Support NeoGAF

[Ovid]

I don't know about u guys, but this chart looks pretty good to me

 

[Ether_Snake]

While the Dow closing below its previous close is important, remember that the S&P500 is a much, much more important index. The Dow is a price-weighted index. As such, most of its move is dictacted by high-priced stocks, like IBM. Dow components like GM, BAC, GE, etc., really don't have an impact on the index anymore. 90% of professional traders use the SP500.

The significant even to watch out for is close below 750. Right now the market seems determined to test that low. We may or may not. Who knows.

According to my numbers, which I base all my trades off, the market is significantly oversold. In fact, we're more oversold now than we were back in November. I would normally be loading up on call options right now but the fact that bank nationalization seems like a very real possibility means I have to go slow. I believe the market is either going to have a massive rally (assuming we hold the Nov low) or is going to have a swift crash. When the market is THIS oversold, those are really the only two possible outcomes.

I'm 90% cash right now. I own BDK, UPS, SO, PM, PG, and AVY calls. I own AKAM puts.

What do you mean when you say you are 90% cash now?

 

[RSTEIN]

What do you mean when you say you are 90% cash now?

I mean 90% of my portfolio is cash, the remaining 10% is comprised of the calls I mentioned.

 

[Ether_Snake]

But I mean what's a "cash" portfolio? You mean you just have money sitting there, or does it mean something else?

 

[Tarazet]

But I mean what's a "cash" portfolio? You mean you just have money sitting there, or does it mean something else?

Yeah the money is just sitting there. Brokerage accounts usually have a sweep option, which is some kind of money market.

 

[Ovid]

I mean 90% of my portfolio is cash, the remaining 10% is comprised of the calls I mentioned.

That is the same ratio I have, 90% cash (money market) and the remaining 10% in stocks.

 

[Ether_Snake]

Nikkei under 7000 by the end of the week? Or maybe a bit of resistance first.

 

[Ovid]

Feb. 23 (Bloomberg) -- Citigroup Inc., the recipient of $45 billion in U.S. government aid, is in talks with federal officials that may increase state ownership of the bank, the Wall Street Journal said.

The government may end up holding as much as 40 percent of Citigroup’s common stock, the newspaper said, citing people familiar with the situation it didn’t identify.

Citigroup, which slumped 22 percent in New York trading Feb. 20 on concern it may be nationalized, proposed to its regulators that the government convert a large portion of its preferred shares into common stock in a transaction that wouldn’t cost taxpayer more money, the Journal reported. Another taxpayer- funded bailout would probably cost Chief Executive Officer Vikram Pandit his job, the report said.

Banks may have to be nationalized for “a short time” to help lenders such as Citigroup and Bank of America Corp. survive the worst economic slump in 75 years, Senate Banking Committee Chairman Christopher Dodd said on Feb. 20.

Citigroup, which is trading at its lowest level in 18 years, would prefer the government stake in the New York-based company to be closer to 25 percent, the Journal said.

Bank of America and Citigroup have received a combined $90 billion in U.S. aid in four months.

The administration of President Barack Obama said on Feb. 20 that a “privately held” banking system is the “correct way to go” and House Financial Services Committee Chairman Barney Frank said nationalization ought “to be avoided.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=av08lzk8SlMg&refer=home
Good or bad for the markets 2morrow?

 

[Ovid]

Well, I see the DJ, S&P, and Nasdaq futures are up, so I guess the markets like the news.

 

[RSTEIN]

But I mean what's a "cash" portfolio? You mean you just have money sitting there, or does it mean something else?

Just good old cash (you know, Canadian funny money).

The government may end up holding as much as 40 percent of Citigroup’s common stock, the newspaper said, citing people familiar with the situation it didn’t identify.

So, we're not nationalization the banks... just owning roughly half of their equity :lol

 

[Deku Tree]

Anyone think Obama would wipe out Prince Alaweed's stake in Citi?

 

[toxicgonzo]

That is the same ratio I have, 90% cash (money market) and the remaining 10% in stocks.

Me too. I jumped in momentarily hoping for a false rally, a quick day-to-day trade but now I'm just a bagholder for a few stocks

 

[Ether_Snake]

Anyone think Obama would wipe out Prince Alaweed's stake in Citi?

