Carlyle Financial defaults. Perfect example of the over leverage that caused sub-prime to occur. This company has 650 million of capital to cover 23 billion in exposure. Just off the top of my head, that's about $25 dollars of debt for each dollar of cash on hand.
Chrysler Corp. to shut down entirely for two weeks over the summer in a cost saving move.
Pretty bad news huh? What happened in the stock market today? It rallied.
On the plus side, Standard and Poors Corp. announces write downs at large financial institutions are just about done. In addition, write downs might exceed actual losses. Could we call that a potential cushion to soften the blow?
Don't take the headlines at face value, rather, consider the headlines in the context of what is happening overall. The talking heads on CNBC trumpeted the top in July and August of 2007 and they are trumpeting the bottom in March and April of 2008.
Consider the possibility that this might not be THE bottom, but on an intermediate basis (at least), there is the potential for a rally the average investor might be able to participate in.
The key right now, is the low in the DJIA for Monday's trade. I fully expect the bears to regroup and attempt to force the market lower. If their attempt to take out Monday's low fails, it will be a compelling argument to invest a percentage of your portfolio back into the market.
If anyone reads this good luck and don't get greedy, an old adage of the market is that bulls and bears make money while pigs get slaughtered.
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