I wanted to take a moment to reflect on the crazy markets we’re facing these days and consider whether the financial sector has hit bottom, or worse is yet to come.
It’s pretty shocking to see old established financial institutions like Freddie Mac and Fannie Mae stumbling. And it would have been unfathomable two years ago to suggest Citigroup would have to raise tens of billions of dollars from foreign investors to maintain liquidity. These have been extraordinary times for sure.
Not everyone necessarily views the current volatility as a bad thing. It appears many people are seeing the down market as an opportunity to get in on the action. New trading accounts at Zecco Trading spiked up 27% after the DOW fell below 11,000. At the same time options trading at Zecco Trading is up 11%. We have seen a slight dip in Equity trades, indicating that some people may not be as active in these crazy times.
And despite the instability and uncertainty in the financial sector, investors are actively trading "government endorsed” lenders like Fannie and Freddie.
Many investors are riding the overall sector volatility by trading ETFs like Ultrashort Russel 1000 Growth Proshares.
There is also a ton of talk about the banking sector on the Zecco forums. Some members, like Beezerlm and growth investor.Andy. think financials are a good buy. In defense of his purchase of Citigroup, .Andy. said he subscribes to the “buy low, sell high” theory and advises his fellow investors to “jump in” when everyone else is “running away.” Others are not so bullish and are either steering clear of financials or shorting them, like fundamental investor Lucasjkr. Technical trader Jackg1606 recently posted his opinion that financial stocks will decline in value by about 75-90% of their current price as of 7/31/08. Others, like ZeccoShare member Rayca disagree and think the worst of the mortgage debacle is behind us. We’ll just have to wait and see.
For those who are not sure what your opinion is check out our topics pages for tips on How to Thrive in a Bear Market.
If you do have an opinion, I'm curious to hear it. Where do you stand? What’s your strategy for riding out a bear market?
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