Comments on: Federal Reserve Actions: Goose Eggs http://www.thedisciplinedinvestor.com/blog/2008/03/13/federal-reserve-actions-goose-eggs/ Investment Disciplines and Timely Advice. Fri, 10 Feb 2012 21:15:03 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Zach http://www.thedisciplinedinvestor.com/blog/2008/03/13/federal-reserve-actions-goose-eggs/comment-page-1/#comment-2102 Zach Thu, 13 Mar 2008 20:28:59 +0000 http://www.thedisciplinedinvestor.com/blog/2008/03/13/federal-reserve-actions-goose-eggs/#comment-2102 50% losses may be heart-stopping for banks, but imagine the pain of investment funds that bought these securities with borrowed money. For these guys there really is no way out as buyers do not exist for their worthless securities, and the institutions who lent them money are breathing down their necks to pay up. This means the managers sell anything and everything just to cover the margin calls - this is why we see so much weakness even in areas totally unrelated to mortgages or credit sectors. Who knows where this vicious cycle ends, but I have a feeling we will be talking about this well into the summer and fall. 50% losses may be heart-stopping for banks, but imagine the pain of investment funds that bought these securities with borrowed money. For these guys there really is no way out as buyers do not exist for their worthless securities, and the institutions who lent them money are breathing down their necks to pay up. This means the managers sell anything and everything just to cover the margin calls – this is why we see so much weakness even in areas totally unrelated to mortgages or credit sectors.

Who knows where this vicious cycle ends, but I have a feeling we will be talking about this well into the summer and fall.

]]> By: Gal, founder of news http://www.thedisciplinedinvestor.com/blog/2008/03/13/federal-reserve-actions-goose-eggs/comment-page-1/#comment-2097 Gal, founder of news Thu, 13 Mar 2008 08:37:02 +0000 http://www.thedisciplinedinvestor.com/blog/2008/03/13/federal-reserve-actions-goose-eggs/#comment-2097 this should be titled: Mother Goose meets Uncle Ben's ... two of my all time favorites :) -Gal this should be titled: Mother Goose meets Uncle Ben's

… two of my all time favorites :)

-Gal

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