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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: anializer who wrote (33969)	3/28/2009 6:41:12 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78702

Anializer - thanks for your opinion on NRG. I do agree that the debt is the largest deterrent, especially in the current environment. Still i think that the EXC bid puts a floor under the stock and there is potential upside. I also let go of KALU as well as some clunkers in my portfolio. I agree that the market looks overbought short term, in particular the Nasdaq. I ams thinking about buying some puts on QQQQ for protection - those puts are pretty liquid and can be traded without high friction cost.

To: anializer who wrote (33969)	3/28/2009 7:27:39 PM
From: Spekulatius	Respond to of 78702

re FED - I am not sure the FED can really do more. The biggest risk at this point is not the financial sector which is held on life support using a dizzying array of machinery by the FED, it is the economy spiraling downward. For example the recent home sales data for existing homes have been touted a a recovery. While I agree that more sales are better than a stalemate market, i see what those home sales are in my neck of woods -deeply discounted foreclosure sales. Those sales have led to an about 10% drop in the home sales value based on Zillow and other internet machines (which work based on comps) in the last 2 month alone. This is throughout town. So now we got a situation where everybody who bought after Y2002 and afterwards with less than 10% down us underwater. To illustrate the point, I have a friend who bought here house in the mod 450K a few years ago that zillows for 250k now. They are decent credits (I think) but their income is weakening also due to the recession. Of course refinancing is not possible either so sooner or later all those mortgages are going to default for one reason or another and yet another foreclosure sign goes up. The stats show that as well, since despite then higher sales, the inventory is up. So anybody who believe that "prime" mortgage in CA from Y2004-2008 are worth face value is just kidding itself. The worst vintages Y2005-Y2007 are probably only worth 70c on the $, if that. The loss totals from this mess must just be staggering and they seem to be getting worse by the day. I cannot see how this problem is solved without the lenders taking huge adjustments to the principal. Too late to worry about moral hazards now once the donkey is in the hole