Wednesday, September 17, 2008

Ye of Little Faith... Systemic Risk... GGP... Holdings...

Ye of Little Faith
In the book of Matthew, Jesus healed a man with leprosy, the centurion's servant, and countless others. Still, Jesus' disciples were still worried when a furious storm caused the waves to leap into their boat.

He (Jesus) replied, "You of little faith, why are you so afraid?" Then he got up and rebuked the winds and the waves, and it was completely calm.
Matthew 8:25-27

As Christians, we put faith in God and his son Jesus. Have faith when all things are uncertain. We know that nothing happens without God's will.

Systemic Risk

The financial storm on Wall Street continues to batter markets. The faith that people have put into governments, companies, chance, and wit are being tested as well. And those who have put their faith in the genius of Wall Street have been punished. The government has once again needed to bailout another business. This time it was AIG. I guess everyone knew that a collapse of AIG would have effected everything from LIBOR rates to personal retirement accounts. Literally, it was too big to fail! This was simply another one of Roosevelt's New Deal powers given to the Federal Reserve as a lender of last resort. In this case, AIG received an $85 billion dollar bridge loan to keep the ship floating. Once again, this loan helped "save" shareholder value, and the management who were in many ways responsible for this debacle. Now that the government effectively owns AIG, my question is are these now considered Federal employees? I think we all know the answer to that one...

I was able to take a 37% profit on GGP yesterday. While I still believe that the slope of this market will be heading down, not up, it only made sense to take some of my investments off of the table. Although GGP was trading at 4.40, I put a limit order in at 4.80...and was shocked that it actually went through! This might have been one of the few times I have sold at the spike up. The University of Wall Street has taught me several lessons over the years!

I am still holding BAC, COF, HBC, and a basket of SPDRS in consumer cyclicals and manufacturing. Almost all of these holding are in positive territory again. It is just a matter of finding the right time to take profits, while preserving a downward hedge in this market. While my true faith is in God, I have reason to believe this market has room to fall. Monday was just a taste of the volatility on Wall Street. More will follow.

1 comment:

Vikram P said...

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Have a great day ahead!