Saturday, June 28, 2008

Worst Since the Great Depression

There is a lot of talk that this is the worst June for the Dow since the Great Depression and the worst month since the 2000-02 bear market. I haven't run the numbers in a while, or posted that much, as they are so bad, but clearly this is my worst month since the 2000-02 bear market. I didn't bet on such a major retracement in the indices - about a 50% retracement of the March-May rally in the NDX, a new bear market low for the Dow, and a pretty much 100% retracement for the SPX. I've been trading on the wrong side of the market for the whole month, somehow, despite this, my trading result should be a little positive unless something real bad happens on Monday but that is offset by horrible investment returns. Friday night in the US my trading positions did go in my direction as the market reversed to the upside in reaction to a collapse in the oil price from a new all time high. The price of oil really drives the US stock market now, second by second. We are going to need to see a substantial fall in the oil price to get any rally going in stocks. I think that's possible. Recent highs in oil seem weaker as they are being made on lower volume etc.

On another positive note, after the close Friday, News Corp announced that it plans to privatise NDS at $60 per share. I currently have 100 shares. My brother is employed by NDS, which is how I heard about it in the first place. It's always been a bit hard to understand why the company was public given the overwhelming majority stake News Corp held. One excuse I heard was that it was to provide incentive options to staff who owned many of the remaining shares. Also, I've not yet seen any explanation as to why News Corp wants to take the company private now.

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