Page 16
August 8th, 2008 by 
reality
Don Coxe has always said that the news that is worth trading is on page 16, not the front page. Today’s page 16 news that could have serious consequences is the outbreak of fighting between Russia and Georgia. The Belfast Telegraph:
A convoy of Russian tanks and troops is reportedly moving toward South Ossetia’s capital as Russian Prime Minister Vladimir Putin declares ‘the war has started’.
Tech stocks are being jammed today, well, because they can be. Ostensibly, because the price of oil is falling. I suppose it is dumb to point out that tech stocks have rallied anyway since oil broke out above 100 in March. However, this kind of violent action has a tendency to feed on itself, as over-leveraged players blow up or are forced to liquidate positions by margin calls. Watch out, as usual.
My suspicion is that the collapse of commodities is the beginning of the end. It shows that the liquidity crunch and economic slowdown have gone global.
Posted in Commodities, Don Coxe, Energy, International, Technology | 
August 8th, 2008 at 9:38 pm
There is still 3.5 trillion dollars sitting in cash that hasn’t been lost yet so place your bets in the “Cash is King” or “Cash is Trash” sweepstakes.
And, no, you can’t sit this hand out.
August 9th, 2008 at 4:43 am
The entire “cash on the sidelines” argument is so simplistic and wrongheaded. What happens if all of that cash were put into the stock market? It all depends! The amount of securities owned will not change - it is the appetite of buyers versus sellers on each side of the equation that determines price.
So if $3.5 trillion came out of money markets in an aggressive fashion, what happens to interest rates? Who funds the growing need for debt at the corporate, local,state and federal level? What impact would higher rates have on equity valuations? What about the economy and over leveraged consumer?
If that money would moved into stocks, it is reasonable to believe it could drive prices higher but not necessarily. If the aggressiveness of sellers was stronger than that of buyers, then the money could be “burned up”, as prices stabilize or spike temporarily while it absorbs the supply - only to drop eventually.
August 9th, 2008 at 8:24 am
Aren’t there two sides to every transaction, a seller for every buyer?
Money market accounts are not money. They are money like assets which must be sold to someone else to be converted into money to buy something.
Its all a big game of musical chairs….