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Date Posted: 08:31:29 09/16/08 Tue
Author: Ari
Subject: Tuesday & Wednesday madness too?
In reply to: RadioRay 's message, "Re: Monday madness..." on 08:58:13 09/15/08 Mon

The thing to watch for isn't the fallout of Lehman failing. Or the fallout from AIG. Those are already factored in to everyone's expectations. The thing to watch out for is the fallout from the NEXT company after that.

3 out of 5 of the US' largest investment banks have cratered this year (2 this week!) The top 5 used to be Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley. Right now I feel conventional wisdom is balanced precariously between the "few bad apples" paradigm and the "house of cards" paradigm. If Goldman or Morgan Stanley get sideways, there will IMHO be a run for the exits.

On the oil price front: I'll fess up to be totally wrong. And it still puzzles me because I see a lot in the fundamentals that should be restricting supply. One thing I'm hearing is that "demand destruction" is totally trumping supply peak right now. In other words, a lot of smart people think Americans won't be able to afford the petroleum that's out there. Actually, they're also scared that the American crisis will spread like wildfire to other counntries and reduce worldwide demand. Either that or the consipiracy theory du jour is that the Saudis are gaming the OPEC announcements to depress prices before the US election.

Whatever's going on, I still hold a long position in USO, which tracks the price of crude. It's taken a beating since its high, but Christ, what hasn't. I think long term supply's gotta shrink faster than demand and the price has gotta go up. But like Keynes said "the market can stay irrational longer than you can stay solvent."

So I agree with Radio Ray: boat, tools, food, and the SKILLS to use 'em are always a good investment....

- Ari

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