Sunday, November 30, 2008

The Great Crash

Here is a comparison (for entertainment only) between the crash of 1929 and 2008. Note how the first leg down so far in 08 bear similarity to 29' in that both crashed about 50% from its high at this point in the calendar year.



In 29' the weekly chart shown climbed back up to the 50% fib level b4 failing again in Apr. of 1930.












The 50% retrace level for modern day dow chart to the right would be about 10800, right at one of the weekly resistant points.

I am also recommending The Great Crash, by John Kenneth Galbraith.
If you are lazy like me, look for the audio version of the book.

Wednesday, November 26, 2008

A tale of a S**tibank employee

Saw this posted in a chat room
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The youthful and enthusiastic Chuck moved to Texas and bought a donkey from a farmer for $100. The farmer agreed to deliver the donkey the next day. The next day the farmer drove up and said, Sorry son, but I have some bad news: "the donkey died".

Chuck replied, Well, then just give me my money back. The farmer then said, Can't do that; I have spent it already. Chuck added, Ok, then just bring me the dead donkey. The farmer then asked, What ya gonna do with him? Chuck replied, I'm going to raffle him off. The farmer said, You can't raffle off a dead donkey! Chuck countered, Sure I can. Watch me. I just won't tell anybody he's dead.

A month later, the farmer met up with Chuck and asked, What happened with that dead donkey? Chuck said - I raffled him off. I sold 500 tickets at two dollars apiece and made a profit of $998 while recovering my initial investment of $100.

The farmer asked, Didn't anyone complain? Chuck replied, Just the guy who won. So I gave him his two dollars back.

Chuck went on to work for S**tibank's investment banking unit where he designed and sold packaged product investments including S&P triple-A rated collateralized mortgage obligations, CDOs and CMBSs. They were easy to sell to Morgan Stanley and especially easy to dump at Wachovia and Lehman Brothers. It was all a huge success while it lasted.