I really hate Hank Paulson. I seriously think this guy is either evil or completely inept. Just a little over a month ago, the bailout package was announced. Not even two weeks after he was able to trick everyone into giving him almost unlimited control over a vast amount of money, he announced he was changing tactics and going a different way. Instead of buying all the assets of banks, they would inject new capital into banks by taking an equity. Well today he also announced a change to the plan. Instead of focusing on the banks, he will use the money to focus on other financial institutions that extend credit to consumers. Does anyone actually think the government knows what it is doing? Is it any wonder why I hate government plans as much as I do?
The market promptly dropped testing the lows of the market. The S&P is now close to the lows we saw on October 10th. That day, the market reached a low of 839. The market closed today at 852, leaving it just 1.5% away from the low. If the market is able to break through that, we have a very scary situation. The problem becomes that in bear markets, you continue to go down if you create new lows. The reverse of this is true, in bull markets you keep making new highs. Considering the S&P is already 42% down, thinking it can go down more is pretty painful.
I honestly think we will break through that low. After the market close, Intel announced that it had a very bad quarter, and the market is for sure going to open down. Unfortunately for me, I closed out my short position today. I had made a 15% profit in that position in a little over four trading days, it was a pretty good trade for me. However, I did not want to be greedy, and decided to get out even though I was pretty sure the market was going to go down from there. This market is hard, and anytime you can take a quick 15%, you take it and don't look back. I don't feel bad about covering, it was the right move, but now I have no downside protection. If the market tanks, my portfolio will go with it since I no longer have a hedge. So I'm a little worried about what will happen in the next few days.
Every time Hank Paulson, or anyone from the government for that matter, opens his mouth, the market does crazy things. Just please stop talking. While you are at it, please stop doing anything. The more you do, the worse things get.
This is outrageous. Who is Hank Paulson to decide what to do with our money?! We gave him huge check for one purpose then he goes and does something else.... and now he is one in charge of deciding whom to lend to? There needs to be blood!ReplyDelete