Home » Uncategorized » Another wild day on Wall Street!

Another wild day on Wall Street!

Friday 3 October 2008

If you are like me, you have a real job that takes you away from the computer at times. I surfaced around lunch time from grading papers and was pleasantly surprised to see the market responding favorably to the house’s vote in favor of the bailout. Or is it called a rescue plan now? I went back to grading and stopped for afternoon tea to be shocked by the tumble that had occured since lunch. What to make of it all?

I decided a long time ago to be a couch potato when it came to investing. I have neither the time nor the energy nor the inclination and most of all the knowledge to engage in markets that rise and fall 300 points or more in a day. I am broadly invested. We have paid off our home so we have a place to stay. We have a nice yard in which we could grow vegetables if push came to shove. So, we have secured a little place for ourselves where we can weather storms.

I suppose one great fortune is that I grew up poor. I am today very much middle class but I began life on a whole lot less than I enjoy today. I am grateful that we can afford to go to symphony, to the opera, to travel, but I also know that years ago when I could afford none of these things, I was just as happy as I am today blessed as I was by friends and family, walks on the mountain and trips to the beach, the occasional prized ice cream, and the even more occasional movie. I have that built-in assurance that even if we had to downsize, that would not mean the end of the world. I fret that my young students who have grown up with such abundance would find downsizing a great deal more difficult and fearsome.

They say that Wall Street is driven by fear and greed. If so, then we have seen fear and greed cycle through the market in overtime this week. The largest drop on Monday; a huge rise on Tuesday; and here we sink back down again. What it surely reflects is just that most people have no idea what to  make of the bailout and all its associated sweeteners to persuade Congress to vote for it. That surely is the result of this bill being very badly described to the general public along with the huge suspicion that most of us now hold of the people in power. Is this really something that they are doing for us? Or is it something that they are doing for them? Why is it that Goldman Sachs appears to be the main beneficiary of all this? Is that just accidental, a reflection that their partners are wiser than the rest of us, or was it because our Treasury Secretary ran that firm and his successor has sat in on the bailout meetings? We don’t know and the market reflects that.

More serious is the wider economy. How are the credit markets going to respond? I shall address that question in the morning.

If you haven’t checked out my notes on the left under Pages entitled “So What’s the FInancial Crisis All About” you may want to so as to get some more perspective on the current economic situation.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s