<A very small portion of the debt pyramid has been tested>
That's true Kyros, but in margin debt, there has been a substantial reduction. I was worried more about a sudden [like 2 day] collapse, which would go through all barriers and leave everyone shocked and paralyzed. That didn't happen despite there being a very large bubble.
I think any further drops will be manageable and will be in the nature of revaluations as people search for net present values of long run productive enterprise. I sold some QUALCOMM shares which I believe were way below net present value because I had ended up with unpleasantly high debt levels due to Globalstar failing to sell their service at their greedily high prices. If I had had cash, I would have been buying at the levels I sold.
I did that [sold] even though I thought I was selling something too cheaply, because I couldn't take the risk that the terror-stricken would bid the price down to $20 a share and result in me being sold out at the bottom. So, I was part of the very thing I feared - forced selling by people and a cascading collapse, even though most people are pretty sure that the company is worth more than I sold it for.
There would have been hordes of people in a similar situation to me [in the markets with their margin levels]. I haven't checked stockmarket margin debt recently, but I think it would be down, in total dollars owed rather than as a percentage of the market.
I am much more comfortable now and am ready for a much deeper panic if it comes. If it doesn't, I'm still fine for a US$ drop and stockmarket gain [even if the gain is just due to huge printing and dilution of US$ rather than sales and profits - protection of capital is very important].
US$ cash holders are NOT protecting their capital - Jay has headed for the exits, scurrying flat out while acting nonchalant. I'm with Jay, I prefer languid decisions but am happy to panic if necessary - my ancestors did not develop panic reflexes through eons of survival to ignore panic when it's time to do it. I like swans; calm, regal and elegant above the surface, but paddling like hell underneath. Ducklings don't mess about with regal - they just climb on top of the water and run. There are many ways to 'duck' for cover.
Mqurice |
