First off, what exactly is the discount rate? The discount rate is the short-term interest rate that banks can borrow at. The current rate is now at 5.75%. The Federal Funds rate, the interest rate that banks lend to each other overnight, remains unchanged at 5.25%. Early morning trading showed the financials up huge with Goldman Sachs (GS) leading the way with a sharp 8+ point gain. Today is a good day to be a bull! Some folks are right… it doesn’t pay to panic. I know I panicked a bit yesterday and I’ll regret it but that’s how you learn. It’s going to be days like this that you learn not to panic.
I predict a 300 point jump in the market today. I hope I’m wrong and it goes higher!
Just a few minutes ago, Dell (DELL) halted stock trading while performing an internal probe into their accounting division. It appears that they’ve discovered irregularities that were purposely made. Trading for DELL will resume at 16:50. Coupled with HP’s (HPQ) excellent quarter, I can only imagine Dell’s stock dropping a couple of points at least in after hours trading. Not sure how this will affect their earnings report at the end of the month but I would tread lightly. Comapnies dealing with accounting issues are too high of a risk for my taste.
Reuters Update:
Dell has stated it would restate four years of financial results, reducing net income for the period by as much as $150 million and revenue by 1 percent or less per year, after the former leading PC maker completed a lengthy audit of its accounting.
CNBC Alert: Dow Plunges More than 250 Points, Down 10% from July Record
Help? This has not been a great week.
Intraday Update: DJIA down 320 points at 13:00. I’m nervous to see what’s going to happen in the 14:00-15:00 “sell” block.
Closing Update: Market closed almost flat. I don’t understand this game.
Dow Jones Industrial Average closed under 13,000 yesterday. Does this signal the beginning of a free fall or is it temporary? My guess is with the upcoming options expiration on Friday and dropping under the 13,000 psychological level, we’ll see 12,000 within a couple of weeks. If that were to occur, I would think the Fed would have no choice but to cut rates or shift their focus from inflation to housing/financials. I’m curious what you think. Are things as bad as they seem or is this just a temporary correction?
I apologize for the delay this week with my portfolio progress. Work’s been a strain. If only I could blog and invest full time. Now there’s a thought!
Market volatility is in full swing (get it?). Last week had the largest point gain and the largest point loss of the year. Last week also brought on some liquidity issues.
- Monday (8/6): The day after Jim Cramer’s rant rallied the market 280+ points. Looked like the market was figuring the Fed would come to the rescue…
- Tuesday (8/7) The FOMC released a statement regarding the inflation situation in the US. They also stated that they’ll be watching the housing/financial sectors in case of spillover into the rest of the US economy.
- Wednesday (8/8): Market was up about 100 points for the day in a fairly volatile session. I couldn’t see any signs of what was about to come at the end of the week.
- Thursday(8/9): Down almost 400 points. During the day, the Fed “injected” $12 billion to the system. The short explanation from how I understand it is that when the Fed begins to purchase bonds from the market that no one wishes to buy, the Fed is effectively “injecting” money or liquidity into the system. The bonds the Fed purchases are usually high grade bonds (AAA). I’m not completely familiar with bonds though so I’ll have to give a nice explanation on how they work in the future. I do know that when you take a mortgage out, not only is your bank making money on the interest from your mortgage, but they turn around and sell your mortgage on the open market as bonds. To me, it appears that banks make money twice off your mortgage. Must be nice, eh?
- Friday (8/10): The Fed injects money, or liquidity, into the market three times. This hasn’t been seen since 9/11. Some people feel the Fed is doing the right thing. Others feel it’s a band aid on a gaping wound. I think they were caught with their pants down to be completely honest.
- Total Deposits: $1,353.38
- Current Portfolio Value: $1301.44
- Profit (Loss) as of August 15, 2007: -$51.96
- Profit (Loss) as of August 8, 2007: -$ 103.88
- Profit (Loss) as of July 30, 2007: -$35.79
As you can tell, even my own portfolio has been pretty volatile. I have three holdings in my portfolio, XTO Energy (XTO), Level 3 Comm. (LVLT), and Titanium Metals (TIE). Normally to be dversified you need 5 different companies from 5 different sectors. The problem comes from the fact that the market has been in such flux it’s been rough to judge when to jump in. I have a couple of plays I’ve been watching for some time. Let’s see if I can sneak in on a down day (and if I have the patience to wait).
DJIA futures are down this morning. Safe trading!