September, 2008:

In what became the largest single day drop in history, the DOW dropped 777 points today. Needless to say, my portfolio  (and many others) took a huge hit. I was expecting the market to rebound today, but instead the market gave me (and everyone else) a nice surprise took a long free-fall. Here is a nice article that talks about the consequences if $700 billion plan is not passed.
This is another example indicating that the market is unpredictable. When the market is expected to go up today, it took a nose dive.
There are too many regrets in my trading decisions lately. There are so many things I wish I would have done to prevent big losses in my portfolio. I closed out two positions too soon.  I sold my Goldman Sachs puts and GLD calls too soon, because I was anticipating a bailout approval. And I also bought XLF shares.
I’m listening to the latest news now. The feds are planning to cut rates (50 basis points) to help boost the market. Let’s see how it goes.

I bought XLF @ 21.30 on Friday. I was expecting that the bailout plan will be passed by the end of the weekend. After much talk and revision, finally on Sunday night, the Lawmakers, White House agree on $700B bailout and Congress Finalizes Financial Rescue Plan.
I expect the stock market to open higher on Monday, with financial companies leading the rally.

Today the market closed significantly higher due to the $700M bailout plans: Stocks rise on bailout hopes; credit remains tight

However, after the closed of the market today, there were problems with the bailout plan and an urgent meeting was called in Capitol Hill discuss the issues. The market index futures are pointing lower as investors lose confidence in the bailout plan. It will be interesting to see how this bailout plan works out. I think they would come up with some solution, even if it’s a patch, by tomorrow morning. There’s too much risk involved for doing nothing.

As anticipated AIG’s rally would not hold. AIG gave up yesterday’s gains and closed at 3.31, the lowest point of the day.

I bought AIG 4 puts @ 0.70 / contract on 9/22
I sold AIG 4 puts @ 0.85 / contract on 9/24
Gain: $254 (+21%) before commissions

I also bought GS puts on Monday (9/22), but my plan was spoiled by Bershire’s $5B stake after the close of yesterday’s markets. I am still holding the puts with a sizable amount and waiting for a good price to sell.

After the government announced that they were going to take control of investment bank giant, Goldman Sachs, the company share prices went on a decline. I bought GS 100 put @ 6.00. The put contracts went up to as high as 7.57 today but I did not sell it. GS was trading weakly for most of the day. At the end of the day, there was a sharp increase in price with huge volume behind it. Later, I came to know, Mr Buffet is planning to pour some $5 billion in Goldman Sachs. I can see my puts become worthless by tomorrow morning.

GS opened today at 118.89, and fell to as low as 113.01 and ended up closing at 125.05. After the market closed, the share prices jumped to 134.75. Should I follow Mr. Buffet footsteps?
Berkshire buying $5 billion stake in Goldman Sachs