Tuesday, October 28, 2008

Dow up 889

2nd Biggest Point Gain in History.

Bargain Hunting. (FoxNews)

Stocks well below their intrinsic value are attracting buyers. Frankly, I think the bailout money is SUPPRESSING the market. Comment and ask me why if you're wondering.

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3 comments:

kbp said...

Why?

:)

The Pharisee said...

Until it's actually used in some sector of the economy in a specific way it causes investors to wait to see where that money goes. It affects the value of those sectors of the economy so investors wait.

kbp said...

I may be misunderstanding you, but most all of that bailout money is buying paper (bonds) that back mortgages.

I'm buying distressed properties, and I can not find funding for less than 7.5% on 25 or 30 year mortgages (6.5 if it was owner occupied).

The rates these mortgages are based on show it should be 1 to 1.5% lower, but there is not enough money out there buying the bonds backing the loans.

I'd hate to see where those rates would be if the bailout funds were not there.

They say Asian investors are still dumping the bonds they hold.

Anyway, if none of the financial institutes had the bailout funds, then the bonds they sell would go at a much higher rate, making the immediate problem worse (long term is another story).

So I am not following how the bailout money "is SUPPRESSING the market". It looks to me to be functioning more like a stop trade to calm the market from falling further.