Bye Bye Bernie (Madoff)
Mar 13, 2009
Posted by Jody Eisenman | Filed under Uncategorized
Disgraced financier Bernie Madoff pleaded guilty today to all charges and was promptly shipped off to his new home at the Metropolitan Correctional Center. Instead of his luxury penthouse apartment, Bernie will have the pleasure of a tiny cell until he is officially sentenced in June. On the plus side, he does get free meals courtesy of the State of New York. I think his days of eating filet minion are over. Like most people, I feel nothing but disgust for this criminal who intentionally stole billions from his friends as well as many charities and institutions. At least Nick Leeson (who’s unauthorized trades brought down England’s Baring Bank) tried to make money. Apparently, Madoff never invested a penny and just intended to scam everyone out of their savings. A truly lovely human being. Of course, there are still unanswered questions; namely, who else was involved, and where did the money go? It’s hard for me to believe that Madoff acted alone. Hopefully, the authorities will eventually get to the bottom of this scheme and charge everyone involved.
As I expected, the market continued its’ upward climb today. At the close, the Dow was up another 240 points, or 3.5%. The S & P 500 was up over 4%. The next key test for the S & P is about 800, or roughly 50 points. For the Dow, it would be roughly 8000. Curiously, most individual investors are not participating in this rally, other than equities they have owned for quite some time. Its’ always fascinating to me how investors that were clamoring to buy stocks at Dow 14,000, don’t want to buy at Dow 7000. Its’ a crazy world. I think much of this rally has been from two places: fast money (those who look to make quick profits and then get out) and short covering. When you are short (meaning that you sell stocks first, hoping to buy them back later at a lower price), your potential risk is unlimited (in theory, a stock could go to any infinite number). Therefore, short sellers tend to cover (by buying) quicker than people who are long might sell. As the short sellers cover, prices rise. Of course, sooner or later, after most people cover, the rally runs out of steam. Lets see how long it lasts.
