I wonder

FYI – Circuit City, in Canada, was already granted bankruptcy protection. And we have not even seen the worst of it yet. The wave has not hit us much at this point.

We are starting to see issues with the financial sector. Federal Government deficits were anticipated (after many years of surplus).

Glad i am short financials and crude at this point.

The only ones who arent making money in this economy, are the ones that dont know how.

An article found tonight:

Shares of Warren Buffets insurance holding company are on the ropes this month, plunging 30% in part because the fabled investor dabbled in an area of the market he has long publicly derided: derivatives. And due to a tangled web of financial relationships, they may be taking Goldman Sachs shares down with them.

Investors are concerned about a $37-billion bet that Buffett made last year that U.S. and world equity values would be higher in 15 to 20 years than they were then, when the Dow Jones Industrials were trading around 13,000. Through his firm, Berkshire Hathaway, Buffett sold option contracts, known as naked puts to an undisclosed group of investors for around $4.85 billion, reportedly using Goldman as broker.

The buyers saw the puts as a type of insurance that would pay off royally if stocks fell over the next decade. They were seen by Buffett as an easy way to pocket a quick $4 billion-plus, which was booked much like an insurance premium, even though he is famous for scoffing at derivatives as weapons of mass financial destruction.

But easy money is the worst kind. The problem is that stocks worldwide have gone downhill in a hurry, and with a lot of the sort of volatility that makes put contracts swell in value. And due to accounting rules, this has made Buffett already need to mark down a $6.7 billion loss on the trade even though the trade has another 14 years to work out.

Because of its solid-gold credit rating, Berkshire Hathaway was not required to put up collateral to make this trade. But now rumors are flying on Wall Street that the owners of the contracts have demanded that broker Goldman Sachs put up collateral for the rest of the amount due. Since the value of the trade could be infinite, the collateral demands are said to be large, and fears that Goldman will struggle to make good on its obligation has panicked shareholders.

Indeed one theory making the rounds this week is that Buffett put $5 billion into Goldman at around $125 per share in September not as an investment but to help provide funds for the collateral.

Of course, there are other reasons for investors to sell Berkshire shares, which are down 42% overall this year, back to 2003 levels. Many of its biggest stock holdings have plunged in value this year, including American Express, General Electric, SunTrust and Goldman itself. And like most insurance companies, it holds a lot of bonds that have plunged in value during the credit debacle.

To see how Buffett described the put contracts in his 2008 letter to investors, click here. Theres little doubt that he and Berkshire will survive this mess. But for now this a blemish on his otherwise sterling record of achievement.

Brightest minds?

When someone creates a brilliant idea, he does not own it and his name means nothing but a starting reference to what he did, its the details of what greatness he or she had achieve that matters, and in these details there are no names, it can be all in your mind and you will become what people call brilliant, feeling that some one is brilliant is a feeling that gives us joy, and this joy must be used to look for how this feeling come, it is all in the details and this feeling will go away in to ways:

1 – You learn what caused the brilliant feeling, and you become an expert by knowing the details, now the feeling of brilliance becomes a feeling of wisdom, knowing more probabilities of a systems outcomes is what causes the feeling of wisdom and that results in better forecasting

2 – You feel the joy of someone else’s brilliance and you feel it again and again when ever you see it, now the feeling of brilliance becomes a feeling of comfort, knowing that you need not know how it was done and the details, your feeling of comfort is a result of not risking the consequences of thinking for your self, its a fake feeling of comfort

We are all hooked to the assuring feeling these famous achieving persons names give us, come on guys these people are not important and will soon vanish for ever like we all will, its what they did that matters and will live on, we may study the details of what they have done and if beneficial we should break it down and reconstruct it under our names and teach our children to pass it on to their names and so on.

Religious maniacs have been following very old stories of people’s names and their glories, always relating these glories to the names of those people that don’t exist any more.

Instead, we must forget who created what or who knows best and focus on what he knows best and how he knows it and only then we can benefit from this knowledge.

People should take the responsibility of their action and not hide behind the comfortable feeling of other people’s successes.

If you want to beat the market, learn how others have done it, don’t repeat it but break it down to details and relate these details to others in your own mind with out any name, in fact try renaming them temporarily and when you have results you want to share bring back the common names for other people to communicate with you, merge this information under your own name and only then you can see beyond other peoples names and achievements that are in the past, when you have done this it will become yours and you will have control because you have built it your self.

Even and ‘meter’ measuring unit does not exist, its a third party measure for people to synchronize against.

So dont celebrate people, celebrate their findings.

Im absolutely shocked at Buffetts actions-makes you wonder what his exit plan will be if Goldman folds.
Great to see trend followers trending!

So a couple of months ago Buffett bought $5billion of Goldman Sachs stock. That has now dropped more than 50%. A $2.5 billion loss in just 2 months on one stock alone! Now what was he saying about only buying stocks with a “high margin of safety”??

Retracement levels after manias stike me as being 50%, 75% and 95%. That puts the Dow at 3500, crude at 38.00 and gold at 250$. Maybe, maybe not but these levels are certainly outside of most peoples’ imagining…..and that’s the thing that makes them possible. Of course it might not happen. Tremdfollowers should make money in any case.

Evidence of a trend change: When people who normally go with the flow, start thinking too much… and find themselves starting to believe they (or ANYONE they know) might figure it out…

The prevailing trend is already down, so we don’t need to explain why. Go do something else you enjoy until it changes…

i think this environment absolutely blows and there is no visibility. deflation, deflationary depression or inflation and worse, who knows ? regardless this just isn’t fun. bring back the 70s 80s and roaring 90s!