Something is a little odd in stock markets around the world. As yet, unconfirmed and yet attracting attacks from various “experts” and the source of ridicule.
But it seems like there are a few individuals putting their money where their mouth is. Or more accurately, putting their money in what they seem to know will happen before October 2007.
Anyone with half an eye on the stock markets have seen the indexes rise like crazy over the last few years. Now it seems as if someone is betting a whole stack of money that the market will crash by one third before the end of September.
Options trading allows people to trade on the rise and fall of shares. I’m no expert in these matters but have been following some stories over the last couple of days.
Someone has placed $4.5 Billion worth of options on stock that needs to fall by 30%-50% before any money is made. If it occurs, he makes $2 Billion. If it doesn’t, he loses $1 Billion. To complicate things further, this needs to happen by the third week of September.
As you can imagine, this is making some people scratch their heads and conspiracy buffs are getting all excited in their speculation as to what on earth is going on.
The last time something like this happened, was before 911. Someone had a bunch of options on the airlines which were involved in 911. After the attacks, as the stock on the airlines plummeted and someone made $50 Million.
Apparently the Securities and Exchange Commission knew who placed these trades. But their identities were suppressed - therefore fueling conspiracy theories even further.
Speculation about what’s going on is raging in two camps:
- Will we see massive terrorist attack on US soil therefore crashing the stock market? After all, it did happen exactly like this before.
- America’s “subprime” mortgage chaos (read as..”too many American’s with shonky credit ratings borrowing stacks of money which they can’t repay) is hitting Chinese banks big time. Some are speculating that China is about to dump the US dollar in favour of a “Communist Financial Revolution”. This would devastate the stock market.
Here in Australia, we are also affected by the “subprime” chaos originating from the US. Recently we had a roller coaster day like never before. Here’s what an analyst at Goldman Sachs JB Were said..
“I think I shall remember this day as the day that I saw the market go to hell, look into the abyss - didn’t like what it looked like and then came screaming back up as far away from there as it could get. … It was a truly spooky day and I’ve seen a lot over the last 20 years but today will be one that anyone who saw it will never forget. But this is what market bottoms are made out of.”
Market volatility is running around like a headless chook at the moment. The buzz word is “risk aversion”. Banks will start to collect on bad debt. Throw in a possible terror strike or a Chinese rebellion and the mystery speculator might just walk away $2 Billion dollars richer.
What infuriates me though, is that, if this all turns out to be true, there are those behind the scenes orchestrating these events. They delight in lining their pockets while watching the citizens of the world lose billions in stock market crashes. Then when people don’t have money, and they do, they buy stocks at bargain prices.
Like I have said, this is all speculation. If something does happen by the end of September, I think I’d freak out knowing that I had been looking into this before it happened.
And if this all turns out to be a false rumor, I’ll be relieved, as a major upheaval to life as we know would have been averted. Nevertheless, I will conclude by extending an invitation to all you American “subprimers” to watch the following clip. Your greed for material products is putting the world into a very dangerous position.
Tags: Stock Market, Stock Market Crash, Conspiracy Theory, subprime, China, Terrorism
I think there is a lot having to do with the housing issues. What happened over here really sucks and is sad. mortgage brokers had all sorts of tricks up their sleeves when the market was on a bubble. People raised in a culture of debt fell for there schemes and the kind of mortgages that should be illegal. Really really sad the quest for more. So many foreclosures… So sad. I think that is the issue with the stock market. The markets haven’t responded to terror threat in a long time. My stocks are doing well
Hi Zabs,
Glad your stocks are going well. This story is gaining more and more attention these days and many stock market forum sites are covering it. Subprime loans have stuffed up the financial markets big time and there are heaps of articles about how this affects China and how they are likely to respond.
While I agree that mortgage brokers are to blame here, the greed of many Americans to own bigger and better homes and toys has also fueled this situation.
I was talking to a guy the other day who is heavily into stocks. His main point was that volatility indexes are sky high these days and everyone’s hands are that much closer to the panic button then ever before.
Maybe it won’t take something big to trigger a downfall - maybe paranoia will be the catalyst. However since this put option has a time deadline, it’s making everyone a little nervous as to what on earth is going on here.
I’m glad this turned out out to be false.
yes.