The first two weeks of the month were quiet for me with a steady decline into a drawdown of around 14%. markets were consolodating and doing nothing really.
The woes of the Sub Prime mortgage fiasco changed all that in week 3 with the virtual collapse of Northern Rock (NRK). Britains 2nd largest mortgage provider.
same old story as before, they were suffering liquidity problems all because of these clever American companies who thought it would be good to lend money to people who had no chance of paying it back.
Northern rock suffered first because mortgages were just about the only sector they were in - others have insurance business to fall back on. The bubble burst when the Bank Of England blew the whistle and told the world they had extended credit to NRK as the 'lender of last resort' - basically the death knell.
This of course caused widespread panic in the money markets this side of the pond.
Strangely enough I didnt make that much from the NRK effect but it did jolly up the markets enough for us to turn a healthy profit by month end.
The Coming Month.
I'm predicting yet more shocks in the market, in fact I think this sub prime effect will last into the new year - which is great news for us, bad news for the banks and hedge funds.
My methods thrive on volatility and we have that in spades at the moment, bring it on!
Increase Percentage: 20.2%
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