One minute, the analysts are catching falling knives, and in the next knee-jerk they are talking about dropping shoes. Have these people not got a grip on anything?

Falling knife

Technically, a falling knife is a stock that has dropped suddenly, usually on a rumor, and nobody knows how far it will fall.

For instance, Sothebys stock dropped 33% overnight because they couldn't sell a bunch of van Goghs. And Crocs, another crock of gold turned to shite, has halved in price following a poor earnings report. Those sorts of sudden discounts in "good companies" attract attention and investors' hands start twitching on the buy buttons, hoping to catch the falling stock at a cool price. Unfortunately, most buyers will bleed on the blade of the falling knife! Knives are sharp, (just ask van Gogh).

It is a judgement call and only hindsight determines the right call.

For instance, the naysayers at Wall St say the auction market for the super rich is dying in the face of recession, so Sothebys is worthless. On the other hand, the falling knife catchers believe that Sothebys is fine, and all that happened is, art collectors finally realised van Gogh is over-priced crap and are simply waiting for better art to invest in. Take your pick.

Dropping shoe

I have no idea what a shoe has to do with the credit crunch crisis, (apart from Crocs stock dying a death) but day after day the financial institutions are reporting mega billion write-offs ie they are dropping shoes!!

The only tenuous connection I can think of between shoes and money is that American homeowners are getting s good kicking from the mortgage lenders?

It's all in the spin

There is a comedy sketch where a guy goes to a bank that just burnt down. He is distraught, thinking he has lost all his money, but the cashier, Rowan Atkinson, assures him everything is fine.

"We managed to save your shoe box from the fire."

"What do you mean, my shoe box?"

"Yes sir, your money is safe with us." and he produces a shoe box full to bursting with the client's savings.

Let's hope the big financials don't have any similar surprises in store for us over the next few months. I like living in this attic and would hate to be foreclosed on and evicted on the end of a bailiff's size 12 Crocs.