Patrick said...
Dear Boon,
Thank you again for drawing our attention on the treasury bills and the fed fund rate.
Seems that the current environment has made investors to take the money off the table or others flock to safety, or they expect the high interst rate movement will be a decrease.With the treasury bill moved much lower in this short time frame, I also checked the VIX index.
I know you have a neutral stance in stock, but what will you do if it has another leg down with both the treasury bill heavily discount to the fed fund rate and with the vix reach at a very high level?
Patrick
Wednesday, July 16, 2008 10:49:00 AM
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Patrick,
- You are very welcome!
- I have no idea of what stocks are going to do in the coming months or years [2]. We at bhc investment have no exposure to stocks at all and we are not attuned to this kind of markets environment.
- In March 2003, Warren Buffett made the following comment [3]:
“Despite three years of falling prices, which have significantly improved the attractiveness of common stocks, we still find very few that even mildly interest us. That dismal fact is testimony to the insanity of valuations reached during The Great Bubble. Unfortunately, the hangover may prove to be proportional to the binge.”
- The Dow was at 8,000, approximately, when the above comment was made.
- Don't buy stocks simply because they look cheap; a 90% plunge is essentially an 80% plunge before another 50%!
- There could be a good *trading* opportunity for those who are good at it when the markets are taking another leg down.
- If the short-term yield [4] continues to fall, the Fed will have no choice but to come out with another emergency rate cut [5], discrediting all its hawkish talks gave earlier -- making Mr Bernanke looking like a complete fool!
- I would like to take this opportunity to draw the attention of readers of bhc investment to the following video featuring David Tice [1], a fund manager I have a lot of respect for. The video was recorded in early July this year. Tice recently increased his short position in the Technology sector, of which the decline has lagged the general markets -- if Tice is right, that will mean the divergence [2] between the NASDAQ and the Dow is to be broken.
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Related posts:
- Steinhardt: Stocks Will Extend Drop on Banks, Oil
- Buffett: Inflation is “Exploding”
- What Warren thinks...
- Buffett: "Recession will be Longer and Deeper"
- George Soros on Financial Crisis, Commodities, China
- Soros: Things will get Worse before They Improve
- Soros: CDS the Next Shoes to Drop
- Soros:'... Probably not... the Final Bottom'
- George Soros: The Worst Market Crisis in 60 Years
- Soros: End of Dollar as World's Reserve Currency
- Soros: The Current Crisis is the 'Worst in 60 Years'
- A Sobering 12-Step Scenario
References:
2 comments:
dear boon,
just read ur blog for the last 3 weeks. it's very informative & really impressed with ur forecasts. wish one day could be like that too. i'm just started learning to invest & interested in gold investment. is it too late for me to buy now? would appreciate ur advise/comment.
tq.
joe mann
I have replied you in a post.
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