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Markets are psycho
Old 11-21-2008, 06:34 PM   #1
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Markets are psycho

Is it just the crazies running the market now that everybody else has pulled out? Why would the rumor of an appointment of a Treasury secretary make the market spike 7%? It's nonsensical. How thin was the trading?
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Old 11-21-2008, 07:41 PM   #2
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I can't answer your question but I really enjoyed the run-up today. I'll take it, even just for rumors! Now if we can get about another hundred days like this one, we'll be alright.
I agree that the phsycho's are running things. How else can you explain it?
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Old 11-21-2008, 07:57 PM   #3
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Any more nonsensical than any other random 7% down day.

BTW, Happiness is a short squeeze.
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Old 11-21-2008, 08:14 PM   #4
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I don't believe the rumor concerning the potential Treasury Secretary was the root cause of the market's spike on Friday. We had several down days this week. I was rather expecting a spike on Friday simply because in the eyes of many market players the market was oversold. IMHO, the spike does not represent a change of sentiment, but rather a little bounce back from a very bad week.
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Old 11-21-2008, 08:50 PM   #5
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Quote:
Originally Posted by laurence View Post
Is it just the crazies running the market now that everybody else has pulled out?
Yes. And when everyone gets back in, it'll still be the crazies running the market-- for the short term, anyway.

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Why would the rumor of an appointment of a Treasury secretary make the market spike 7%?
The media is confusion correlation and causation. Personally I think the fact that I did some yardwork today is what really caused the spike.

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Originally Posted by laurence View Post
How thin was the trading?
No worries-- I'm sure that in the next couple of weeks it'll all bleed out again like a leaky innertube.
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Old 11-21-2008, 08:55 PM   #6
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Psycho? my answer is yes. No one knows what they're doing because they can't predict anything. It's all smoke and mirrors. So the market appears to be running on pure fear and speculation. That is psychotic, in the sense of chasing phantoms and delusions. Ever see the movie "A Beautiful Mind"?
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Old 11-21-2008, 10:56 PM   #7
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Is it just the crazies running the market now that everybody else has pulled out? Why would the rumor of an appointment of a Treasury secretary make the market spike 7%? It's nonsensical. How thin was the trading?
Not thin at all. And IMO, Timothy Geithner is a very reassuring appointment at Treasury, plenty enough to spark this rally in a market that more than anything by this time keeps going down because it appears that we have a runaway train.

I wouldn't be surprised if this makes a market that goes up more easily than down, at least for a while.

Ha
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Old 11-22-2008, 02:57 AM   #8
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There is a complete lack of confidence by long investors.

Apparently the hedge funds are still deleveraging. Shorts are covering. Traders buying and Dumping trying to pickup some money in the volatility.


IMO - Until long investors gain confidence... this what we will see. The stability (i.e., many of the long investors) have exited the market. I suspect the ratio of speculators to long-investors has changed (more speculators to longs). In some cases the speculators are trying to get out and dumping. The Speculators (short-term gamblers) swing the market violently. What was tolerable noise when the market was healthy is loud and raucous.
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Old 11-22-2008, 07:24 AM   #9
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Keep in mind that for all the buyers, there were sellers. Now, were those sellers "capitulated" sellers who didn't sell at the bottom and now as the market was going up, decided to sell, or were they "savy" sellers who saw the market going up and decided to sell into strength? I'm guessing the latter.
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Old 11-22-2008, 07:37 AM   #10
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Not thin at all. And IMO, Timothy Geithner is a very reassuring appointment at Treasury, plenty enough to spark this rally in a market that more than anything by this time keeps going down because it appears that we have a runaway train.
Yup, if you look at the inter-day chart it's pretty hard to argue that the Geithner announcement wasn't the "spark" that lit the rally. Certainly short-covering heading in to the weekend provided fuel to the fire, but I have no doubt that the Geithner news got the blaze going in the first place.
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Old 11-22-2008, 07:51 AM   #11
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Fridays are psycho IMO.
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Old 11-22-2008, 07:52 AM   #12
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Keep in mind that for all the buyers, there were sellers. Now, were those sellers "capitulated" sellers who didn't sell at the bottom and now as the market was going up, decided to sell, or were they "savy" sellers who saw the market going up and decided to sell into strength? I'm guessing the latter.
Could be. Of course we'll only know in retrospect how "savy" today's sellers are. But many markets are now ridiculously oversold (with the equity market not even close to the most ridiculous). For example . . .

