Options Trading Coach Resources
Understanding Options, Maximizing Gains: How We Beat the Dow by 301% in 2008
With a monumental strain on the global financial system that lead to unparalleled governmental intervention and stimulus, we found ourselves knee deep in the worst market performance since the 1931 Great Depression.
We were met with unbridled volatility and strain that may impact the financial markets for at least another year.
And it was all thanks to:
- Housing meltdown
- Financial meltdown
- Stock Market meltdown
- Dollar meltdown
- Massive government bailouts and exorbitant stimulus
- The death of Indymac, Countrywide, Washington Mutual, Fannie Mae, Freddie Mac, Goldman Sachs...
- Humiliated realtors, discredited NAR, destroyed homebuilders
- Inflationary and deflationary risks
- Oil at new highs
- California disasters
- Massive layoffs across the board
- Fraud
- Poor retail sales
- Consumer sales and confidence in the toilet
- High delinquencies and foreclosures
- Higher credit card defaults
- Sky-high unemployment
- Hedge Funds blowing up.
And we still haven't dealt with the possibility of:
- Hyperinflationary risks, which will send oil and gold skyrocketing
- Arrests
- More Ponzi schemes uncovered
- Another $700 billion needed
- Government failure
- Collapsing treasuries
- Even more poor retail sales, low consumer sales and confidence
- Higher delinquencies and foreclosures
- Higher unemployment
- A larger wave of residential housing mortgage failure
- Auto loan failures and repossessions
- Billions of dollars in credit card defaults
- Commercial mortgage failures and foreclosures on such things as malls and office buildings
- Credit default swaps that required no money down will lead to financial chaos
And, already there's talk of a recovery? Not likely... and that's because of Option ARM resets, which could send the S&P 500 to 600 and the Dow to 6,500.
But it's not as if everything that happened was unexpected. We called for the fall in February 2007 around the same time we profited from New Century Financial put options.
In review, the financial chaos began in the subprime collapse of 2007 and grew in 2008. It led to the collapse of the rest of the mortgage market, resulting in tighter credit lending standards, lock ups of asset-backed securities, defaults, ridiculous delinquencies, foreclosures, and failing banks.
We lost Countrywide because of a greedy Mozilo. We watched as the Bear Stearns behemoth fell and got a $2 buyout offer. Fannie and Freddie were seized. Lehman, AIG, and Merrill plummeted. And on and on...
Yep, 2008 needs to be forgotten and never repeated.
Volatility made the market pop 800 points one day, only to fall 650 the next day... and it repeated again and again, only to be met with bailout plans and Fed injections that our great-grandchildren will one day pay back.
And for the overall year:
- The Dow fell 33.8%, its biggest fall since 1931.
- The S&P 500 fell 38.5%.
- And the NASDAQ fell 40.5% - a figure worse than the 2000 bursting of the tech bubble.
But we beat them all... easily.