I don't.

And:

Dividends Falling Most Since ’55 Means S&P 500 Still Expensive
By Michael Tsang

Feb. 23 (Bloomberg) -- The fastest reduction in U.S. dividends since 1955 is depriving investors of the only thing that gave stocks an advantage over government bonds in the last century.

U.S. equities returned 6 percent a year on average since 1900, inflation-adjusted data compiled by the London Business School and Credit Suisse Group AG show. Take away dividends and the annual gain drops to 1.7 percent, compared with 2.1 percent for long-term Treasury bonds, according to the data. (And don't bother factoring in anything for that old-fashioned concept called 'risk' - Jesse)

A total of 288 companies cut or suspended payouts last quarter, the most since Standard & Poor’s records began 54 years ago, when Dwight D. Eisenhower was president. While the S&P 500 is trading at the lowest price relative to earnings since 1985 and all 10 Wall Street strategists tracked by Bloomberg forecast a rally this year, predictions based on dividends show shares are overvalued by as much as 46 percent.

“It’s a greater fool theory if we always buy stocks based on earnings and we never get a penny out of it, hoping for someone to buy that stock at a higher price,” said James Swanson, chief investment strategist at MFS Investment Management in Boston, which oversees $134 billion. “Dividends have been a cushion in bad times. If they go to zero it’s a disaster.”

Twenty-five companies in the S&P 500 saved almost $17 billion by cutting or suspending outlays this year, more than all the reductions from 2003 to 2007, when the index returned 83 percent. On a per-share basis, S&P 500 companies may trim payouts 13 percent this year, the biggest drop since 1942 ...

 

[Javaman]

Here's a nice article that touches on why so many "experts" failed to predict the economic slowdown...

http://money.cnn.com/2009/02/17/pf/experts_Tetlock.moneymag/index.htm?postversion=2009021816

(Money Magazine) -- You've probably never wanted expert insight more than today - and never trusted it less. After all, the intelligent, articulate, well-paid authorities voicing these opinions are the ones who created the crisis or failed to predict it or lost 30% of your 401(k) in it.

Yet we can't tear ourselves away. The crisis has brought record ratings to CNBC and its parade of talking heads. You're probably still entrusting your portfolio to the experts running mutual funds. Despite everything, we can't shake the belief that elite forecasters know better than the rest of us what the future holds.

The record, unfortunately, proves no such thing. And no one knows that record better than Philip Tetlock, 54, a professor of organizational behavior at the Haas Business School at the University of California-Berkeley. Tetlock is the world's top expert on, well, top experts. Some 25 years ago, he began an experiment to quantify the forecasting skill of political experts.

By the time he finished in 2003, Tetlock had signed up nearly 300 academics, economists, policymakers and journalists and mapped more than 82,000 forecasts against real-world outcomes, analyzing not just what the experts said but how they thought: how quickly they embraced contrary evidence, for example, or reacted when they were wrong. And wrong they usually were, barely beating out a random forecast generator.


Americans were shocked at how wrong the experts were. You weren't. Why not?

My research certainly prepared me for widespread forecasting failures. We found that our experts' predictions barely beat random guesses - the statistical equivalent of a dart-throwing chimp - and proved no better than predictions of reasonably well-read nonexperts. Ironically, the more famous the expert, the less accurate his or her predictions tended to be.

Money has written about human mental quirks that lead ordinary folks to make investing mistakes. Do the same lapses affect experts' judgment?

Of course. Like all of us, experts go wrong when they try to fit simple models to complex situations. ("It's the Great Depression all over again!") They go wrong when they leap to judgment or are too slow to change their minds in the face of contrary evidence.

And like all of us, experts have a hard time with randomness. I once witnessed an experiment that pitted a classroom of Yale undergrads against a lone Norwegian rat in a T-maze. Food was put in the maze in no particular pattern, except that it was designed to end up in the left side of the "T" 60% of the time. Eventually, the rat learned always to turn left and so was rewarded 60% of the time. The students, on the other hand, fell for a variant of the "gambler's fallacy." Picture a roulette player who sees a long sequence of red and puts all his money on black because it's "due." Or more subtly, he looks for complex, alternating patterns - the same kind of mental wild-goose chase that technical stock pickers go on. That's what happened to the Yalies, who kept looking for some pattern that would predict where the food would be every time. They ended up being right just 52% of the time. Outsmarted by a rat.

