BP is financially very sound and well able to pay for the damage done by the spill. Furthermore, its price, at ~ $50, is fairly cheap historically. My sole reason for not buying it is that it is unlikely to go much higher than $60 near-term, barring the effects of inflation. If it starts selling in the $40 dollar range, I'll buy some to keep forever, just to get the juicy dividends.
Seán

Doug,
     I picked up a few shares of ING at slightly below my bidding price and was complacently printing the confirmation when I noticed the bottom had fallen out of the market. In mere moments the DJIA fell more than 800 points, which impressed me greatly. Minutes later almost half the losses were recovered, but vast pools of suffering and sorrow remained visible on the floors of all exchanges.
     I suspect the debacle—I dare say that now.—was caused when declining prices triggered a vast backlog of stop-loss orders placed by cautious players. In like manner, I suppose, latent buy-orders, issued by the hopeful when prices seemed too high, were activated by the fall in prices; which led to an incomplete recovery. (Think program trading?)
     There probably will be time to buy some bargains because the European crisis will be damping investor enthusiasm for some time to come. I noticed BP was selling below $50; my appetite is whetted.
Seán

quote:

In mere moments the DJIA fell more than 800 points, which impressed me greatly. Minutes later almost half the losses were recovered, but vast pools of suffering and sorrow remained visible on the floors of all exchanges.

That is okay they looked at it and said "JUST KIDDING!". They will now give those trades in that time a do over.

Asia didn't like it much and fell further tonight. They seem to have fallen more than the US. Europe of course has it's own problems.

I did watch BP go below $50 on my ticker and almost reached for the phone as I watched it climb back up what appeared immediately. The spill still has me nervous. I was wondering about loss of production as much as clean up. More research is necessary.

Despite the "Sell in May" trade someone was saying most often May is a good month.

I have been expecting this correction but just later and from higher. My crystal ball must need cleaning. We are barely short of a 10% correction. That is the minimum move I like to try to catch... some.

I bought both BP and some more GE today in the last half hour.

I'm a touch nervous about the BP with all that is going on but that yield pays me to sit on it. I don't need to hold it forever either.

I don't like sitting on too much cash and feel this correction was an opportunity. I won't deny we could get more such opportunity before this fall.

quote:

I...feel this correction was an opportunity.—BullDoug

Doug,
     I agree. With no good reason for the crash, recovery should be swift; especially since standing orders to sell must now be thoroughly depleted.
     If BP can cap the major leak you should see a gain immediately. If their effort fails BP's price may fall some more, but that should be temporary.
Seán

quote:

If BP can cap the major leak you should see a gain immediately. If their effort fails BP's price may fall some more, but that should be temporary.
Seán

I considered that a quick resolution could give me a nice pop to the stock. But having learned from you to always consider the worst case I asked if I would still want to own it and that was a yes.

Cramer said he could buy some BP here and would look again if went down to 47, and again at 43....Hey, wait a minute!


But now that this first effort failed it becomes more interesting. All the talk about needing to pump warmed water or glycol in it to make it work before they attempted the collector, the collection of oil, made me think that giant cover was more for public relations than a sincere effort along the lines of "Must do something now". Now they are considering how to make it work while several other efforts that require more time and thought are progressing.

They might make it work yet but the idea is on shakey ground after failing so fast.

Doug,
     The containment apparatus is not a failure yet. All that's needed is a way to thaw the ice. That might done by pumping air through a tube into the container and igniting it. It would, in effect, become a flame of oxygen burning in an atmosphere of gas. There would be no danger of explosion because the oxygen available to burn would be controllable. I expect some influential engineer assigned to the project will think of doing that within a day or so.
     Meanwhile, if BP falls to $45 tomorrow, I will be buying some of it.
Seán

Doug,
     What a shambles! Euros were available today for less than $1.24 each, on the off chance one was wanted. Meanwhile my portfolio, erstwhile robust, has turned strangely flaccid and looks like staying so a while. I was strongly tempted to buy BP today, but didn't make an offer; the news concerning it stays bad, so its price may fall a little more. I'm also considering adding more INTC; eventually they're bound to sell a chip to someone.
     I think we are seeing the first ravages of unsustainable governmental debt. I am surprised to learn the Euro was the weakest link.
Seán

     From this story it would seem the Euro is a goose already cooked and ready to be carved. It wasn't long ago when flight from the failing U. S. Dollar to the safer Euro was the topic of the day.
Seán

BP reports success with its second attempt to insert a tube transfer oil from the leaking well into a storage ship.

quote:

What a shambles! Euros were available today for less than $1.24 each, on the off chance one was wanted. Meanwhile my portfolio, erstwhile robust, has turned strangely flaccid and looks like staying so a while. I was strongly tempted to buy BP today, but didn't make an offer; the news concerning it stays bad, so its price may fall a little more.

quote:

BP reports success

Ahh, some success was certainly a relief. When the markets bounced back the other day it appeared I had managed to recently purchase one of the few stocks in the world that went down. I looked but failed to find another. Options seem to already be reflecting a touch of optimism that the spill may be mitigated some and sooner than a couple of months from now.

