Investors now leaving the markets
On September 16, 2008, maverick_rich posted the following:
Guys… it’s been fun… I’m taking a break for the next month… Too depressing otherwise…
I’ll leave what options I have left for a hail marry rebound. But, I’m already figured the remaining money is a sunk cost and gone.
Right now, I’m preparing myself and my family for what could be a repeat of the 1930s. The Fed, SEC, have played mathematical experiments with what is the Modern Financial System. The models don’t work and the theory is wrong.
What seems to be happening is similar to forest fire preventions. Since 1987, all the government agencies worked to prevent recessions (all types of forest fires). Well… the dead wood built up and we had some mini fires like LTCM, which were promptly dealt with. Then, there was Bears Stern, again… the Fed came in and tried to kill the fire off. This time, the Lehman fire was started, along with AIG and the Fed decided it could not and would not stop this fire. They are hoping that the fire damage to the forest will be limited, or that the forest will rebuild itself. The real risk is that the fire will engulf the whole forest.
Unfortunately, 2 problems exist. 1) They did nothing to deal with the arsonists out there that want to see the forest burn 2) They did nothing to eliminate the dead wood in a clean and clear fashion. The SEC, with the removal of all of Joe Kennedy’s rules over the past 15 years, essentially started handing out lighters to everyone entering the forest (markets). So, as soon as one tiny fire is dealt with, another starts. The SEC is claiming that trees can recover and grow as fast as a fire can burn in down. That is the only way naked shorting would have no impact to market pricing. But, maybe the guys at the SEC never passed calculus… Anyway, I don’t think the Fed can do anything anymore at this point. The SEC was and may be able to stop this. But, it won’t. Not until after the whole forest burns down. There just is no leadership out there. Seems like Cox is either paid off or was threatened by the hedge funds. Buying puts is the not the same as going short a stock. It kills me when government officials claim that folks can use alternatives to naked shorting. The difference is that options don’t directly impact the underlying assets. They have their own supply demand characteristics.
Anyway guys… I’ve decided that I’ve pulled all the cash out of the accounts that I can. I’ve accepted the fact that it is over. I’m going to focus my energies on my work and my MBA (not that the MBA will be worth much come May when I graduate. But, given that I already payed $80k for the $100k for the program, may as well finish it…).
I do want to thank all of you guys for the amazing level of support you have given me over the years. It truly means the world to me. I will be back every now and then. But, what I am seeing here is that the dominoes have started to fall, and the momentum of this monster fire can no longer be stopped anymore. This week-end was historic in so many ways. The Fed and the banks played chicken and nobody flinched. If and when WaMu is bankrupt, the FDIC will run out of money for insuring deposit accounts. So, in the end, taxpayers are going to have to come in and bail everyone out anyway. But, then, it will not be the Fed’s problem.
Good luck to all of you.
Rich
techstock2000 @ September 16, 2008