| Grizzly's Growlings Back Issues |
Well, the market took one baby-step up the first ½ hour Monday morning, then it took one giant step around that corner. You know the details of the carnage by now, so we won’t elaborate on them. Suffice it to say that the DJIA is down over 1,000 points in the last four trading days. Suffice it to say the over $2,000,000,000,000 (that’s two trillion, with a "T") in market capitalization (i.e. wealth) has evaporated since the DJIA hit its record high on July 17th. This is THE worst investing period ever for most investors, save perhaps the big one, October 1987.
Are we in for a "Terrible Tuesday?" Maybe, maybe not. The Asian markets are down Tuesday morning, but not dramatically so. As of 11:30 PM EDT, Australia, Hong Kong, Indonesia, New Zealand, Taiwan, and Thailand are all off 2-4%. Tokyo, by far the largest and most significant Asian market, is down 1.25% and back under 14,000. The S&P 500 futures trading overnight on the Globex are up a strong 17.00, clearing the small discount-to-cash as of the NY close. We’ll just have to wait and see if this can hold up through the morning.
Even if US stocks open higher Tuesday morning, the rally probably will be short-lived. Just as the dip-buyers jumped on every downdraft in the bull market, profit-takers will see every rally as that one last chance to get out. No one wants to ride this Bear down to the bottom, however low that may be. Many investors and traders, pros and BEARdstownites alike, will be content to salvage whatever they can of their remaining gains.
Bear-Friendly Funds Update: Tuesday 09/01/98
Monday was a bear’s delight! The bear funds we track all had stellar days:
Fund |
NAV |
Change |
Gain |
| BEARX | $7.73 | +0.67 | +9.50% |
| URPIX | $11.09 | +1.45 | +15.04% |
| USPIX | $10.03 | +1.89 | +23.22% |
| RYURX | $11.61* | +0.80 | +7.40% |
*Note recent 1-2 reverse split.
Again, the pundits and the media characterized the action as "civilized and under control," "no panic, no capitulation yet,." " tense and strained." When it’s characterized as "blood in the streets," we’ll be at at least a short-term bottom.
On Monday, CNNfn.com reported that 80% of investors who took their poll still want to "hang on" or "wait a bit more." They're sure not throwing in their towels, yet. Well, maybe they will tomorrow.
The first group of margins calls were issued today to many investors -- investors who don’t know what a margin call is! It will go something like this:
Broker: "Mr. Jones, this is Biff your broker. Remember how you bought Yahoo on margin a couple of months ago? Well, I’ve got to make a margin call. You can either wire me $5,000, or we can sell the stock. What’s it gonna be?
Mr. Jones: "What, are you kidding? Dump that dog of a stock! Get me OUT!"
For every seller, there is a buyer. Someone bought those 2 billion shares traded today. You can bet they’re not happy, and you can bet they’ll be looking for an opportunity to remedy their mistake and get out.
US stocks remain on FULL CRASH ALERT! The downdraft may not resume Tuesday, or even this week for that matter, but we've still got a LONG way to go on the downside.
Grizzly
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