The Euro is another matter. Prior to the currency being issued what is happening now is precisely the criticism against it working. The ability of one country to damage the others by not maintaining the same fiscal policies as the other country was part of the fear.

What they can't do is let the currency of the individual country fall to help balance the books and risks. That seems a bit like a flaw for the multi-country currency.

If Greece refuses to deal with the problem I wonder if they could cut them loose from the Euro. They aren't a large part of it.

Asia is not happy tonight but may be reflecting Friday here.

Although China/Shanghai seems particularly upset but Hong Kong is only digruntled half as much. The mere suggestion and the mild efforts (so far) of slowing growth there has hammered that market that was soaring so high not so long ago.

Doug,
     Membership in the Eurozone is subject to the conditions of the Lisbon treaty.
At this time a member can withdraw voluntarily, by giving two years notice, but there
is no provision for expelling a member in any circumstance. A majority vote of 55% by
member countries would make expulsions possible, I believe, but am not certain.
    Another thought: The yuan is pegged to the dollar and the dollar is appreciating
versus the euro. That would make European imports from China more expensive,
which is bad news for the Chinese. Could that be the root cause for the falling Chinese
markets?
Seán

Doug,
     Indexes were sharply down again today, apparently in response to the declining Euro. I doubt we'll see a quick recovery, so I'll defer further purchases of shares until I see some sort of bottom. I have paper losses on all recent acquisitions including AA, INTC and XOM, so a pause seems indicated. It looks as if BP may reach my $45 buying price tomorrow, but I shall forgo that purchase also, even though I'll probably be sorry.
     I won't be selling anything because everything I own is suitable for weathering a disaster. Instead, I hope to increase my holdings when the market stabilizes at a lower level.
Seán

quote:

Doug,
Membership in the Eurozone is subject to the conditions of the Lisbon treaty.
At this time a member can withdraw voluntarily, by giving two years notice, but there
is no provision for expelling a member in any circumstance.

Without going through it in any detail it was my understanding they set up certain fiscal constraints for those using the Euro. I can only assume there is some sort of mechanism they can use to enforce the fiscal standards, penalties. It likely happens all monetarily.

Obviously each country issues it's own bonds and they could have allowed Greece to default. How that would affect the Euro is another matter.

quote:

Another thought: The yuan is pegged to the dollar and the dollar is appreciating
versus the euro. That would make European imports from China more expensive,
which is bad news for the Chinese.

That is a good thought I have also heard mentioned by some talking heads. But the flip side is that a stronger dollar makes Chinese imports cheaper for the US.

I think the bigger concern is that this might slow growth or cause a double dip recession in Europe which would slow demand generally, outside of the effects by currency rates.

The effects of currency on interest rates, trade, economies, banking, plus much more, and vice versa has so many related factors I find it difficult to ascribe any clear cause and effect on individual aspects.

It is all too relative, so to speak.

quote:

Doug,
Indexes were sharply down again today, apparently in response to the declining Euro. I doubt we'll see a quick recovery, so I'll defer further purchases of shares until I see some sort of bottom.

quote:

I hope to increase my holdings when the market stabilizes at a lower level.

As mentioned I had anticipated some sort of correction after our stellar run up over more than a year with hardly a correction to be had. But I have to say all the dire predictions have me a bit baffled.

I have to say I am not exactly buying the pessimism. Only a couple of stop losses sold. I did have other cash I was holding as I was also a touch nervous about committing it. For the most though I rode this one down.

I think we are seeing an over reaction. Part of that "Once burnt, twice shy" we were talking about earlier.

But down for the year? That doesn't make sense to me.

Did I think we were a little high at the start of the year? Yes.

Did I think earnings needed to grow in to the evaluations? Yes.

Did the economy need to strengthen and predictions, estimates be proven out? Yes. Were they? Yes and then some on the positive side.

I think the economy is stronger than I expected for this time, earnings have been better than anticipated.

I committed a chunk of cash today I was holding in a 401(k) to a mutual fund that is a large and mid cap growth. Tech companies are the biggest holdings for that fund at the moment. I don't hold individual stocks in that account.

I concede I may be wrong in the short term and this correction which I didn't avoid could have more to go. It will likely be fall before the market takes off again.

Looking at the bigger picture, like year end, I am still of the mind that this dip has shifted my risk/reward ratio more in my favor and feel comfortable committing cash here.

But I might have to hold my nose for a while, at times, when checking the market until things look better.

quote:

I might have to hold my nose for a while...—Bulldog

     Today's numbers before the bell suggest holding both nose and wallet. Thank Heaven
for two hands.

