No matter where you look, and which online news service you scan, you are bombarded with stats about the declining housing market and the daily increase in the number of homes entering foreclosure. It’s not only happening in the bubble states (California, Nevada, Arizona, Florida) but nationwide as well. Calculated Risk featured an update story on the subject in Georgia, …
How Credit Default Swaps Work
One of the many terms you’ve been reading about is Credit Default Swaps (CDS). They represent a market that is currently valued at some $50 trillion (yes, trillion, not billion) and can, given today’s counter party risk, which I alluded to in a recent post, affect the markets very negatively given the right circumstances.So what on earth are CDSs and …
No Load Fund/ETF Tracker updated through 2/14/2008
My latest No Load Fund/ETF Tracker has been posted at:http://www.successful-investment.com/newsletter-archive.phpMixed economic reports had the bulls and bears engaged in a tug-of-war all week. Our Trend Tracking Index (TTI) for domestic funds/ETFs remained -0.86% below its long-term trend line (red), in bearish territory. The international index dropped to -7.42% below its own trend line, keeping us in a sell mode for …
Money Market Fund Update
In a recent post, I warned about the dangers of chasing high money market yields. Kevin Depew at Minyanville had this to say in item #3 of his “Five Things You Need To Know:This morning on its earnings conference call Panera Bread (PNRA) was forced to detail why the company had to write down $1 million due to a short-term …
Picking Pockets
The markets received a lift yesterday on Warren Buffett’s proposal to buy out some of the bond insurers’ (monolines) liabilities. While this improved sentiment in the market place, I think it’s a case of Buffett trying to pick somebody’s pockets clean. The man is obviously smart, and his offer will be beneficial for him but not for the mononlines. In …
Counter Party Risk
With the unwinding of the credit bubble, new terminology has been thrown at the public at an amazing pace. One of the terms you hear more frequently as banks are writing down bad investments, is “counter party risk.” Rob Roy’s article “Default Swaps Intensify Credit Crunch,” explores some of the details how leverage combined with abnormal events can have devastating …