History of Panic Buying

Nice bit of chart porn via Forbes, which writes: "JPMorgan’s Jamie Dimon may prove to be the latest in a line of investors to turn panic into profits. But it’s a risky business."

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click thru for bigger graphic

Jpm_risk_takers

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Source:
When Blood Is on the Street
Neil Weinberg, Bernard Condon and Emily Stewart
Forbes, 04.07.08, 12:00 AM ET
http://www.forbes.com/forbes/2008/0407/034.html?partner=magazine_newsletter

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  1. Dee Leverage commented on Mar 21

    S&P just cut Goldman and Lehman to outlook NEGATIVE…nice of them to pick a time when most aren’t watching…but the Prophet of Margin Calls knows all. Your tricks are futile.

    S&P Cuts

  2. AGG commented on Mar 21

    Nice rogues gallery.
    “The most important human endeavor is the striving for morality in our actions. Our inner balance and even our very existence depend on it. Only morality in our actions can give beauty and dignity to life.”
    Albert Einstien
    Of course he wasn’t a sophisticated investor, so what would he know?

  3. Dee Leverage commented on Mar 21

    Suggestion on Plunge Protection Team…once you know about it, you should keep it low key and never refer to it again. It’s like an old scar that won’t go away…but try to forget about it or it will drive you nuts. They are destined for the dustbin of history anyway.

  4. Pool Shark commented on Mar 21

    “The first rule of the Plunge Protection Team is – you do not talk about the Plunge Protection Team. The second rule of the Plunge Protection Team is – you DO NOT talk about the Plunge Protection Team.”

  5. Ross commented on Mar 21

    Eh, the PPT team sure blew it in 01.

    Gotta go adjust my new 250 mpg carburetor. Bye

  6. Al Czervic commented on Mar 21

    Maybe it’s more like a Plunge Postponement Team.

  7. John Borchers commented on Mar 21

    Al is absolutely correct. The PPT is a plunge postponement team as they were created after the banking failure of the 80’s where the DOW plunged (I think) 25% in one day.

    Now a days we have the circuit breakers which will shut down the market mostly ahead of that and the PPT.

    If you look over history since the PPT the largest one day fall in the DOW was around 6%.

  8. Ross commented on Mar 21

    So what if they have a PPT (plunge protection team). We have the BPT (bubble protection team AKA Big Picture Typepad)

    Ours is bigger that their’s! Nah nah Nah Nah nah.

  9. Ross commented on Mar 21

    Forget the last post. Got into the elderberry a little early. Thought it was Saturday.

  10. John Borchers commented on Mar 21

    So there’s been a lot about the recent market volatility. Like everyone else I don’t remember up and down 5% days or even weeks. Downloading a little data from Yahoo shows otherwise though. Low and behold this has happened all the time. So why is it so noticeable now?

    If previous history guides us to the future, in that we have a shallow recession we are a few weeks from the bottom according to the yellow line.

    What it does say is that people will always jump in and try to call the bottom and the market will violently react to this. It has always happened and always will.

    http://i265.photobucket.com/albums/ii204/jmborchers/DowVolatility.jpg

  11. rickrude commented on Mar 21

    so when is Bernanke’s face going to be painted on the chart ??

  12. Wade commented on Mar 21

    Check out the Financial Times. They are reporting a central bank (many of them) bailout of the credit crunch by buying the MBS.

  13. John commented on Mar 21

    Well Barry it looks like you might be right with your earlier call for an MBS BailOut of some sort, either by Central Bank Intervention, or some other Federally created agency (think Resolution Trust Corp via the Financial Institutions Reform Recovery and Enforcement Act of ’89), to shift the burden right onto the back of the U.S. Taxpayer.
    As Wade pointed out above the Financial Times is reporting on these rumours/talks and Calculated Risk appears to have some more on it.
    Wouldn’t it be great to be a Fly on the Wall during those conversations. We’d gain some clarity and scope as to just how Big (or small??) this problem actually is.
    Now if they do decide to employ their ‘Nuclear Option’ and buy up all this Bad Debt what do you think that will do to the U.S. Dollar? While I think the recent steep decline in the dollar priced in at least a .75 bp cut, along with the recent fed interventions, I doubt very seriously it has priced in such a strategy by the Central Banks.

  14. John commented on Mar 21

    Ok. According to Calculated Risk (citing to Greg Ip at the WSJ) the Fed is denying reports of any talks of “coordinated purchases of mortgage-backed securities with other central banks”…

  15. 3rd inning commented on Mar 22

    thanks for the post redlena!
    great article

  16. JustinTheSkeptic commented on Mar 22

    The bottom will not come until we see 40+ on the VIX’s… If it doesn’t happen soon then we will go test the intermediate bull (shit) high…but make no mistake the bottom is not in yet.

  17. Tom commented on Mar 22

    If I recall correctly during the savings and loan fiasco the resolution trust bought up the mortgages from the banks that went under. This occurred after the shareholders equity was wiped out. I hope if this rumor of a new paln is true they will use the same criteria of making sure the current shareholders and management are not rewarded for their stupidity.

  18. Emmett commented on Mar 22

    Man I just love that curve.

    10 year moving average is almost always monotonic positive.

    Note the logarithmic scale.

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