Equity Market Being Used As Source Of Funds By Financial Institutions

The stock market is being used as a source of funds right now which is not good. The largest players in the equity market have major major capital issues right now. AIG (AIG) needs $70 Billion to survive, that is a HUGE number (Goldman Sachs’s (GS) entire market cap is $53B; they basically need a Goldman and a half) and they are just one major player. This is the point where stocks are no longer viewed as representing ownership in fundamentally sound companies but rather as a mere source of funds - a way to raise cash - you sell stock, you get cash. This is when it gets scary and stock markets crash, it’s when people become fearful of owning stocks as an asset class.

After today’s action, you can tell real fear is developing in the market and people are really JUST starting to get a bit nervous about owning stocks. You’re starting to see stocks that were worth $60-70/share go to zero and these aren’t just any stocks - they were the biggest balls in the market. People are starting to think about what they own and what it’s really worth if panic sets in. I mean, is it that far-fetched to see Apple (AAPL) selling in the 90s; the big boys could sell that stock off another 40 points down to $100 and funds would still be getting out with a profit. That’s how you have to think right now. Think about how much fund ownership your stocks have and know that those funds are having major problems and need cash.

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