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Here come the Losses



January 22, 2008 – Comments (5)

The losses coming in today are huge...

Bank of America, one of the few banks that stayed away from the subprime mess, has had its profits sink 95%.  Way better than losses...

Wachovi's have sunk 98%...

Ambac came in at $31.85/share loss and there is the $2.4 trillion in loans no longer "insured" as AAA due to their rating cut this week.  Looks like this people just woke up to the fact that the so call "hedges" on drunken debt were mirages.

Today will be a day of historical interest to watch, two day downs...

• Shanghai (two days): -12%

• Japan's Nikkei 225 (two days): - 10.2%

• Hang Seng (two days): -13.7%

• DJIA futures: Down 650 points

Oil down to $88, I guess that will change with the .75% rate drop, at least temporarily.  It just reversed the $25 decline in gold to $10.

Good luck all, hang on to your seat, its going to be a rough ride.

5 Comments – Post Your Own

#1) On January 22, 2008 at 4:06 PM, Imperial1964 (94.18) wrote:

Yeah, I'm pretty-much sitting this one out.  It doesn't pay to be long, and the Fed keeps punishing the shorts any time the market drops too far.

I've got half of my money in cash and my long positions are conservative--since August.

Be careful everybody.

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#2) On January 22, 2008 at 6:14 PM, dwot (29.11) wrote:

This was an interesting day. People that were buying today really haven't thought it through as to why these kinds of moves were helpful in the past and why what worked in the past isn't going to work this time...

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#3) On January 22, 2008 at 7:37 PM, Harold71 (20.26) wrote:

CNBC Bubble Vision:

"Isn't it interesting that the sectors that were hit so hard last year did so well today?"

 It's called short covering.  Lots of people were in on it. I covered a portion of my shorts as well.  My guess is that short covering accounted for at least 250 points back up on the Dow.  Everybody else was still too afraid to buy.

This is just the beginning of a massive tightening of credit.  People will start saving more.  The economy will contract (If I hear "Are we in a recession?" one more time, I'm gonna puke). 

Just like expansions, contractions feed on themselves.  It'll be interesting.  Being prudent will be rewarded.

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#4) On January 22, 2008 at 7:39 PM, dwot (29.11) wrote:

Harold, this would be where my investment inexperience comes in, this short covering and how it manipulates whether or not what you are seeing is people buying for real, or what you just said is like a game of poker or something...

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#5) On January 22, 2008 at 11:20 PM, dwot (29.11) wrote:

BofA breakdown of losses

$5.44 billion trading losses (in contrast with $460 million profit, the loss is 12 times the previous year profit, can we say leverage?)

$1.74 billion in credit losses and $1.33 billion added to reserves.

$800 million to money market mutual funds, the things that aren't supposed to "break the buck..."

Ambac $3.26 billion loss. They insure $2.4 trillion of debt.

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