Monday, September 15, 2008

Lehman Impact

It's looking like Lehman brothers will be liquidated. The result could be worse or more worse depending on whether a systematic plan can still be concocted by the start of US trading, tonight Australian time. Stock index futures opened half an hour ago on Globex and the S&P contract is down about 36 points. A substantial break from Friday but around recent lows. If that's the worst impact then that's a pretty good outcome. No way to know at this point though whether that holds, or futures bounce back or decline further before the open 15 hours from now.

P.S. 9:51am Australian Eastern Time

ES futures have bounced a little. Australian share price index futures (SPI) are opening down about 120 points or 2.4% near recent lows.

P.S. 10:20am Australian Eastern Time

I'm into the buffer zone on my margin loan from Commonwealth Securities. This is a warning that a margin call could come if the market falls further. You can't buy any more stuff but don't have to sell yet. This hasn't happened since 2002... The All Ordinaries is only down 60 points though at the moment and when Friday's Australian managed fund values post later today I'll be out of the buffer zone again. I'm most likely to sell Qantas first if I really faced a margin call. Following that, I'd ask CommSec to redeem some of my units in the CFS Conservative Fund as it is 70% bonds and cash and 30% stocks and property.

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