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The banks through historically higher interest charges are much better prepared to deal with the unsecured debt defaults than secured debt defaults. Credit card defaults are easier to predict and easier to calculate than losses from foreclosures exacerbated by falling home prices.

What is the next stop?

Please explain. Since I am talking about the REIT index and not individual reits I go by the assumption that the reits that stopped paying dividends will lose their REIT status and will be removed from the index. My guess is that the REIT industry is not going to disappear as a whole. What am I...

What about REITs indexes ( RWR for example). Do you think they are valid dividend players?

I bet he has them cash secured.

Stock_trader3, What is your opinion on the government decision not to bail out Lehman Brothers? Was it a mistake?

Greed at the end of the up cycle is almost as strong as the fear at the beginning of the down cycle.

The market won't move higher while financials are in a downtrend. The financials have to hit bottom in terms of their earnings and job cuts before the broad market turns around. Do you think they are there yet?

How about the rapidly rising level of unemployment?

Isn't the fact that the market is down 50% from it's high would also mean that the corporate earnings are expected by the market to be cut in half? Do you expect the deterioration of the earnings to get even worse?

Help me understand this: S&P going down in the long run means that you should be rather betting on the 10 year yields heading down as well. Don't you see a condradiction here?

Tomorrow is expiration day and it's not even close.

SSO

IWM is green.

IWM is up over 1%.

I am not sure though how to establish the historical norm between volatilities of 2 option strikes in your approach? It would be difficult to make any profit if historically volatility of the first strike is higher than volatility of the second strike. No reversion to historical norm because...

Wouldn't that be similar to comparing of the option's IV to the stock's historical volatility based on historical norms? This data ( option's IV and stock's historical volatility ) is easily available on the web.

What is the practical use of this information? In other words how to apply this knowledge in practice?

I guess you know something the bond market does not. (As I explained in my previous post).

Even given the forecast by Moody's of 10% default rate the current junk bonds yields are still pretty good. Do you expect the junk bonds yields to go higher? Then please tell us what's is out there that is not in their price already?