350zCommtech's Account Talk

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OK guys help me out here. I don't have the smarts to figure all the signs out and decipher everything thats happening in the financial world right now but it sure looks like we (the US economy) are in big trouble. My question is this...

How bad is this whole situation? Has the US ever faced a problem like we are seeing now that is permeating all aspects of the economy? Is the Government helpless to really try and do anything to head off this train wreck? Should they do anything? Is some of the bad news being blown out of proportion by those who could make a buck off other peoples problems? I know that no one can predict what the future (late 2008) holds, just looking for opinions to help me make better decisions.

Thanks to all of you that help others of us understand a little more of what is happening.
 
akpackfan said:
How bad is this whole situation? Has the US ever faced a problem like we are seeing now that is permeating all aspects of the economy? Is the Government helpless to really try and do anything to head off this train wreck? Should they do anything?
Click to expand...

How bad? Well, some folks are using the "D" word, as in depression.

Here is my opinion on what the government can do. This option was brought up during the bond hearing 2 weeks ago.

350zCommTech said:
The government needs to bring Warren Buffet back to the table and force the bond insurers to accept his offer. After that, the rating agencies can freely downgrade the bond insurers. ABK and MBIA will probably blow up and more writedowns will come along with more BKs, but this will start to restore trust in the markets as the good, the bad, and the ugly gets exposed. The muni's will be saved.

The more they try to delay this, the more innocent victims there will be.
Click to expand...
 
Quite simply, the panic that has gripped the mortgage-financing market is irrational and has no basis in investment reality. In many ways, today's situation is reminiscent of the recession of 1990-91, which featured a housing bust and piles of bad loans, which hurt banks. The Federal Reserve started cutting interest rates even before the recession began. The economic downturn was no day at the park, but it was fairly easy on stocks, which rose during the recession and managed to avoid a bear market. In the three recessions between 1980 and 1991, stocks turned positive before the recession ended, leading to runaway gains in the months after the downturn. Stocks on the whole rose modestly during those recessions. I'm old enough to have been there. The stock market is a powerful discounting mechanism, so by the time it becomes clear to everybody we're in a recession, the market has factored in the ensuing recovery. Staying the course and holding the line at 75% C fund and 25% I fund. At the end of 2006, the S&P Financials was the largest sector in the S&P 500, representing 22% of market cap. Today, it is still the largest sector although the weighting is down to 17%. I'm happy about all the pain that is being delivered to the speculative housing sector - it was way over due but let's not get carried away before things settle down. This is not 1973-75 or even 2001 - the value scenario is completely different. The price/earnings ratio for the S&P 500 today, when looking ahead to 2008 earnings, is just 13.8 or less. That could mean the index doesn't have much further to fall. Thanks to the global outreach corporate profits ex-financials are coming in at 12% to 14%. I think now that the financial sector has been priced for the worst.
 
350zCommTech said:
There are no buyers because there is no trust. Everybody, from banks to bond insurers to rating agencies, that got involved in this alphabet soup knew that is was a scheme. They made billions and got million dollar bonuses and caused astronomical home price inflation across the country and maybe around the world also.

The government needs to bring Warren Buffet back to the table and force the bond insurers to accept his offer. After that, the rating agencies can freely downgrade the bond insurers. ABK and MBIA will probably blow up and more writedowns will come along with more BKs, but this will start to restore trust in the markets as the good, the bad, and the ugly gets exposed. The muni's will be saved.

The more they try to delay this, the more innocent victims there will be.
Click to expand...
Hey 350,
Again, Thanks for the help today.:o Had a few good videos to break the "depression" some folks may have been feeling (at least for awhile).
On a more somber note, I seem to recall a couple weeks ago, your opinion was to stay away from F -my understanding was that any solution such as above, will = major writedowns, and therefore, bad for F, as well as for stocks/equities in general.

I suppose I'm wondering, wanting to understand in simplest way possible - why now are you in F, and is F a good place to move to for the rest of, say March, or as long as stocks are falling]?? Or is your move basically temporary?? I'd still likely only go in 1/2 at most, but is the Bond Insurer's/Lender's issue now, no longer a reason to stay away? Wish I understood fundamentals behind F better, because IMO Bonds are even more complicated to predict than the stock Funds.
VR
 
Birchtree said:
Quite simply, the panic that has gripped the mortgage-financing market is irrational and has no basis in investment reality.
Click to expand...

There you go again. The Permabull Energizer Bunny.

O.k., everybody, if you believe that Birchtree is correct in his statement above, please raise your hands.:D


Birchtree said:
Staying the course and holding the line at 75% C fund and 25% I fund.
Click to expand...

