This has been a wild week in the markets. I was away on vacation for March Break last week but I was still able to watch the markets and they seemed fairly tame over the week. Then on Friday when I was traveling and wasn't able to watch the markets the rumblings of trouble started. Bear Stearns lost close to 50% of its value over the course of the day on what appeared to be no news. Then on Sunday we get the shocking announcement that JP Morgan is buying Bear Stearns for $2 a share (the Thursday closing price was around $54) and the Federal Reserve is providing the support to make that deal happen. The Federal Reserve also cut the discount rate on Sunday. On Monday the markets (predictably) tore down the prices of financial stocks around the world. As Gavin Graham points out in this article
(thanks to Canadian Capitalist
for the link) the market is doing a fairly good job of mis-pricing Canadian financial stocks but things have managed to get slightly better by the end of the week. Gold broke through the $1000 mark since the fiscal sky was falling and it must be the only safe haven (ok, whatever). On Tuesday the Federal Reserve cut the overnight rate by 0.75% which was a disappointment to the markets (imagine that!) since they were hoping for a full 1% cut. That sent the US dollar up and commodities down. By the end of the week financials recovered slightly and commodities (including oil and gold) were down from their Monday levels.
What a wild ride. I just wish I had more cash available and actually had the guts to pull the trigger on some financial stocks on Monday.