Equity like returns can be found buying high quality corporate bonds. I've seen 3 year unsecured bonds of a monopoly utility that has about a zero percent chance of bankruptcy yielding 10% (that's ~900bp over treasuries . . . a distinction normally reserved for companies very close to default). By some measures the investment grade debt market is now pricing in a default scenario worse than the great depression, even though corporate balance sheets are still in very good shape generally. Average "junk" bonds yield 20%. Within that group are secured bank loans trading at sixty cents on the dollar, even though the loans are covered more than 100% by underlying asset values. I've been told that Aaa (yes I know) CMBS bonds are trading so low that you'd still have positive returns even if EVERY commercial mortgage defaulted and the underlying properties were liquidated at 37 cents on the dollar (vs. about 60 cents historically).

None of this suggests to me that we are witnessing a rationale market. And while it is easy and natural to extrapolate trends (i.e. stocks are down 50% in unrelenting selling, so therefore stocks will continue to go down) the evidence as I interpret it doesn't support the notion that today's sellers are in any way "savy".
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Old 11-22-2008, 07:59 AM   #13
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How thin was the trading?
569 Million on the DOW; not too thick.
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Old 11-22-2008, 08:04 AM   #14
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as well as psychos running the market I suspect computers have something to do with it also. All those complex modeling systems, automated buying and selling etc. Some of the modellling software use "neural networks" to make predictions so may be the computers are psycho as well. I once heard a saying that went something like:

"Computers make mistakes faster than anything, with the possible exception of guns and tequilla"
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Old 11-22-2008, 09:30 AM   #15
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Old 11-22-2008, 09:35 AM   #16
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Not thin at all. And IMO, Timothy Geithner is a very reassuring appointment at Treasury, plenty enough to spark this rally in a market that more than anything by this time keeps going down because it appears that we have a runaway train.

I wouldn't be surprised if this makes a market that goes up more easily than down, at least for a while.

Ha
Ha, can you tell us some about him?
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Old 11-22-2008, 09:58 AM   #17
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Not thin at all. And IMO, Timothy Geithner is a very reassuring appointment at Treasury, plenty enough to spark this rally in a market that more than anything by this time keeps going down because it appears that we have a runaway train.

I wouldn't be surprised if this makes a market that goes up more easily than down, at least for a while.

Ha
From what I've read, the market have have interpreted his appointment as some evidence that Obama will be less protectionist than previously anticipated. Some have speculated that some of the recent weakness in the markets is the lack of clarity about how Obama will govern.
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Old 11-22-2008, 10:06 AM   #18
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From what I've read, the market have have interpreted his appointment as some evidence that Obama will be less protectionist than previously anticipated. Some have speculated that some of the recent weakness in the markets is the lack of clarity about how Obama will govern.
Could be. Could be that people saying that have their own motivations for that conclusion. Could also be that Hank Paulson and the administration have recently given signs that they were folding up their TARP and calling it a day. The market was uneasy about the prospect of not having a fully engaged captain at the helm for the next 2 months. With Giethner already in a critical position as the NY Fed President, now you suddenly have the Treasury Secretary Elect in the middle of things who can actually start influencing policy today, rather than waiting until Jan 20.
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Old 11-22-2008, 11:19 AM   #19
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Ha, can you tell us some about him?
Sure. Here is his bio at the New York Fed. Timothy F. Geithner, President of the New York Fed - Organization - About the Fed - Federal Reserve Bank of New York


And here is a Wiki Timothy F. Geithner - Wikipedia, the free encyclopedia

I am encouraged because he is a career governemnt money man. I am beginning to wonder who Paulson works for- his current employer, or his alma mater. Remember too that Paul Volcker was president of the NY Fed, just like Geithner. Clearly a good precedent.

Lastly, Geithner's appointment makes it impossible to appoint Larry Summers. He is fine; but at times may be a bit of a loose cannon, which we definitely do not need now. Summers is going to be safely tucked away in the White House, in some sort of "advisory" role.

Ha
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Old 11-22-2008, 12:12 PM   #20
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...and I believe Volcker is advising Obama as part of his 'economic transition' team.
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