More Trading

I didn’t have time to trade yesterday.  So no P&L for yesterday.

So far, I haven’t done any today either.  I did make the right call to a friend this morning saying “sell , sell, sell” when the DOW was up.  The credit market problem is more severe than people realize.  The $700 billion only addresses the mortgage debt.  We haven’t even begun talking about credit card and commercial real estate debt.  The banks will not loan out money to people who are behind on bills.  These banks took enough of a hit in the mortgage debts that they learned their lessons – people making 40k shouldn’t live in a 1 million dollar home, and this lesson is being learned by the credit units.  They will stop giving credit to people who are already in debt – giving them more credit doesn’t help bank any bit. 

I don’t understand why people would rack up a ton of credit card debt.  People just don’t know who to live within their means.  We make decent money, but we live in a town house, drive a ‘99 Camry with 150k miles and a ’01 Eclipse with 80k miles.  We can totally get a BMW or a Mercedes if we want, but we don’t want to stretch our finances.  A wise CEO (well… was wise at one point until he stopped listening to his own advice) said “risk management is controlling of losses so you can fight another day”.  That is by Fuld who was the CEO of Lehmans, 3 months before Lehmans went under.  We want to control our risk so we have a rainy day fund, and we have enough so we don’t have to live on the streets.  This country is not a country where everyone gets bailed out.  People need to start to wake up and smell the reality.  The reality is that people in this country live like royalties because a lot of people here think money is free and will always be there.  My parents came here with two suit cases.  I remember my dad made around $500 a month in 1988-1989.  He saved enough for two airline tickets for my mom and I to come and enough to have a rainy day fund – which we needed when things got bad during the 89-92 recession.  I remember we didn’t buy new clothes, fancy electronics, etc.  We bought what we needed.  I am not saying we all should be that way, but a little financial conservatism is key to financial stability.

Speaking of stability, I would recommend anyone with a large exposure out in the market to hedge 20-25% of their exposure on the short ETFs.  SH is a good one.