The Broker's Hidden Agenda — The Bubble — The Wall Street Hype — The Bubble Is Bursting — The $17,000 Toilet Set — Sell the Stocks Now! — Get Your Money Safe — The Exploding Budget Deficit — The Bond Market Bubble — The Real Estate Bubble — The Winning Minority—The Team—Hidden Risks—Deflation!—The Fall of the Blue Chips—. Move Your Account!—A Call to Action—Vertigo—The Great Bailout—The Great Rally—The Gap—The Blame Game—Rock Bottom—The Darkest Day—A True Recovery.
FICTION OR FACT?
Don't forget the golden rule of winning in the stock market!” he added in a professorial tone. Do you understand, - he asked, - what will happen if everyone does what you are talking about.
THE BUBBLE
Now," the woman concluded, "the management team will have a really strong incentive to do everything humanly possible to increase UCBS shares in the stock market, which brings us to the second item on our agenda - your bottom line. Everything we have proposed, every maneuver, is perfectly legal,” the consultants said almost in unison.
THE WALL
UCBS's lead underwriter was Harris & Jones, one of the most aggressive investment banking and brokerage firms on Wall Street. And large blocks of the shares were distributed to brokers who pushed the stock to their clients.
STREET HYPE
In the past, Wall Street companies derived most of their income from broker commissions – from buying and selling stocks on behalf of the investor. Simply put, the big Wall Street firms used to work mainly for investors who wanted to buy shares in the companies.
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THE BUBBLE BURSTS
On the contrary, approving questionable accounting was standard operating procedure at every one of the Big Five accounting firms in America. It didn't even address one of the biggest accounting problems of all—manipulations of employee pension funds.
THE $17,000 TOILET KIT
If it had been just the deflation – the falling sales and falling prices – maybe UCBS could have gotten by too. No wonder our PC sales are crashing!” said the vice president over lunch later that day.
SELL THESE STOCKS NOW!
The Dedinis miss it!” he said as if it was the talk of the whole town. Incredibly,” he said, “there are 40,000 registered financial planners in the state of Maryland, but only a few hundred are fee-only. It also assumes,” he continued, “that you actually bought the 'market' - all 30 stocks on the Dow or all 500 stocks on the S&P -.
ARE WE STILL IN A BEAR MARKET?
If the blue line is higher, it is an indication that the market may be recovering. If you're a smart salesperson, you try to avoid "selling into a hole." That's when the market falls while you're selling, when everyone else is trying to sell at the same time as you." You can tell right away if the market is in rally mode or not.
IS THE MARKET IN RALLY MODE?
With many securities, you'll probably need to set a price limit, a minimum you'll accept for the shares you're selling. Depending on the situation, your broker may recommend a slightly higher or lower limit price. I neglected to tell you that it was right there on my instruction sheet that I gave you—to temporarily park the income in a cash fund.
GET YOUR MONEY TO
You told us to sell, but you didn't tell us where to put the money,” said Linda Dedini at the next consultation with her adviser, this time with her husband Gabriel by her side. She wasn't sure if she should let her husband or ass in and explain it to him in 10 seconds or less. Then he turned to Gabriel and added, “It's a mutual fund—in this case, run by a subsidiary of your brokerage firm.
SAFETY
Your money – or rather CDs and debt obligations etc. - kept by the bank that the fund chooses as its depository. Even if the brokerage or fund management company fails, it will not affect your money. Hell, even if the bank itself fails, it won't jeopardize your investment in the money fund.”
ADVANTAGES OF TREASURY-ONLY MONEY MARKET FUNDS
There are several ways you can withdraw your money from your Treasury only money fund:. You get a piece of paper — the bond — that says they owe you the money.” The Treasury bill is called a ‘bill.’ The safest of them all is the Treasury bill, which takes us back to the government funds.
BALLOONING BUDGET
Moreover, he also considered inviting some of the same people who advised companies on how to distort their earnings in the 1990s. Who will know more about bending and breaking the rules than the people who have done it in practice. Oliver Dulles, who lost his job at the accounting consulting firm shortly after Johnston resigned, was one of the first—and the most eager.
DEFICIT
And to prove his skills, he had already done some research that he thought would add great value to the project. Well, it just so happens that the biggest accounting fraud of all is being perpetuated by none other than the federal government. He had often heard critics of government and watchdog agencies talk about the "smoke and mirrors" behind budget accounting, but he had never seen any definitive, black-and-white evidence to determine them with the kind of precision that the CPA figures— he seemed to imply.