Considering how wrong they are, why are the same old talking heads continuing to give advice?

Unless you force experts to be specific, as we did, they can make predictions that are difficult to falsify. You know the cynical clich "Never assign a date and a number to the same prediction." That lets you get away with saying things like "Yes, I did say the Dow will hit 36,000, and it will - just wait. I was merely a little early."

 

[ALeperMessiah]

Well what began as a positive looking day is going downhill at the start of the afternoon session. Dow down 130 at this point. I have a few mutual funds in my personal account that I'm bailing out of today, about 3 months too late, but I need to take my loses and move on...

 

[gkryhewy]

Well what began as a positive looking day is going downhill at the start of the afternoon session. Dow down 130 at this point. I have a few mutual funds in my personal account that I'm bailing out of today, about 3 months too late, but I need to take my loses and move on...

Unless those mutual funds are comprised largely of Citibank and BoA, selling at decade lows would appear to be precisely the wrong thing to do.

 

[Tideas]

does anyone have any investment in shipping companies? Their dividends return are friging crazy!!

Any bad side to this?

 

[Ovid]

I was thinking of buying some muni bonds (when I get my bonus and tax refund) in a few weeks. I have been researching them and noticed that they have pretty decent returns compared to my money market & saving accounts. Any cons to doing this?

 

[Ovid]

NEW YORK, Feb 23 (Reuters) - U.S. stocks slid on Monday, sending the Dow Jones industrial average to its lowest in more than 11 years, as uncertainty about the government's latest bid to shore up ailing banks, including Citigroup (C.N), diminished the appetite for riskier assets.

* A sell-off in technology shares added to the negative tone amid concerns about declining business and consumer spending.

* The S&P 500 broke below its bear market closing low set Nov. 20, while the Dow slid to levels last seen in late 1997.

* The Dow Jones industrial average .DJI was down 157.30 points, or 2.14 percent, at 7,208.37. The Standard & Poor's 500 Index .SPX was down 18.44 points, or 2.39 percent, at 751.61. The Nasdaq Composite Index .IXIC was down 37.62 points, or 2.61 percent, at 1,403.61. (Reporting by Ellis Mnyandu; Editing by James Dalgleish)

You guys know what happened when the markets reached this level last year on November 20th, we had a huge rally. Granted, it was helped by Black Friday & Christmas but I just wanted to let you guys know.

 

[Ovid]

Here is the article from Nov. 20th 2008

NEW YORK (CNNMoney.com) -- Wall Street slumped Thursday, with the S&P 500 plunging to an 11-1/2 year low as fears of a prolonged recession sparked a massive selloff.

Treasury prices rallied as investors sought the comparative safety of government debt. The dollar was mixed versus other major currencies. Oil prices plunged

The Standard & Poor's 500 (SPX) index lost 6.7% and closed at its lowest point sine April 14, 1997.

The Dow Jones industrial average tumbled (INDU) 5.6% and the Nasdaq composite (COMP) slumped 5.1%. Both the Dow and Nasdaq closed at their lowest points since March 12, 2003, which was just above the low of the last bear market.

The Dow has lost 872 points, or 10.4%, over the last two sessions. It saw a bigger two-day point drop in the two sessions after the presidential election, but it hadn't seen either two-day percentage drops since October 1987, according to Dow Jones.

Stocks slipped through the early afternoon following miserable readings on the labor market and manufacturing sector. The major gauges briefly bounced after hitting fresh 5-1/2 year lows. But the recovery attempt dissolved as Congress haggled over the fate of the automakers and Citigroup led the bank stocks sharply lower.

Citigroup: The company's largest shareholder, Saudi Prince Alwaleed Bin Talal, said Thursday that he is increasing his stake in the troubled bank back to 5% from 4%, even as shares continue to plummet. Citigroup (C, Fortune 500) shares plunged 26.4%.

The move follows the U.S. government's decision to inject $25 billion into the bank. Earlier this week, Citi said it was cutting over 50,000 of its staff as a means of cutting costs heading into what is expected to be a rough 2009.

