A Fitting End to a Lousy Year
Dec 23rd, 2008 | By Andrew Gordon | Category: Financial NewsA worsening economy has pushed the market down. A global recession has pushed it down further. Will the latest Wall Street scandal push it down more? Some of the hundreds of losing hedge funds have written letters to investors saying that they won’t accept requests for redemptions until a later date.
Most, however, have been forced into selling to meet an avalanche of redemption requests for January 1.
This massive selling is another reason why the market fell so quickly. Could we get a little rally after January 1?
Institutions will have to reinvest this money. Treasuries and money-market funds are returning next to nothing. The stock market could be the beneficiary by default.
But the Bernie Madoff (is it pronounced “Mad Off” or “Made Off” – as in made off with the money) $50-billion rip-off (Good news: he may have cheated investors out of as little as $30 billion!) may trigger a new rush by institutions to get their principal back. A lot of funds of funds had exposure to Madoff.
That would mean more selling and could blunt a bear rally. Thanks a lot, Bernie.
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Andrew is currently the Editor-in-Chief of two monthly investment research services INCOME and The Wealth Advantage. He has also become a leading expert in utilizing Exchange Traded Funds to profit from rising and falling market sectors.
It is interesting to know how events in the distant past have parallels to what we have going on. For example, did you know of the link between the American Civil War and Mumbai�…. There was a cotton bubble going on at that time in Mumbai.