S.O.S - DJIA loses 500 points

Posted by Kris | Tuesday, September 16, 2008 | | 0 comments »

Wall Street is literally screaming SOS.. It suffered the greatest drop after the 11 September terrorist in 2001 which in actually the spark of the 2001-2007 Bull Market because the FED lowered the interest rates aggressively to stimulate the economy which led to housing speculation.

The FED started to increase the rates during the incoming bull market wave to stem inflation. But when the subprime mess started imploding, it kept on cutting the rate to save the market from depression.

The interest rate now stands at 2%. The main concern now is always inflation. The FED are running out of magic bullet to save DJIA from tumbling more and more.

Oil prices are dropping to below USD100 and last night GOLD prices started to diverge from the stock prices. GLD (Gold Trust Share) leap up to ~77 as DJIA tumbles.

Houses in the US has lost roughly ~50% of its value in used to be "prime" areas such as Florida, California, Arizona. Alot of individual wealth has evaporated, as property has always been the largest asset/liability for a individual. California houses used to be damn expensive, a simple detached house could fetch like USD1million to 2million. While a small & simple apartment around USD300K to USD500.

In any game, there will always be winners and losers. The question is who is the real winner from this financial turmoil? Someone is making huge sum of $$$$.