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August 08, 2011 at 10:01 AM
Stocks fell sharply following more downgrades by S&P. The list includes Berkshire Hathaway (BRK.A) and Freddie/Fannie Mac (FNMA and FMCC).
Selling had been fairly orderly earlier Monday. The only panic I saw was in the precious metals, where gold was now trading on par with platinum. This is an extremely rare occurrence, brought about by the view that decreased industrial demand for the latter will cause weaker prices, while speculators continue bidding up the former.
Commodities are also getting hit, namely the grains and energy complex. We expect this to continue, but at some point one must be a buyer due to demand considerations.
Our view is to develop a shopping list to implement when volatility declines. The business development space is getting pummeled; a potential trading vehicle may be BDCL, a leveraged ETF that owns BDC stocks. It has a yield of over 14% and should bounce when the market regains its footing.
