Bob'29

Hedge Fund Liquidations Bear Some Blame For Market Drop

Although an excellent article by Mr. Spritzer, he misses an important aspect of the current market crash. Not only have hedge funds needed to liquidate. The Fed underestimated the effect of not bailing out Lehman. In short hind sight this was a huge error. With the collapse of Lehman Brothers the insurers that guaranteed its bonds needed to come up with enormous amount of cash. These insurers held very large equity and commodity positions that they needed to sell at any price to come up with their insurance promises to Lehman bond holders. This is quite possibly many times greater than the hedge fund liquidations. There have been suggestions that the U.S. government buy commodity futures to stabilize the market, as the commodity crash will effect the U.S. agricultural production in the immediate future. Disclosure: Long POT

Apple Stalls, but Shorting Is Risky

The combined effect of all of Apple's facets produces a compelling reason for its stock price to increase both in the long and in the short term. From another blog somewhere in the universe:
"After some quick rounding and arithmatic estimates; It will take about 13.6 million movie rentals/sales per month for the movie division of iTunes to add an additional one billion dollars to Apple revenue in one year. I arrived at this with a ratio of 3 rentals to every movie sale. This ratio may be tilted toward the sale side as rentals do outnumber sales. Currently it would take 83.4 million sales of iTune songs per month to produce a billion dollars per year in revenue . iTunes songs has now accomplished this five times over (5 billion sold). The current monthly movie rental/sale number is now 1.5 million. I don’t think it will take a whole long time before iTunes movies add another annual billion in revenue to Apple’s numbers. Apple’s close relationship with Disney will positively effect Apple’s bottom line, an aspect of Apple that most analysts have overlooked."