ÿþ<html> <head> <meta http-equiv="content-type" content="text/html;charset=iso-8859-1"> <title>OnlineColumnist®.com: Putin Punishes Georgia</title> <meta name="generator" content="Adobe GoLive 4"> <style type="text/css"> .style2 { font-size: large; font-weight: bold; font-family: Arial; } .style3 { height: 69px; } .style4 { font-size: x-large; font-weight: bold; } </style> </head> <body bgcolor="white" vlink="black"> <center> <table cool width="624" height="2719" border="0" cellpadding="0" cellspacing="0" gridx="16" showgridx gridy="16" showgridy> <tr height="79"> <td width="133" height="118" rowspan="2" valign="top" align="left" xpos="0"><a href="aboutdiscobolos.html"><img height="110" width="62" src="images/discobolos.logo.transp.gif" border="0"></a></td> <td width="7" height="118" rowspan="2"></td> <td width="482" height="79" colspan="2" valign="top" align="left" xpos="140"><img height="75" width="450" src="images/banner.GIF"></td> <td width="1" height="118" rowspan="2"></td> <td width="1" height="79"><spacer type="block" width="1" height="79"></td> </tr> <tr height="39"> <td width="182" height="39"></td> <td width="300" height="39" valign="top" align="left" xpos="322"><a href="aboutdiscobolos.html"><img height="14" width="267" src="images/divisionofNEW.GIF" border="0"></a></td> <td width="1" height="39"><spacer type="block" width="1" height="39"></td> </tr> <tr> <td width="624" colspan="6" valign="top" align="left" xpos="0" class="style3"> <table border="0" width="100%" bgcolor="black" cellspacing="0"> <tr> <td> <table border="0" width="100%" bgcolor="#99ffcc" cellspacing="0" cellpadding="4"> <tr> <td align="center"> <div align="left"> <a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> HOME</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> &#8226; <a href="articlesindex.html">ARTICLES</a> &#8226; <a href="books.html">BOOKS</a> &#8226; <a href="teflon.html"> THE </a><a href="teflon.html">TEFLON</a><a href="teflon.html"> REPORT</a> &#8226; <a href="mailto:letters@onlinecolumnist.com"> REACTIONS</a> &#8226; <a href="aboutdiscobolos.html">ABOUT DISCOBOLOS</a></strong></font></div> </td> </tr> </table> </td> </tr> </table> </td> </tr> <tr height="2"> <td width="133" height="2">&nbsp;</td> <td width="489" height="2576" colspan="3" rowspan="2" align="left" xpos="133" content valign="top" csheight="2573"> <p class="style2">Wall Street&#39;s &quot;Panic&quot;</p> <p><b><font face="Arial,Geneva,Helvetica">by John M. Curtis</font></b><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b><a href="books.html"><br> </a></b></font><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b> (310) 204-8700</b></font></p> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><i>Copyright October 10, 2008<br>All Rights Reserved. </i></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <p class="MsoNormal"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<span class="style4">W</span>all Street ended another disastrous week, dropping the Dow Jones Industrials 1,874 points or 18.2%, prompting President George W. Bush to beg investors to give his bailout plan time to work and, most of all, to not panic.<span style="mso-spacerun: yes">&nbsp; </span>While the Dow finished the Oct. 10 session down only 128 points, it had been down over 700 points just three hours earlier.<span style="mso-spacerun: yes">&nbsp; </span>Blue chip stocks had lost over 2,400 points in eight trading days, the worst drop in market history, including the dreaded 1929 crash.<span style="mso-spacerun: yes">&nbsp; </span> At one point Friday, the Dow dipped 688 points to 7,882, a low not seen since the market bottomed in 2003, following two years of steady declines after Sept. 11.<span style="mso-spacerun: yes">&nbsp; </span>Hours later the Dow jumped to 8,500, finally ending the whipsaw day at 8,451.<span style="mso-spacerun: yes">&nbsp; </span>Contrary to Bush, the market was far from panicked, watching the nation s biggest mutual and hedge funds methodically play the relentless ups-and-downs.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Day-traders and hedge funds carefully calculate how to buy low and sell high, making profit on the spread between the two.<span style="mso-spacerun: yes">&nbsp; </span>While it s frequently camouflaged or glossed over, today s market demonstrates beyond any doubt that the market is anything but panicked.<span style="mso-spacerun: yes">&nbsp; </span>Despite the global equities sell-off, Wall Street was several moves ahead, driving share prices to bargain levels, then methodically swooping up the irresistible bargains.<span style="mso-spacerun: yes">&nbsp; </span> Nobody wants to miss the bottom, said Anton Schultz, President of Mendon Capital Advisors in Rochester, N.Y.<span style="mso-spacerun: yes">&nbsp; </span> I view it as a victory that we only finished down 100, affirming there was no real panic, only carefully planned and executed buying and selling.<span style="mso-spacerun: yes">&nbsp; </span>At one point Friday, the market rocketed from a nearly 700 loss to a 250-point gain, a 950-point swing upward.<span style="mso-spacerun: yes">&nbsp; </span>Bush talks about panic selling but doesn t mention inexplicable buying.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>When the G-7 meets in Washington over the weekend to discuss a fix to the global credit and stock market meltdown, it s going to show indomitable resolve to markets going forward.<span style="mso-spacerun: yes">&nbsp; </span> Sooner-or-later, just like it did in part of the trading session Friday, major mutual and hedge funds will send buy signals, propelling the market to unprecedented gains.<span style="mso-spacerun: yes">&nbsp; </span>If the market gyrated 950 points Oct. 10 in a whipsaw session, it could easily rocket up 2,000 points when fund managers decide it s time to buy.<span style="mso-spacerun: yes">&nbsp; </span> Everyone is hoping for really good news that can invigorate some buying and break this credit freeze, but your guess is as good as mine as to whether that will happen.