Friday, October 10, 2008

Crazy Ass Market Randomosity

  • Well...  The market all over the place!  You go to the bathroom, and there's a 400 point swing in the DOW by the time you zip it up.  And you were here to SEE IT! 
  • The 2002 Market Bottom Analogy.  Interesting.  As interesting as the bottom of a Jacksonville Jaguars cheerleader?  You be the judge!
  • Greg Mankiw has thoughts on How to Recapitalize the Financial System
  • Loss of wealth to weigh in on consumer spending.  I mentioned in the last entry that I was shopping at ATT for an iPhone.  I had to wait in a line.  I know folks are cutting back somewhere. Maybe dining out and such.  But they want their technology, and things haven't gotten that bad yet.
  • Yes, the banks are rallying from the WSJ blog.  Disclosure:  I bought some WFC (Wells Fargo) yesterday at the close.  Not bottom fishing, because that's impossible in this market.  Just consider WFC one of the better ones out there with somewhat less exposure to the subprime mess and with the power to go out there and grow and acquire.  *I think.*  And *I hope.*
  • I heard on the local news this week that drinking, gambling, and smoking were up.  Sin stocks for tough times.  I thought about looking into some of the smoking stocks, but haven't yet.
  • You know where there are a lot of smokers?  Smoking areas outside businesses.   Bah.
  • Hey, what about the bear market in oil prices?  Back to where they were a year ago.   Just a few months ago, oil was $147.  Now?  $79 last I looked.  How's XOM doing?  How's Hugo Chavez and the Royal Family doing?
  • From Tenille Tracy, Rising Option Prices Could be Propelling Stock Swings.

The options market has become an expensive place to do business in recent days, and that could be contributing to wild swings in the stock market.

The options market often serves as a buffer to the stock market, providing a venue for investors to protect their stock portfolios or speculate on future moves without actually buying or selling stock.

In recent days, however, the prices of options have skyrocketed — in part because volatility in the market has flown off the charts. Options that once traded for a few dimes now cost more than a dollar, or even several dollars. And that’s especially true for put options, which are bearish contracts that convey the right to sell a company’s stock at a fixed price.

As a result, investors who would normally buy puts to protect their stock holdings might be opting to sell their shares altogether. It’s almost as if they realized their monthly car-insurance policy went from $100 to $1,000, and they decided to simply sell the car as a result, says Randy Frederick, director of derivatives with Charles Schwab & Co.