies should have seen this coming a mile away. Giving ARMs for 100% of a home’s value (or more) to people on the margins is a formula for disaster if anything goes awry with the economy—which it will, sooner or later. The stupidity of people in positions of (supposed) authority never ceases to amaze me.
“To me this suggests a potential cut in interest rates is in the offing.”
Of course if that happens, a lot of people are going to want to go right out and buy a house;)
Still just need to ride out the current storm in the market.
I keep some in my 5% CD’s too.... my risk level is fairly high but not full bore testosterone balls to the wall level either.
The Wall Street Journal is in a compromised position on all this.
They have known internally for some time now that this subprime collapse was coming, but they studiously avoided it, both editorially and in its news, letting others take the lead in uncovering the problem.
They also knew that the subprime problem was an illegal alien problem - that is where the wave of foreclosures were coming from - not only illegals, but landlords exploiting illegals in overcrowded dormitory houses, and in a few cases, minorities who were displaced from jobs by illegals.
With its passion for unlimited cheap labor and important legislation coming up for consideration that would guarantee that unconstrained flow of cheap illegal labor, (the amnesty and open borders bill) the Journal was extremely diligent in hiding that linkage. It has had a lot of help from government agencies and the MSM in hiding that subprime linkage to the illegal alien invasion (20 million people do need places to live, you know).
So for those who think we need 20 million plus illegals to cut their grass and clean their toilets and are now seeing their 401k and retirement funds and stock portfolios and home values going south, enjoy your lawns.
interesting visual......
http://www.breitbart.tv/?p=3997
Check this out...hahaha...Jim Cramer must be getting it in the shorts to be this upset!
Subrime implosion was caused by the low interest politics of greenspan - to grant these loans and to spread the risk around the world by trading it is a symptom of printing money at full speed ahead.
Now people will loose homes they never could afford and companies will cease to exist that shouldn’t have been there.
Unluckily some more things are going to happen because these guys had some secondary business around them. Housebuilding - overall consumption etc.
This had to end here or it had ended way more dramatic (it’s not over yet mind you).
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