Black Friday?

Hrm...let's see. Yesterday:

- A French Bank closed 3 subprime hedge funds because there's not enough liquidity to value them. I don't know what that means exactly, but it sounds bad.
- The S&P dropped 3% yesterday.
- The subprime mortgage fiasco is turning into a vortex.

I yanked my 401(k) back into a money market. I'm NOT looking forward to a repeat of the bath I took on my Roth in 2001.

Comments

  1. Whitney8/10/2007 9:08 AM

    not enough liquidity to value them....the mtg co's are so far upside down on their lending that it's not even worth the analysts' time?

    ReplyDelete
  2. Harold Combs8/10/2007 9:39 AM

    well, the hedge funds were invested in the subprime mortgages and mortgage brokers themselves. I used to be invested in Harbor Fund's Harbor Bond fund and it had a great run investing in mortgages, but it scared me so I got out before 2005.

    Maybe Chuck can jump on here and explain it for us.

    As a student of history, alot of these events are "butterfly effect" scenarios: Something triggers something else in a chaotic chain of events. Alot of the stock market is set-up to prevent that--if there's a panic, the market shuts down to stop the automatically programmed stop-loss orders from the brokerages.

    Still, it can get fun. We'll see.

    ReplyDelete
  3. Harold Combs8/11/2007 7:22 AM

    Well, the Fed jumped in with $20 Billion and bailed-out the scared investors. We'll see if that holds...I think the fundamentals of this market are just whacked.

    ReplyDelete

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