Financial update??

Where is Joe's commentary on the market? What the hell is he doing? Who cares about his trip from eight years ago or his softball tournament in Tampa?? Selfish bastard!!

Well, first, if I talk about the financial markets then I have to update you on Contango Oil, the stock which I told you to buy at $80. It went up to $95 and I apologized. Then it retreated back to $80...then $75...then $65....then $50...and now $46. Yep, $46. Wow. So what do I really know??
I know my hedge fund is worth about half of what it was 30 days ago. The price of natural gas, measured in MCF's, has dropped from $14 to $7.33.....so there you go. Contango is a different animal though as they were going to be sold and now they aren't, so it's in free fall.

So what you have going on right now is still tied to the mortgage crisis. I could go on and on about it, but in a nutshell:
1) Everyday people overextended themselves into mortgages which they shouldn't have been given.
2)Then interest only loans did their part to help fuel the fire as they reset and individuals' mortgage payments could triple over night.
3) People wanted out of their mortgage but couldn't refinance because they no longer had equity in their house because real estate prices dropped.
4) Speculative, high risk, mortgages were sold across the financial markets as A+ credit by using some "interesting" manipulations that actually made some sense when taken in a historic context. Those formulas used suddenly didn't work in a falling real estate and inflation oriented market.
5) Defaulting borrowers forced those who owned the mortgages to sell other assets to cover their losses in their mortgage position.
6) Instead of thinking in terms of one mortgage, think in the billions of dollars.
7) Selling into a falling market, caused the assets that these mortgage holders owned to be worth even less and they had to raise capital. Unfortunately, they couldn't keep up with the pace of the defaults.

So in broad, broad summary, that's sort of what's happening. AIG is the leading insurer in every market into which it insures. It's insurance business is awesome. Unfortunately, it's financial arm is out of capital and the concern is that there are not enough assets in the insurance side to cover the financial division's trauma. So now AIG is bordering on bankruptcy. If you have insurance with them, you'll be fine and your policy will be picked up.

See? There's really nothing YOU can do about this situation now. You could sell all of your mutual funds and stocks, but you'll be selling at closer to the bottom than the top so I wouldn't advise that you lock in your losses. Keep calm. Keep investing. Ride the wave.