I find it amazing that with a 10% drop in the market reached it is now time to buy? Why? Because P/E ratios are good? Because cash flow is good? The economy is still good and strong right? And therefore there is no recession?
It’s a time to buy right? After all it seems all the professional traders are buying… (It seemed somebody was buying today)
…the next low (read: the next support level) is 1222 of June 13th, 2006. (!!!) We appear to have bounced back off that level, but that support level is not holding strongly. Don’t be suprised if it falls over. Countrywide is all but gone. That is the last of the non-bank lenders. What is even (more…)
On CNBC Europe there was this guy from Saxobank who talked about how the models of today are illustrating that computers will yet again fail. He was saying how good traders will save the day.
Today on CNBC American Squawk box I heard one of the most straight talking individuals I have listened to in a long while. The panel was Steve Forbes, and a woman called Janet Tavakoli, and they were talking about Quant funds and their models. Janet’s comment regarding quant model’s was, and I quote: Model Masturbation (more…)
Many, including myself are wondering who is responsible for this mess. Many point at Greenspan, but I think it is not so black and white.
One problem that we have is that people don’t understand the mathematics and dynamics of mortgages. I even get the feeling that mortgage lenders are pretty clueless. In particular I would like to quote the following from Housing Bubble.
“One was a waitress who made decent money at a high end restaurant, but couldn’t prove it because so much of her pay was in cash tips. Another was a young lawyer, making nearly $200,000 in the city but who didn’t have the money saved for the down payment on a $800,000 Manhattan condo.”
The market is in turmoil and BNP is complaining about liquidity issues. I went back to look at an interview from Scholes (author of Black-Scholes pricing) for an opinion on the situation.
As a result, “decision time becomes elongated” and speculators hold back their capital just when their services are most in demand. The lack of liquidity itself then becomes a factor in asset pricing, leading to swift, sharp drops in values.
At iTulip they had an interesting posting regarding the currency markets.
“We are fast reaching a stage at which elegant quantitative models won’t determine who survives, in fact, those that tend to rely on models in this environment may be most likely to be shining shoes sooner rather than later.”
Really, you mean you CAN’T PREDICT? Who would have thought? Seriously, I have been talking about this time and time again (1,2,3). I might be a newbie at this, and I might not have all the credentials of a full time quant. BUT, after a year of doing algorithmic trading I have learned that you cannot and should not predict the market.
I was puzzling and thinking if I were Bernake what would I do? Many are crying raise the darn interest rates. Many are saying lower to give the companies a break. Bernake though does not strike me as an individual that leaves a statement. He strikes me as an individual that tries to do the right thing.
So if I were Bernake and his personality here is what I would do:
I think Jim Cramer lost it, and I don’t quite understand what Jim Cramer is recommending.
In his “Stop Trading” segment on Street Signs today, Cramer said the nation’s central bank is “asleep” and should immediately “relieve the pressure” on financial firms and the nation’s home owners who are facing big increases in their mortgage payments as ‘teaser’ rates expire. Many thousands will “lose their homes,” he warned. “This is not the time to be complacent.”
He predicted a big rebound for the major stock market averages if the Fed does indeed lower rates
Two great posts to IG in the last few days have me back to make a counter-post to their great arguments. Call me the devil of IG if you want, but that’s my job, right?
