I enjoy teaching my students some of the more stark phrases used in the financial industry. One of my favorites is "dead cat bounce", a phenomenon that occurs when a stock or the market takes a big plunge, then bounces up just a bit the next day. This is based on the idea that if you dropped a dead cat, it would bounce slightly before lying there dead. (Another for these times is "Don't try to catch a falling knife")
Monday, when the market was up in a big way, one of my students asked if that might just be a dead cat bounce. I said that it would have to be a dead cat full of super balls in order to bounce that high. Well, the same guy comes into class yesterday and says "that was one hell of a dead cat bounce". He's right. As I write this, the markets are now below their lows from Friday, having lost more than the big gains on Monday. In these days of wild volatility, even dead cats are effected.
There is a lot of stuff going on here. The economic news is not good, and most economists expect 6 months to 2 years worth of recession. The credit markets are working a bit better, but still not normally, causing fear among investors. Hedge funds and mutual funds are suffering withdrawls, which is causing them to sell, which causes more withdrawls......and so it goes. Hey, at least the price of gas is going down.
So here is the best financial advice you will get today: If you need gas today, don't fill your tank. It will be even cheaper tomorrow.
Meanwhile, if you wonder who won he debate, the traders at Intrade have bumped the price on Obama up to 86%, about 4 points higher than 24 hours ago. Are we really going to have a black president in my lifetime? Amazing! But there are still 3 weeks to go. I would suggest that the Obama campaign may want to take some of that huge pile of cash they have accumulated and send Jesse Jackson on a 3 week cruise to the South Pole.
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