I’ve been short housing for 2 years now, and I never had the thought “hey I should jump in here for a long trade!” On any big rally I just added more to my short position. I’m looking to close it out pretty soon, but it’s been a long, long ride that made a ton of money.

What have you been buying?

I was going to put a little more in with some orders for ultralong ETF’s I had set last night, but with the futures so bad, was afraid I’d pay too much, so cancelled them to see if it would drop more at open, but instead prices came off the opening lows quickly. So, I stayed put. I suppose there will be more opportunity.

Am beginning to think the intermediate bottom may come with a whimper and not a bang.

Like tyaresun, I had bought some calls too high, but all almost all don’t expire til Jan. so I ain’t capitulating even though the current losses look discouraging. They can bounce back quickly in a rally. My only discomfort with them is if my wife asks how my trading is doing :)

Its the economy, silly. Earnings flat-out SUCK. The Alt-A and option ARMs haven’t begun re-setting in earnest. We have Birth/Death model catastrophically tilting the unemployment numbers. We have massive demographic (Boomers) that has been socking away the lion share of their income into the market and they are about to begin withdraws, in earnest.

We have banks hoarding capital. We have a FED that has lost control of the one thing they actually control. We have credit card debt that is higher than many countries GDP. We are at a point where each dollar of new debt has a Net negative effect to the GDP.

We have hedge funds blowing up. The alphabet soup the FED has created is not working. Auto makers are a hair away from total implosion. The consumer is close to saying no mas, if they haven’t already (see closing and consolidation in retail land).

I have more… shall we go on?

Note that Moody has A and AA and AAA rated corporate bonds, which did NOT drop as much as the BAA…..This is a telling sign that the bond markets do NOT believe that the debt of these corporations are collectable per whatever period they sell for.

These are bond yields, on not the best rated, but still investment grade corporate bonds. It is the guys closer to the margin. Its not the worst of the worst, but given the fact many corporations don’t have stellar ratings these days, you find there are quite a lot of them at or near the margin. Notice also the speed of this collapse. It happened within DAYS compared with the 30′s MONTHS. The GDP collapse this implies will be much the same.

we’re getting a different rhyme this time round from 1929. In ’29 the crash in oct/nov wasn’t due to the bonds leading the way. But the April 30 bear market taking away 86% of the DOW WAS led by this paper.

One more reason I fear the chances of a “rally” are gonna be interesting

http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&width=1000&height=600&preserve_ratio=true&s1id=DBAA

The thing is, every time we had a crash people thought “it is different this time”. If they hadn’t thought it was different that time they would have been confident in the market and there wouldn’t have been a crash in the first place.

The one thing that is exactly the same this time is that people think “it is different this time”.

I don’t know where the bottom is, but I know we’re at least 50% closer to it than we were a month ago. I’m doing the same as Barry, easing in a few percent here and there over every leg down with a few puts to take the edge off.

My first post here btw, love the blog and have learned so much from it. Thanks Barry!