<span style="mso-spacerun: yes">&nbsp; </span>I think people are desperate for action, said Jon Biele, head of capital markets at Cowen &amp; Co. in Manhattan.<span style="mso-spacerun: yes">&nbsp; </span>Market experts know that the nation s biggest funds will move to the upside when selling finally ends.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>If Bush were right, panic selling would have taken the market to new lows.<span style="mso-spacerun: yes">&nbsp; </span>Instead, major funds look for buying opportunities when selling bottoms out.<span style="mso-spacerun: yes">&nbsp; </span>Only insiders at major mutual and hedge funds know when the capitulation point has been reached, when sellers can no longer justify unloading stocks.<span style="mso-spacerun: yes">&nbsp; </span> Fear has been running rampant all over the Street.<span style="mso-spacerun: yes">&nbsp; </span>Fear and greed, that s what rules the Street. I think the carcass has bee stripped to the bone, said Dave Henderson, a floor trader with Raven Securities, misleading that traders are driven by emotion.<span style="mso-spacerun: yes">&nbsp; </span> Buying or selling involves methodical strategies, driving inflated share prices back to reality, then swooping up bargains, causing the market to go up.<span style="mso-spacerun: yes">&nbsp; </span>Wild swings in the market don t involve small investors telling stock brokers to bail out.<span style="mso-spacerun: yes">&nbsp; </span>Gyrations stem from fund traders carefully deciding when it s time to buy or sell.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Wall Street s dirty little secret involves how a carefully coordinated buy-and-sell program drives the market up-and-down.<span style="mso-spacerun: yes">&nbsp; </span>Regardless of external events, Wall Street decides when the market is too inflated, requiring programmed selling to create more attractive share prices.<span style="mso-spacerun: yes">&nbsp; </span>Market meltdowns always carry the excuse du jour, namely, today s real estate bubble and credit crisis.<span style="mso-spacerun: yes">&nbsp; </span> Past sell offs have involved oil shocks, terrorist attacks, Asian economic problems, natural disasters, inflation, interest rates or any other excuse used to justify sell-offs.<span style="mso-spacerun: yes">&nbsp; </span>Bush chastises the market for panic selling when, in reality, programmed selling achieves the end of driving down share prices for the purpose of creating the next bull market.<span style="mso-spacerun: yes">&nbsp; </span>While no one knows when the exact bottom will hit, Wall Street has been through many predictable cycles involving sell-offs and eventual buy-backs.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>When major mutual and hedge funds dump their holdings, they typically park liquid assets in safe short-term investments like money market funds.<span style="mso-spacerun: yes">&nbsp; </span>Fund traders know they can t make enough profits to keep the cash parked for too long.<span style="mso-spacerun: yes">&nbsp; </span>When equities deflate in value to the point of captitulation, namely, when programmed selling stops, fund managers buy back positions driving the market upward.<span style="mso-spacerun: yes">&nbsp; </span>Shortsighted investors don t understand Wall Street s standard-operating-procedure for making profits.<span style="mso-spacerun: yes">&nbsp; </span>Small investors take a beating when they lose faith and bail out in down markets.<span style="mso-spacerun: yes">&nbsp; </span>Smart investors who can afford a long-time horizon roll with Wall Street s endless buying-and-selling roller coaster.<span style="mso-spacerun: yes">&nbsp; </span>Wall Street s latest downturn is no different than past:<span style="mso-spacerun: yes">&nbsp; </span>Programmed trading will eventually stop selling, buy back positions and eventually drive markets upward.</p> <p class="MsoNormal"> &nbsp;<bAbout the Author</u><b>John M. Curtis</b> writes politically neutral commentary analyxing spin in national and global news.&nbsp; He's editor of OnlineColumnist.com and author of <i><a href="books.html">Dodging The Bullet</a> </i>and <i><a href="books.html"> Operation Charisma</a></i>.</p> </td> <td width="1" height="2576" rowspan="2"></td> <td width="1" height="2"><spacer type="block" width="1" height="2"></td> </tr> <tr height="2574"> <td width="133" height="2574" valign="top" align="left" xpos="0"><img height="172" width="111" src="images/johninframe3.jpg"></td> <td width="1" height="2574"><spacer type="block" width="1" height="2574"></td> </tr> <tr height="1" cntrlrow> <td width="133" height="1"><spacer type="block" width="133" height="1"></td> <td width="7" height="1"><spacer type="block" width="7" height="1"></td> <td width="182" height="1"><spacer type="block" width="182" height="1"></td> <td width="300" height="1"><spacer type="block" width="300" height="1"></td> <td width="1" height="1"><spacer type="block" width="1" height="1"></td> <td width="1" height="1"></td> </tr> </table> <table border="0" cellpadding="0" cellspacing="2" width="597"> <tr> <td><font size="1" face="Arial,Geneva,Helvetica"> <hr noshade size="1"> </font><a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> Home</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> || <a href="articlesindex.html">Articles</a> || <a href="books.html">Books</a> || <a href="teflon.html">The Teflon Report</a> || <a href="mailto:letters@onlinecolumnist.com"> Reactions</a> || <a href="aboutdiscobolos.html">About Discobolos</a></strong></font> <div align="left"> <p><font size="1" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">This site designed, developed and hosted by the experts at</font><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"> <a href="http://www.cmeonline.net" target="_blank"><img height="30" width="138" src="images/cmelogoANIM.gif" border="0" align="absmiddle"></a></font></p> </div> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">©1999-2005 <a href="aboutdiscobolos.html"> Discobolos Consulting Services, Inc.</a><br> (310) 204-8300<br> All Rights Reserved. </font></td> </tr> </table> </center> </body> </html>