     Other matters kept me from enjoying the last hours of this trading day but just reviewing them is thrill
enough. 43 points lopped off the S&P 500 commands attention; I can attest to that. Judging from
the Yield Curve money is fleeing to US Treasuries. Stock futures indicate investors think a tomorrow will arrive
on schedule, albeit not a happy one.
     The Euro has moved up to $1.2468, but that probably means little in the absence of supportive action.
     This correction will likely provide a great buying opportunity, but I plan to wait until the downturn ends. That will be
when my existing portfolio recuperates a bit; meanwhile I'll sell nothing.
Seán

quote:

Today's numbers before the bell suggest holding both nose and wallet. Thank Heaven
for two hands.

This month has made it easier to hold that wallet, less worry about that unflattering bulge.

quote:

This correction will likely provide a great buying opportunity, but I plan to wait until the downturn ends. That will be
when my existing portfolio recuperates a bit; meanwhile I'll sell nothing.
Seán

I have sought to give validity to the saying that the market can stay irrational longer than one can stay liquid.

My BP purchase is lagging my expectations. I surely thought they would mitigate the spill more than they have so far.

They originally claimed the spill was only 1,000 barrels a day and now they are siphoning off 5,000 barrels through their straw and the leak appears hardly affected.

They have said they could be trying to do the top kill as early as Sunday. I think a lot would change if they can shut that off. Not just for the BP stock but I think the continuing spill has only added to the feelings of depression from this recession Americans have been trying to shake off.

Today is a double witch options expiration, the anticipation of which I believe added to yesterday's tumble. There was little need for the shorts to have to buy stocks to cover because of rising prices. Selling prevailed.

     If index futures signify anything at all, today should see a mighty sell-off. I expect there'll be superb buying opportunities aplenty. Recovery is not apt to be a sudden thing, so purchases can be made leisurely, after due deliberation.
Seán

     The threatened confrontation with North Korea is a factor, but concern about the future of the euro is the main cause of the current stock sell-off. Debt in the Eurozone has reached a level high enough to undermine the currency; at the moment euros trade at less than US $1.23. Wikipedia tabulates External Debt per Capita of all countries as of 2009. The list is difficult to read because it has so many entries, so I've sifted out the countries of ascendant interest into a smaller table. Surprisingly, the Greek indebtedness differs little from that of its potential rescuers.
Seán
PS: The US National Debt per Capita is $42,128.

     The big surge in stock prices today was primarily caused by assurances China will not dump the euro. To me this says that China can manipulate the economies of the Eurozone and putatively that of the US at will just by threatening not to support increasing sovereign debt.
Seán

quote:

Originally posted by Sean:
     If index futures signify anything at all, today should see a mighty sell-off. I expect there'll be superb buying opportunities aplenty. Recovery is not apt to be a sudden thing, so purchases can be made leisurely, after due deliberation.
Seán

The futures told a true tale on Monday. Same for the bit of an uptick on Tuesday. But this market reversing either direction at the close seems all too schizophrenic at the moment.

I am a touch concerned about crossing under the 200 day moving average. I am of two minds about it. The run up over the last year was dramatic so the average may have had too much of an upslope to be normal. We can't gain 70% in a year indefinitely. So touching or falling back to a rising 200 day average is healthy . Even short periods of time under it is not too worrisome.

But a change in direction of that average to down sloping is a bigger concern as an indication of a deeper Bear Market. All the current recovery numbers and improving economy runs counter to that longer term, though.

Currently it gives a signal to watch for the economy to falter here. That is what it is predicting at the moment, I just don't see it. I think there is over concern to Europe and some general malaise as we aren't seeing the strong recovery everyone is anxious to have happen. But I didn't expect that yet.

quote:

Originally posted by Sean:
     The threatened confrontation with North Korea is a factor, but concern about the future of the euro is the main cause of the current stock sell-off. Debt in the Eurozone has reached a level high enough to undermine the currency; at the moment euros trade at less than US $1.23. Wikipedia tabulates External Debt per Capita of all countries as of 2009. The list is difficult to read because it has so many entries, so I've sifted out the countries of ascendant interest into a smaller table. Surprisingly, the Greek indebtedness differs little from that of its potential rescuers.
Seán
PS: The US National Debt per Capita is $42,128.

Very interesting numbers but they bother me. Something about them seems wrong. While true that Germany has many Euros in bonds outstanding I wonder if they deduct assets? As in how much do they own of other countries debt and is that counted? I just have trouble believing it with Germany being so strong.

quote:

Originally posted by Sean:
     The big surge in stock prices today was primarily caused by assurances China will not dump the euro. To me this says that China can manipulate the economies of the Eurozone and putatively that of the US at will just by threatening not to support increasing sovereign debt.
Seán

Except that concern is a result of other weakness. I am not sure it is nearly as large a concern for us. Moreover if they hold so much of another country's debt they can manipulate the market they surely don't want to do it in a manner that destroys the value of what they hold. Their high ownership forces them to act responsibly I would think.