Sources said Thursday that Citigroup officials are lobbying the SEC to reinstate the ban on the short selling of financial shares, the Wall Street Journal reported.

In other corporate news, General Electric (GE, Fortune 500) denied it is looking for money from sovereign wealth funds or other funds. Shares fell 11%.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by more than ten to one on volume of 2.23 billion shares. On the Nasdaq, decliners topped advancers by five to one on volume of 3.20 billion shares.

http://money.cnn.com/2008/11/20/markets/markets_newyork/index.htm

It's funny how both Citi and GE are both in the news today with pretty much the same headline.

 

[Javaman]

I was thinking of buying some muni bonds (when I get my bonus and tax refund) in a few weeks. I have been researching them and noticed that they have pretty decent returns compared to my money market & saving accounts. Any cons to doing this?

I read an article a while back about the pros and cons of tax free vs. taxed bonds. Unfortunately I don't remember much about it, apart from it being important to determine if the lower return on the nontaxed bond is a better deal then taking the tax hit for the larger return of taxed bonds. I believe it went something like, go for tax free bonds only if your income is high. While it sounds simple (and generic without hard numbers) There's some crazy math involved in making the best decision.

 

[Deku Tree]

I read an article a while back about the pros and cons of tax free vs. taxed bonds. Unfortunately I don't remember much about it, apart from it being important to determine if the lower return on the nontaxed bond is a better deal then taking the tax hit for the larger return of taxed bonds. I believe it went something like, go for tax free bonds only if your income is high. While it sounds simple (and generic without hard numbers) There's some crazy math involved in making the best decision.

If you are in the highest tax bracket, then historically it makes sense to buy Muni's. But if you are in a lower tax bracket then you'll have more money after taxes with treasuries.

http://personal.fidelity.com/products/fixedincome/pomuni.shtml

 

[Tarazet]

I sunk more money into VNQ. The yield on the thing is amazing now, nearly 16% if the dividend is maintained at the December '08 rate.

 

[Tideas]

I sunk more money into VNQ. The yield on the thing is amazing now, nearly 16% if the dividend is maintained at the December '08 rate.

that's weird. the dividend isn't showing up on google

 

[toxicgonzo]

You guys know what happened when the markets reached this level last year on November 20th, we had a huge rally. Granted, it was helped by Black Friday & Christmas but I just wanted to let you guys know.

I thought this was going to happen. I put in 10% on my portfolio to test the waters but when the rally hits, I want to really jump back in and average down

 

[Tarazet]

that's weird. the dividend isn't showing up on google

They paid me 93.5 cents per share on December 31, and they have a quarterly dividend.

 

[Ovid]

Looks like Marvel had a good quarter.

Marvel Achieves Record Results in 2008: Marvel Studios' Film Slate Launch Drives 2008 Net Income of $206 Million and EPS of $2.61

http://finance.yahoo.com/news/Marvel-Achieves-Record-bw-14448870.html

 

[Relix]

It will rain green today.

But it will be the last bit of "resistance". Dow is going under the 7000 soon.

 

[Ovid]

Almost time to buy MSFT

 

[Ether_Snake]

I want to buy ADSK and ADBE but I don't have money right now.

 

[Gallbaro]

I am getting such little returns this week, even though I have been ultra short. Namely because I refuse the think BNI is over priced especially since oil is starting to creep.

 

[Ether_Snake]

BNI? It's railway no?

I own some BHI.

 

[Gallbaro]

BNI? It's railway no?

I own some BHI.

Yup Burlington Northern Santa Fe

In my quantitative and qualitative research into the industry, qualitative meaning riding Amtrak in their territory and comparing their fixed assets to the other 3 major railways in the country, they are the best, much more efficient than their only competitor which is Union Pacific (CSX and NS, are east of the Mississippi), with a lot less deferred maintenance.

That being said it is a pure play on oil prices, food prices, Chinese trade, coal out, goods in, and population growth driving demand for all three.

I do not think it is at bottom yet, that should coincide with a market bottom, but when, if, recovery hits then the railroads are off to the fucking races, especially with cap and trade.

 

[Ether_Snake]

ADSK down 7% right now, got downgraded. I'm hoping I can buy some in the near-future for long-term.

