Wikinvest Wire

October is over, thankfully

Saturday, November 01, 2008

The Wall Street Journal reports($) on a month to remember:

Wall Street closed a poor October on Friday but the 16.9% drop in the Standard & Poor's 500-stock index looked pretty good compared with the hit taken by Asia and some other nations.

October brought a mauling to markets from Brazil, down 24%, to China, down nearly 25%. The culprit was a word unfamiliar to many: "deleveraging," or Wall Street jargon for the practice of unloading stocks and bonds bought with borrowed money, usually under pressure.

In the wake of the mid-September bankruptcy court filing by Lehman Brothers Holdings, that pressure became intense, and selloffs wiped out investments from oil to stocks, leaving few areas of the globe unaffected.

Dan Peirce, a portfolio manager at State Street Global Advisors, explained what happened this way: "Three words: global margin call."


Anthony J. Alfidi said...

"Deleveraging" will soon become as much of a household word as "decoupling" once was.

Anonymous said...

Releveraging has begun. I just lent my buddy $20.

Anonymous said...

you aint seen nuttin yet...

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