Most Volume Stocks
Does this sound like what’s happening in the financial markets?
sub-prime mortgages ballooned from a marginal, once in a blue moon product to big business in the past 5 years.
in that period, there hasn’t been a real estate market downturn, nor an interest rate cycle, nor a recession.
so, the financial markets have no experience to rely on when they estimate what proportion of these sub-primes might prove to be losses. It could be 3% or it could be 30% — there just isn’t much to base an estimate on.
but the volume is large … 100 billion or more in assets at book value.
so the markets don’t know if this is a 3 billion or 30 billion loss.
and when the markets don’t know, what they do is refuse to buy the stuff. and refuse to buy stocks that rely on the stuff.
therefore, mortgage houses, investment bankers, hedge fund sponsors, and traditional banks shares and commercial paper are all being shunned until we know more about the size of the losses.
the most specialized mortgage shops are hardest hit.
good thinking??
That’s part of it. There’s a really good article in Salon this week which explains the macro view in laymen’s terms. You should find it interesting. Link below.
Charts of the Day – CTEL, HUSA, LVS, TIVO – Stock Charts Harry Boxer, TheTechTrader.com