Secretary of Treasury Paulson gave a woeful pep talk on CNBC this morning, while finally admitting their were problems in the market. A bit later Senator Dodd met with him and Bernanke to discuss the tools the Fed was prepared to use to get rid of the tightness in the credit markets. Even to the most Pollyanna, it's obvious the Fed is too restrictive. They opened the spigots from 1 to 3 to 14 to 30 day paper, then cut the discount rate, and then cut the loan charge rate by 1/2 a percent also. What's next? The cut in the fed funds rate. And thus the can can Fed appear "measured" in it's response.
But the moves in the stocks are incredible. Last Thursday, RIMM traded under 185, today it closed at a split adjusted 245! GRMN Thursday was 86 1/2, it closed at 102.50 today, and WYNN added 20 points from it's low. So it's obvious that the selling in the growth stocks has already run it's course; today they ran the steel stocks. The selling was so bad that even Microsoft (MSFT 28.07) is now a buy. That stock was used for redemption money, by those that had to liquidate. The funds who sold their commercial paper rushed to buy T-bills and get 2% for a year. Now you can buy Mr. Softee and get 6% in a week. Whatever happened to the efficient market theory?
But a great acting stock that most people missed was the performance of Berkshire Hathaway. It added 10,000 points in the last week to top $120,000 a share! Shareholders probably took it to heart when WEB had this to say, "I can spend money faster than Imelda Marcos when things are right."
You should follow his lead.
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