The Worst Is Yet To Come:

Discussion in 'Trading' started by capmac, Jul 26, 2007.

  1. capmac

    capmac

    The Worst Is Yet to Come

    By Rich Greifner July 26, 2007

    Remember the subprime meltdown last winter? Low-credit borrowers defaulted on their home loan payments in increasing numbers when their adjustable-rate mortgage interest rates reset. Shares of major subprime lenders like Countrywide Financial (NYSE: CFC) plummeted, while the most egregious offenders filed for bankruptcy.

    Investors were pretty panicked -- for about a week. The market fell 5%, but quickly rebounded. Within a month, those losses were erased, and the major indexes were setting all-time highs by summer.

    You call that a meltdown?

    The market's resurgence was impressive, but let's not pat ourselves on the back just yet. The subprime episode wasn't a meltdown, a crisis, or a disaster. It was a warning, and we failed to heed it. The real meltdown is coming ... and its name is Alt-A.

    No one knows for sure when the Alt-A implosion will happen, or how much damage it will ultimately cause. But the experts do agree on one thing: The Alt-A fallout will make the subprime situation seem like a minor chimney fire.

    I have a few suggestions on how you can protect your portfolio, but first, let's get to know the enemy.

    http://www.fool.com/investing/dividends-income/2007/07/26/the-worst-is-yet-to-come.aspx
     
  2. no it isn't

    everyone in the next few days will be like arm chair economists and market experts trying to explain this decline

    the reality is that nobody knows nothing
     
  3. This is a non-trendin sideways market, but with lots of volatility.

    Yeah the markets may rebound a little, but only to become bound in a wide range.
    So bulls and bears are both right AND wrong.
     
  4. There is a strong probability of a 10-20% one day decline in the next 48 hours...
     
  5. DonKee

    DonKee

    What you are seeing is "classic" hedge fund trading.

    Once a 10 day low in taken out....many large hedge funds start to unwind, of course, their biggest problem is "who do we sell to?".

    The answer is "no buyers".

    Now they must start buying up the 10 and 30 yr to "hedge".

    Classic story that is repeated quite often.
     
  6. Classic quote...so true.