Opportunity Is Still Out There

Is The 'Wall of Worry' Back?

One thing that bothers me about this market is the high level of complacency. I know the VIX is still elevated, relatively speaking. However, the level has come down about 50% since the peak in late November, and meanwhile the market has not broken out with that drop in volatility. Further, there is a pervasive attitude out there about the economy and its effects on business...'yes, we know it'll be bad...so what?' It's just that kind of complacent attitude that attracts buyers just before the market is ready to be whacked.

Mortgage Crisis is Near an End...or at least Arrested

An important development is occurring that needs to be mentioned. Last Thursday, Congress and Citi (C) came to an agreement to accept mortgage writedowns (cramdowns) for borrowers in bankruptcy. This allows judges to write off principal balances far in excess of market value, letting the banks eat the remainder. This may be wrong and immoral, but the debt service on these upside down loans could go on for years, and foreclosures would risk precipitously. This will help cure the crisis. Banks should start to modify loans this way before the bankruptcy courts get involved.

First and Final Word About Madoff

Let's face facts...Bernie Madoff may have labeled it a Ponzi scheme, but first and foremost he was a really bad trader, then a fraud, then a crook and liar....lastly he created a Ponzi scheme when he had to keep it going. You see, calling him a bad trader is the WORST thing you can do to him. What he did was despicable, no doubt about it. But he was part of the elite and could not deal with the shame and disgrace of losing, so he kept lying for years.

It's still a Bear Market, but...

Opportunity is still out there for traders. This is a stockpicker's market, and those flexible and nimble enough will make good money this year. Markets may not be up huge in 2009, but there are many other sectors that will be strong. We'll be looking for the best trends and riding them out!

Disclosure: None.

Comments

[Duke Wong:]

The financial crisis could be near or end but the deflation would be the deeping trouble.
Investment is involving with risk/reward. The reward is low on the bear market. So it's depend on the personality.
Sometime, analist try to manipolate the market with small up/down trend.
The only fact could help the current situation that is new leader/new ideas but now it's too soon to tell the new ideas would work.

Jan 12 07:19 AM

[Jim Hawthorne:]

As the saying goes, there is always a bull market going on in something, or somewhere, I suppose.
The VIX is still highly elevated and the volatility makes this a trader's market as opposed to a playground for the prudent investor.
I agree with your comment that flexibility and nimbleness are key to success in this environment. Also strongly recommend Brian Shannon's daily tech analysis over at www.alphatrends.blogsp.../

Jan 12 07:21 AM

[bobbobwhite:]

Bernie Madoff, John Gotti and Sammie The Bull Gravano.....all
started out with good intentions to "get ahead" but it all escalated beyond their control. Not that different, actually, and even though their respective business models were quite different, everyone associated with them suffered badly as a result.

It doesn't matter what business you are in, you will fail if you allow problem escalation to take you down the road of no return. Better to nip it early for all concerned, and especially yourself, even if you go to jail. That's just what a stand up guy does and is.

Jan 12 12:53 PM