DOW 14,000 – All Time High
The broke the 14,000 level today. Despite Bear Stearns warning that their subprime mortgage hedge fund was worthless and Ben Bernanke stating that the subprime related losses would be in the range of $100 Billion the market was up! It just shrugged off the bad news and went on its merry way.
Interestingly, regarding Bear Stearns, Bloomberg reports “It was Bear Stearns, the biggest broker to hedge funds, that nine years ago declined to join 14 other investment banks in the bailout of Long-Term Capital Management LP. Then last week, as New York-based Bear Stearns pleaded for help to rescue two of its hedge funds teetering on the brink of collapse, many of the same firms refused to come to its aid”. If you’ve never heard of Long Term Capital Management, I suggest you read the very interesting book,
When Genius Failed: The rise and fall of LTCM. It was basically a hedge fund started by some Nobel prize winners that ended up in smoke.
Going back to the stock market, when the market ignores terrible news and goes up, its usually a sign that the market is very bullish and will continue for a while. Consider that many companies are reporting bad earnings, and the stocks are not being punished.
Motorola (MOT) posted a $28 Million loss and the stock is up. Citizens Republic Bank (CRBC) announced its non-performing loans had quadrupled and it took a $20 Million write-off and its stock jumped up too!
Simply amazing.
At least the Dow Transports ($TRAN) is also hitting new highs along with the Dow Industrials ($INDU). If the TRANs had been lagging, the rally would be suspect.
We have a global credit bubble, a housing disaster in slow motion, a subprime mortgage fiasco, hopelessly underfunded government liabilities, an unsustainable trade deficit, negative U.S. savings rates, a collapsing dollar, oil depletion and creeping inflation, and yet the market is going higher!
Oh well, if you can’t beat them, join them!
If you found this post helpful, consider donating to my coffee fund!![[del.icio.us]](http://images.del.icio.us/static/img/delicious.small.gif){kind=small}
- Myths of Hedge Funds WSJ has a great article about Myths of Hedge Funds.Myth #1: Hedge Funds are all the same. There are up to 25 different hedge-fund strategies which include funds invested in equity (both long and short), bankruptcies, mergers and acquisitions, high yield debt, bank debt, currencies, commodities, convertible debt, mortgage backed......
- Mortgage Meltdown: The Worst Is Yet To Come! Check out this 12 minute video from 60 Minutes. There's another wave of mortgage defaults on the way, this time from Alt-A & Option-Arm (also called Negative-Amortization or Neg-Am) loans. As opposed to the subprime loans which were worth almost $1 Trillion, these two groups make up nearly $1.5 Trillion. ......
-
Shanghai Stock Market Finally Corrects About 2 weeks ago, I mentioned that the Shanghai Stock market was likely to correct.Well today is the 3rd straight day that the Shagnhai market has traded down. So far its down 20% from its peak but its still up 28% for the year.The Chinese government thought that the markets......
Related Websites
- What Is The Dow? What Is The Dow Jones Industrial Average? We've hear a lot about the Dow in the news. It goes up and folks are happy. It goes down and folks panic. But what is this mystical Dow that everyone is talking about? The Dow actually stand for Dow Jones Industrial Average. ......
- A funeral and hedge fund falls....more to come? Greetings from El Paso, TX.... I attended a funeral today. The funeral was for "Grandma V" and I got to see family I had not seen in a long time. It will probably be a long time before I see them again. But....the funeral "got me to think'n." No...I was......
- How to Probe for Signs of a Market Bottom We had a bounce yesterday. Was it one of proverbial "dead cat bounces" that are all too common in bear markets? The buzz from stock market analysts about finding or predicting a market bottom seems to be increasing. Everyone wants to be told that this is it, things are as......
[All content is copyright of Living Off Dividends & Passive Income]
Leave a Reply