Thursday, August 16, 2007

Sleeping Well

Oh the wailing and gnashing of teeth I am reading about the falling Dow and other financial issues. What has fallen? It is still up over ten percent for the year, even after today's bloodbath. I am glad I am in it for the long haul.

911 nor Katrina couldn't stop a well diversified portfolio from moving forward nicely. Is the current crisis (is there one?) worse than either of those two events? I think not. That is why I am long.

Dumpster divers like me are licking our chops on doubling down on some things and scooping up some nice deals in the aftermath of this "correction". I love buying things on sale.


Dan from Madison said...

So much for the bloodbath - the Dow was down 340 and ended up down only 15. But the general trend has been down for the past few weeks.

Jonathan said...

There are probably people quietly making large profits by buying high-risk mortgage-backed securities at fire-sale prices, or bailing out hedge funds. If you bid on one high-risk mortgage you have some risk. But if you have deep pockets and can bid on thousands of them, you can estimate the default rate and figure out what they're worth. If the funds who are currently holding those mortgages are forced by customer redemptions to liquidate, you can buy at great prices. There is probably a lot of opportunity out there now.