Thursday, June 26, 2008


After getting back I have spent some more time going through some things and the more I look at this the happier I am that I was not an aggressive buyer today. Look at some of this stuff.

The ABX index plummeted today.

The TED Spread surged today

Fleckenstein and Calculated Risk talking about the credit market trading desks drying up.
I have said this several times but probabilistically this has got to be the highest you will ever see for a market crash. You do not make money trying to bet on them over the long term so I am not placing any bets on an extreme move in the indexes. All I am saying is that where as 2 years ago the chances of a market crash (I will arbitrarily define as a move down in the major indexes of over 10%) was maybe 1%. Now it is maybe 20 to 30%. This crash could be triggered by many things. One of them ironically could be a crash in the material and energy names. If investors perception of this names suddenly shift they have a long long way to fall. Another would be yet another major blow up at a bank.

Things do not look good and as noted earlier there was no panic to cause me to want to initiate strong buying. Things are just sick out there. I was in an outlet store today where I know the store manager and she said sales are down 20%. Main street is as sick as Wall St.

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