What a day! S&P whacked the market

by truthbetold Mon Aug 08, 2011 10:37 pm

First S&P downgraded US debt on Friday. US market could have withstood that salvo (in my opinion). Added to that was Italy and Spain Bond problem(growing investor dislike).

Then during the market day S&P announces down grade of Fannie Mae and Fannie Mac. Wall street panicked.

This is blood bath. In a months time US stocks lost nearly 2000 points (20% plus).

The problems are known: US economic slow down, US debt problem, Trade deficit , Europe debt problems, Oil prices etc.

It is just that market has finally decided that it has to take notice. If it truly discounts all the fundamental problems listed above, Depression will be a walk in park. Market may choose to shrug off the problems after few days and come back to its old ways. Or it may start taking long term problems seriously and come back to earth.

Moody's and Fitch may also join the downgrade process. If that happens, it will be another Lehman's.

It is dangerous out there for a few days.

Strategy: I plan to play only a portion of the amount. It is tough to make money in this market even if you are right.
Of Course you can always buy Gold and sit back and enjoy.

by charvaka Mon Aug 08, 2011 10:42 pm

truthbetold wrote:Strategy: I plan to play only a portion of the amount. It is tough to make money in this market even if you are right.
Of Course you can always buy Gold and sit back and enjoy.

This sounds like a good strategy. I have a third of my money in gold. But I am getting jittery because I was crazy enough to buy the gold double long ETF, so my downside risk is twice as bad if gold begins to come down from its perch. I have open limit buys on another third of my money. The last third is in cash. I am really jittery right now about both gold and the open buy orders I have out there. It's a good thing I have meetings all day for the next 2-3 days. That way I won't get trigger-happy during the trading day.

by truthbetold Mon Aug 08, 2011 10:58 pm

Charvaka,

I just posted in another thread on Gold. However, I did not realize that you are investing in double long etf. I do not know how well they track the gold price movements. My impression is that they are not as efficient as options are in tracking movements.

If I buy double long , I would be doubly quick to get out once the trend changes. This is speculative. So it has to be very short term.

by charvaka Mon Aug 08, 2011 11:03 pm

Yeah, I was looking for a quick shortcut and settled on DGP about 10 days before the debt deal got done. It has worked out really well for me (over 10% gain) but I am seriously thinking of getting out -- even if I put that into a less risky gold strategy.

by MaxEntropy_Man Tue Aug 09, 2011 9:54 am

corporate balance sheets are still solid. i'm not going to panic and change anything on my very long term investments. in any case, it's too late for that. if i had some dry powder i'd be looking at ADBE and ESI.

by Guest Tue Aug 09, 2011 10:28 am

What does Rakesh J say?

http://www.moneycontrol.com/news/market-outlook/markets-may-not-shootafter-hitting-bottom-jhunjhunwala_574464.html

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