 

[RumblingRosco]

My goodness, if we fall below 7,000 we will surely be living in exciting times. :lol

 

[xero273]

My goodness, if we fall below 7,000 we will surely be living in exciting times. :lol

Probably not going to fall below 7000. market can't make up it's mind which way to go today..

 

[AstroLad]

WHY IS WSJ.COM DOWN HAS THE WORLD FINALLY EXPLODED?

 

[RSTEIN]

WHY IS WSJ.COM DOWN HAS THE WORLD FINALLY EXPLODED?

REEEEEEEINHAAAAAAAAAAAARDTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT

 

[AstroLad]

sunova bitch it really is down. and i'm trapped in an airport wanting to read catch up garh

 

[Incognito]

I'm thinking it's a little more like this. There's some nastiness out there in the financial sector and it might be a couple weeks before it's all squared away. Don't worry too much though because I still think we see new highs in all the indexes by the end of the year.

prophetic

 

[Relix]

My prediction for an ugly crash between April and June are coming closer everyday :lol Wouldn't surprise me to see the Dow hitting sub 5000 soon. Bears are in good mood. Until the new US budget hits I can't see a recovery.

I still say today will end green, around the 80s maybe, though Friday's are usually red.

Remember guys, nows the moment to short and be a BEAR. To make money you need to short these days. Go ahead with it, nothing "immoral" about it (a fellow student told me this and I wanted to facepalm him). At this moment I don't really care for the stock market, I just want to make money off it (as we all do I guess). Wall Street rats need to GTFO before this is fixed, and a good market crash will help with that. A new generation is growing that will take over and probably fix this mess, but its gonna take a while. Green Collars FTW

 

[Tarazet]

My little experiment with Zecco has come to an end. I sent a fax to E*Trade asking them to rescind my account transfer and take back my stuff (no charge). Now since I have options in the account, I'll finally have grounds to get them to approve options trading, but I won't get hit with any more annual fees for like Zecco charges. Win-win.

 

[gkryhewy]

My prediction for an ugly crash between April and June are coming closer everyday :lol Wouldn't surprise me to see the Dow hitting sub 5000 soon.

That is exceedingly unlikely, and I'm a pessimist.

 

[Ether_Snake]

prophetic

Where has he been?

 

[Tarazet]

This market is a thing of wonder. The whole financial market is valued as if the USA were on the verge of reverting to native rule. It's pretty amazing to see Blackrock trading at under $100.

 

[gkryhewy]

This market is a thing of wonder. The whole financial market is valued as if the USA were on the verge of reverting to native rule. It's pretty amazing to see Blackrock trading at under $100.

Who's got the last laugh now, fuckers?

 

[Ovid]

My prediction for an ugly crash between April and June are coming closer everyday :lol Wouldn't surprise me to see the Dow hitting sub 5000 soon. Bears are in good mood. Until the new US budget hits I can't see a recovery.

I still say today will end green, around the 80s maybe, though Friday's are usually red.

Remember guys, nows the moment to short and be a BEAR. To make money you need to short these days. Go ahead with it, nothing "immoral" about it (a fellow student told me this and I wanted to facepalm him). At this moment I don't really care for the stock market, I just want to make money off it (as we all do I guess). Wall Street rats need to GTFO before this is fixed, and a good market crash will help with that. A new generation is growing that will take over and probably fix this mess, but its gonna take a while. Green Collars FTW

I would be too scared to short stocks. That is why I never had a margin account. If I were going to short I would just use a ETF that shorts stocks like Proshares. Plus, isn't there unlimited liability when you short?

 

[Ovid]

Wow...I didn't even see the news. So the government is going to partially nationalize Citi. I knew that nationalization was the only way.

 

[kathode]

Plus, isn't there unlimited liability when you short?

There is, theoretically, since a stock has no maximum value cap (as opposed to a minimum value cap of zero). But that's why you have tools like stops and limits to protect yourself.

Daaaamn, we might see an S&P close below 740. fuuuuuuck.gif

 

[gkryhewy]

There is, theoretically, since a stock has no maximum value cap (as opposed to a minimum value cap of zero). But that's why you have tools like stops and limits to protect yourself.

Daaaamn, we might see an S&P close below 740. fuuuuuuck.gif

And this is staggeringly different from yesterday's close of 751....?