Fund Blawg

You may be able to fool some of the people some of the time, but you cannot fool the stock market in the long run. For the last year, the major Wall Street firms have told us the problems were contained to subprime mortgages, and things would recover in the second half of 2008. Yesterday September 15th, the stock market finally said enough of the lies, half-truths, and deceptions from Wall Street, the Federal Reserve and experts on  Bubblevision. After the weekend meetings to try and save Lehman, Merrill Lynch and AIG,the market took apart the broader market, financials and everything in-between.

The S&P 500 index is now at a new two year low and is below it's peak in 2000.

The biggest victim  of today's carnage was AIG, which fell to the tune of 60% as volume increased by a factor of 15. A volume increase of that magnitude means that pensions, mutual funds, and other large holders of the stock said "get me out of this stock no matter what the price".

 Next up is Lehman Brothers which is now trading below $1/share, after trading as high as $60/share earlier this year.

There is now real fear in this market. Based on the panic selling of September 5th and the questions I am receiving from friends and family members. We are now in stage three of this bear market where there is widespread recognition that we are in a bear market. Ultimately this bear market will flush out all the problems with this market and a new healthy bull market can take shape.