Why, do you believe the housing market is going to bounce back in a couple of months and that the bull market will return next week, taking the S&P back to 1500? Wait a second, do you even believe that housing market is in a recession?:D
 
hessian said:
Hey 350,
Again, Thanks for the help today.:o Had a few good videos to break the "depression" some folks may have been feeling (at least for awhile).
On a more somber note, I seem to recall a couple weeks ago, your opinion was to stay away from F -my understanding was that any solution such as above, will = major writedowns, and therefore, bad for F, as well as for stocks/equities in general.

I suppose I'm wondering, wanting to understand in simplest way possible - why now are you in F, and is F a good place to move to for the rest of, say March, or as long as stocks are falling]?? Or is your move basically temporary?? I'd still likely only go in 1/2 at most, but is the Bond Insurer's/Lender's issue now, no longer a reason to stay away? Wish I understood fundamentals behind F better, because IMO Bonds are even more complicated to predict than the stock Funds.
VR
Click to expand...

hessian,

Until the trading restrictions are in place, my moves are short term oriented(1-3 days). And yes, I do believe that the F fund could be a good place to be for the rest of March, but nothing moves in a straight line, obviously. Especially since we don't have to worry about anymore ABK bailout BS.:D

The best way to understand what I'm doing is by asking questions when I post my charts or comments. Ask about my time frame, safe bet/gamble, etc...
 
I do not believe the housing market is yet in a recession. I'm having difficulty believing that the housing speculator has no internal moral compass - and can just walk away from contractual obligations. It's beyond my conservative scope. The greedy specularor is the culprit here, not the lending institutions or home builders. I believe the Fed will step up once again to relieve this pressure - after all they were the ones intent on causing this crisis for the sake of pre-empting inflation. They need to intervene on the foreclosure issue to prevent further contagion with falling prices - falling prices hurts everyone in any particular neighborhood. They will drop both rates and the Treasury will eventually start calling for a stronger dollar and our euro friends will be awfully glad to provide any assistence they can to defend the value of the dollar. The sun will shine again - trust me on this one.
 
Birch, I go along with your last sentence "The sun will shine again - trust me on this one." I know a few housing contractors and they have STOPPED, gone Bankrupt, or are plainly just sitting on completed homes that they can't sell. All their workers are out of a job. I really don't think it's that bad here in Central Georgia, other places in the country are devastated. I think it's REALLY BAD and going to get worse, much worse!:cool:
 
I'm not an alarmist or a die hard Ron Paul supporter but this is some scary stuff. The paper in my wallet is worth less every day and I don't see any other politician on either side acknowledging the collapse of our currency and the ramifications involved. I'm glad I own a few guns.:D

Sorry if this has been posted before.



 
Hi Z got a question - The G Fund pays Tuesday or Wednesday. If Tuesday that is 9 days if Wednesday this is 10 days.... Would it be worth staying 100% F Fund and bypass the G Fund penny when the F Fund could pay more or even lose. The G is a sure bet the F is a good bet but not a sure bet so which way would you go.:confused: Or to balance it out go 50 F & 50 G I guess - Thoughts on this appreciated - :)
 
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Braveheart said:
Hi Z got a question - The G Fund pays Tuesday or Wednesday. If Tuesday that is 9 days if Wednesday this is 10 days.... Would it be worth staying 100% F Fund and bypass the G Fund penny when the F Fund could pay more or even lose. The G is a sure bet the F is a good bet but not a sure bet so which way would you go.:confused: Or to balance it out go 50 F & 50 G I guess - Thoughts on this appreciated - :)
Click to expand...

For tuesday, I'm thinking G or back into the market, C or S. The markets should try to bounce near SPX 1270. It will obviously depend on what happens tonight and tomorrow morning. I will be looking for reasons to get back in.

I would like to see a slow grind down followed by a bounce near 1270 in the afternoon. If it falls hard early in the morning and goes through 1270, then I will think about G or F.

I have other stuff to help me decide also.:)
 
350zCommTech said:
For tuesday, I'm thinking G or back into the market, C or S. The markets should try to bounce near SPX 1270. It will obviously depend on what happens tonight and tomorrow morning. I will be looking for reasons to get back in.

I would like to see a slow grind down followed by a bounce near 1270 in the afternoon. If it falls hard early in the morning and goes through 1270, then I will think about G or F.

I have other stuff to help me decide also.:)
Click to expand...

I'm with you 350z - I've been in the G fund since January 18 (S&P closed at about 1325) and have been patiently waiting for it to dip below 1300 to begin buying back in. However, since I still believe we are in a bear market, as opposed to a bull market correction, I am only looking to get in for some quick 1 or 2% rebound gains and then make a quick exit back to the lilly pad before the next downward leg begins.
 
presskh said:
I am only looking to get in for some quick 1 or 2% rebound gains and then make a quick exit back to the lilly pad before the next downward leg begins.
Click to expand...

Exactly, you got the right idea. In this market, you got to act like a thief. Hang around a day too long and you'll get caught with you pants down.
 
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