I hope I'm right.

[Ed Gadziemski]

nameless_ wrote:

Credit Default Obligation (CDO) is still out there and haven't unwind

That only directly affects financial sector stocks. It doesn't impact earnings of non-financial firms. I agree they need to be unwound. It should be done quickly and those heavily invested need to take the loss so the rest of us can move on.

nameless_ wrote:

Alt-A and Option Arm mortgage are just starting to reset

Yes, people have been so busy blaming poor people that other mortgages haven't received much attention. However, that also affects primarily financial stocks. Underlying market fundamentals are nearly reset for non-financials and while unemployment will continue to increase for a while, most firms have made or are making enough expenditure cuts to restore profitability by year's end. What is needed is an acknowledgement that the financial sector is FUBAR. The losses need to be announced and absorbed, regulation needs to be reformed, and rescuable institutions need to be rescued. That leaves out AIG, Citi and BofA in my view.

[Rob Graham]

Did you factor in the likely collapse of GM? Their auditors don't think they will make it past year end...

[Ed Gadziemski]

GMs further impact on the stock market is limited as their stock is selling for less than $2. It would have a psychological effect and a big impact on parts suppliers, though.