Federal Budget Deficit Out of Control
The Treasury Department's numbers -- doctored numbers -- are the ones being debated before Congress. First, the government has a bunch of agencies—Federal Home Bank, Freddie Mac, Sallie Mae, etc. Never forget – the taxman is the silent, ever-present partner behind every business in America.
THE BOND MARKET
You say, "The economy is going down, so interest rates will go down." Okay, I accept that. Then you say: 'The economy is deteriorating a little further, so interest rates have to come down a little further.' Fine, I accept that too. I stare blankly at the bond price screen and happen to see the price of the long bond – the newest, longest-term US bond.
THE REAL ESTATE
But you don't see it yet because it hits commercial and industrial real estate first. But what about all that money that will flow from the stock market to the real estate market? Do you really believe that people with losses like this will be afraid to get into real estate?”.
WHAT TO DO WHEN REAL ESTATE IS FALLING
Seriously consider selling commercial proper- ties. Their values are typically the first to fall in the wake
It's a difficult and painful decision, but it can be wiser than risking an event that could derail your plans. In the investment world, the opposite is often the case, especially at major turning points in history. Conversely, those few who learn the secrets of crash profits can sometimes make more money in a downturn than many people made in a previous boom.
THE WINNING MINORITY
Then why didn't you check the stocks with one of the independent credit rating agencies I told you about?” asked the counselor. The other bad news,” she said ruefully, “is that the doctors say Grandpa has only weeks to live.” If the S&P goes up 20 percent and you have a fund that is the inverse of the S&P, your fund 20 percent.
CRASH PROTECTION
Decide how much of that risk you want to pro- tect yourself against. If you wanted to protect yourself
But if you did, you would essentially be moving money from a safe investment to a more aggressive one. But she had become frustrated with the rules of the game: While it was okay to talk about a future recession in private conversation, any material for distribution was severely restricted, especially if it could fall into the hands of the public. Her fundamental argument was not radical: a recession is not complete until its own causes have been corrected, before most of the excesses accumulated during the previous boom have been purged.
THE TEAM
Washington already had the "company" (CIA), the "bureau" (FBI), the "commission" (SEC), and various others. The team first appeared in the wake of the stock market crash of 1987," the analyst said. He fears that unless they do something - immediately - the market will continue to plunge.
HIDDEN RISKS
Look at the eight big players - the banks that control most of the US derivatives business. It does not waste precious public resources on bailing out failed private sector institutions. For most citizens, the pain of the fall is less severe in the short term, but much greater in the long term.
Dow 1929 vs. Dow 2002
Dow vs. Nasdaq
Here's how it works: Among the stronger companies, it's going to become much more expensive — and much more difficult — to raise the money they need to expand or even stay where they are. Even in 1974,” Tamara continued, “just before the worst recession and deepest bear market of the second half of the twentieth century, the burden of private debt in this country was much, much less severe than it is now. Then, as the century ended and a new one began, an old but mighty power reared its head for the first time in more than 60 years and began pounding key regions or sectors of the world economy.
DEFLATION!
So in scenario A, this kind of selloff produces deflation of the lowest variety—the kind of deflation that runs rampant. As with technology and telecommunications companies, nothing could sink a company dependent on credit faster than cold turkey—the sudden withdrawal of that credit. Even when it was absolutely clear to the rating agencies that Enron's finances were in total disarray," he said, still scanning the clipping, "the rating agencies refused to downgrade the company to 'junk' and insisted it was still 'investment grade.' Wait; I'm looking for something in this clipping from the New York Times. Oh, there it is.
WHAT TO DO WITH YOUR BONDS
I have instructions for both: "What to do with your bonds," and "Managing your 401(k) in a down market.". And even if your bonds don't default, declining confidence in the junk bond market as a whole can drive down the price of all junk bonds—including yours. Sell all corporate bonds that do not boast a rating of single-A or higher—including triple-B (S&P's BBB; Moody's Baa) bonds.
If you don't exercise the option within that time frame, that's it - you've lost your chance. First, you've learned what the "strike price" is—the price at which you can exercise the option and buy the stock. You have learned concepts such as "in the money" (when the market is at the same level as the strike price) and "in the money" (when the market has exceeded the strike price).
