Dow drops 1k and regains most - WOW

Today the Dow Jones Industrial Average dropped by almost 1,000 points.  People are calling this a "computer glitch" but the truth is nobody knows what happened yet.  It is likely that the initial panic was from investors were very nervous about the situation in Greece.

Some background on Greece.  What is most likely the most fucked up member of the EU voted today on an "austerity plan."  Basically this is a plan to cut government spending by a large amount including wage cuts to government workers.  Suffice it to say, it didn't go down well among the common folk who decided to stage violent riots.  And on top of this, the house of cards that is the EU is still to drop (Spain, Portugal, and Italy are next).

So investors are worried about this, and its likely that some stock crossed a threshold that triggered automatic selling.  I heard in at least one source that some trader at Citi entered an order for a billion instead of a million. That stock would likely be Proctor and Gamble.  It appears that the system worked correctly, and that the fast paced electronic trading was halted on the NYSE, allowing sensible selling to resume.

Since PG is a component of the Dow, the entire market went into a freefall.  My entire portfolio, consisting of autos, banks, oil ETF's and retailers was down 10%.  With the comeback I ended down a reasonable 4% but that was a scary day.

From what I gather the market worked exactly as it should have.  The safety systems kicked in and ending down 4% is nothing bad.  There are those who will argue that situations like these mean we need more government regulation.  This is wrong.

Unintended consequences in the war on banks

It is interesting to see how quickly people have moved against bank overdraft fees. These are nothing new; I was once dinged with one 5 years ago and have only myself to blame. Now we are looking at congressional regulation of these fees. While that's great in theory, what could the unintended consequences be of stripping banks of one of their money making enterprises?

1. The end of free checking
2. Reduced bank hours
3. Higher ATM fees
4. Lower interest rates

Trust me, the banks will make up for this somewhere, and instead of the people who are financially irresponsible paying for it, people like me, who keep a decent balance in their accounts, will likely end up footing the bill.

A hard lesson in retirement savings

This guy put 80% of his retirement money in GM bonds. Let this be a lesson to not put all of your eggs in one basket.

I wonder if he had a financial adviser or if this was just his plan. A financial adviser would almost certainly be guilty of malpractice for recommending this...

And you thought your rates were bad

The worst credit cards you can get.

Cramer on Index Funds

Cramer owned this guy today, and he's absolutely right.  The S&P has been pretty much flat over the last 10 years.

Quite possibly the worst job in America

Calling people whose family has died and collecting on debts... just so you know, you don't have to pay them.  But apparently, many do.

Bigots afraid of being publicly known as such

There were many bigots associated with the passage of proposition 8 in California, with most of the funding coming from the LDS (Mormon) Church.  

Due to an open initiative in California, all campaign contributions are publicly disclosed.  Obviously, with the unpopularity of proposition 8, some business owners and individuals are receiving scorn from prop 8 detractors now that their names are out there for all to see.

A judge has recently upheld the law, which I consider to be a good one.  Everyone should know where the money is coming from in any political contest, be it a ballot initiative or a presidential election.

There are many wealthy Californians who are on the wrong side of history on this issue.  It is analogous to finding out a business or individual fought against civil rights legislation in the 60s, or voted for George Wallace.

And if I knew that a business had greatly contributed to Prop 8 fundraising, you can bet I'd boycott them.

Simple tips for saving

Here are some simple ways to save some green in 2009.  I have to say, the automatic paycheck deduction works well.  We currently save about 20-25% of our monthly incomes.  Once you have it diverted automatically you rarely miss it.

Negative Interest Rates

Wow.

C's bailout and the market's next week

Everyone is applauding the job the Fed has done bailing out Citigroup. C is up over 50% today. Jim Cramer is especially happy. Stocks in general are up.

After witnessing Lehman and Bear crumble and AIG get a bunch of cash with nothing to show, Citigroup may actually survive. They agreed to take a hit on several dozen billion in exchange for the government taking on 90% of the fall afteward. The government will get partial ownership in Citigroup should it absorb this mess - which it will. Homeowners whose mortgages are owned by Citigroup will likely have more leverage renogiating as this was one of the conditions the Fed imposed, as was executive pay. The dividend is also gone. Oh well. I should have bought some shares last Friday, but how was I supposed to know?

What's next in this market? I think that black Friday will not be very black this year, causing retails to tank. Look for TGT to get a bargain on Monday afternoon.

Obama picks Sec of Treas, stocks go up

Obama picked Timothy Geithner as the new Secretary of Treasury and the market went up almost 7%.  Why?

He's much different from Paulson and some of the other former holders of the post.  He does not come from a business background, but has quietly worked his way up to become president of the New York federal reserve bank.

Market Swings, Oil, and Foreclosures

The markets were up an average of close to 4% today, one of the biggest gains in a decade.  Why did this happen and why is this a bad thing?

The gains today were due to the Federal Reserve promising to dump $200 billion into our money supply to loan to banks that are dealing with the subprime loan fallout, thereby diluting the currency in your pocket.  Imagine you have a martini, and someone says that they will turn it into 2 martinis.  You agree, so they put half of yours into another glass and fill both up with water.  This is what happened today.

Another trend to look at is the price of oil reaching a new record.  While oil is reaching a new record in dollars, this is mostly due to the dollar dropping in value to its lowest point ever against the Euro.  Why are our greenbacks worthless?  For the same reason as above, and also because of our $3 trillion war, and most recently the fed's interest rate cuts.  When the government lowers interest rates, other countries pull out of the dollar (since it pays less interest) and put it into things that they think will increase in value such as gold and oil.  

There is no oil shortage and there is no manipulation by the oil companies either.  It is simply economics at work, it is a market that has been beat up so badly by our government that it is swinging wildly to correct itself.  The only way to let it do that properly is to leave it alone.

Let people get foreclosed.

Let some banks go under.

Why should I be punished with a worthless currency because several million people bought houses they couldn't afford?  I don't own a house, and as of yet I didn't have enough money to and I understand that it would be foolish to take on an interest only loan or similar product.  Yet we are all paying for people that do.  

Leave the market alone Bernanke!