This ‘n That

It's the weekend again and who knows what news awaits us on Monday.  Bank closings?  Bank nationalizations?  Bankruptcies – GM for example?

It makes me nervous to hold positions with negative gamma when market-moving event can so easily be announced.  Just another reason for owning portfolio protection.

I'm waiting for Treasury Secretary Tim Geithner to say something useful, but at the same time I'm concerned that his next speech will be no better than his last.

Because I no longer trade individual stocks (or their options), I seldom pay attention to where stocks are trading.  But, when I look at prices, it's so difficult to believe I'm living in the same United States of America that I know:

GM     1.46
EK   2.24
F     1.70
C     1.03
BAC    3.14
GE   7.06

The VIX (CBOE volatility index) is elevated, but far below the highs reached last autumn.  And that's reasonable because the market is less volatile now that it was then.  But many investors believe that a falling market is always paired with sky-high VIX values.  This time (so far), VIX is lower than many would have guessed – and thus believe that the bottom cannot be reached without a large spike in the VIX.  I disagree.  A bottom is possible without that spike.

There's plenty of fodder for political argument.  The right blames it all on Obama and his 7 week presidency.  The left blames it all on dubya.  Where's the bipartisanship we voted for?


2 Responses to This ‘n That

  1. Income Trader 03/08/2009 at 4:07 PM #

    Hi Mark,
    Incredible to see all these companies at these levels. It either is a tremendous long term buying opportunity or the biggest value trap of all time. I am afraid I am not smart enough to decide which.
    I would love to hear your take on the mark to market debate. I have been saying for awhile now that mark to market is responsible for the steepness of this banking crisis, but obviously not the root cause itself. Do you agree that the financials and the market in general would benefit from abolition of these rules? Do you agree that this is an issue that should have been addressed months ago?
    Mark to market helped the financials skyrocket in boom periods and has sunk them in this crisis.

  2. Mark Wolfinger 03/08/2009 at 4:52 PM #

    Hi IT,
    Some of these companies are toast. But which? I don’t know.
    I’m turning your major question into tomorrow’s post.
    Thanks for the great question. I know it’s not related to options, but that’s immaterial.