don't fall in love with those ultra shares. I have been getting my *** handed to me with them. I started buying them aroudn 8K, thinking that the worse has passed and I could make a few bucks.
S&P Breaks 730 Support
- Thread starter Go2Guy
- Start date
don't fall in love with those ultra shares. I have been getting my *** handed to me with them. I started buying them aroudn 8K, thinking that the worse has passed and I could make a few bucks.
10-4 - this is not buy&Hold; this is only a trade. And I never, ever do market orders on the ETF's.
What's your definition of illiquid? Somebody offering $0.2 for a performing loan portfolio isn't functioning properly in my opinion. Yet banks are still forced to mark. Forcing an institution to take write-downs on performing portfolios they have no intention of selling just because the market is "worried" about real-estate isn't proper.
Arguing the real-estate bubble isn't a valid argument in this discussion since we are talking about performing loans. If the cash flows are there, it shouldn't matter what somebody "thinks" something is worth. Once those cash flows become compromised you have a valid point, mark it (eight dude).
Some prognosticators are predicting S&P as low as 550 .
The reasoning is based on the projected average earnings of the 500 companies at ~$68 / share. The typical market multiple, at bear market lows is 8 times earnings; so $68 x 8 = 544.
The problem is, nobody really can predict, or have any visibility on what corporate earnings will look like in '09 for the S&P - especially when banks, which make up a lot of the top 500, are a mess.
This will be painful and long.
My definition of illiquid is not what is important since I'm not the one that is making or enforcing the rules. I believe the rules (FASB 157) refer to "an orderly transaction between market participants at the measurement date.” From a practical aspect this means when there is a lack of market information, an entity is allowed to use its own assumptions, but the objective is still the same: what would be the current value in a sale to a willing buyer.
Credit risk is just one risk connected with a loan portfolio. Interest rate risk can be just as large of a risk, so just because a loan portfolio is "performing" doesn't mean that there aren't other factors that might require a substantial mark down. Also it should matter what the market "thinks" because the market is a less arbitrary judge of value than other sources.
I haven't said that mark-to-market is perfect. I realize that it isn't perfect. However, it has far less flaws than do the other options.
