Thursday, August 9, 2007

Market Madness

Here we go again. Deja vu all over again. [Hehe, a fine aphorism of Yogi Berra!]

BNP hedge funds stop redemptions since the fund can't value the illiquid MBS slices, even though they re Aaa/AAA. No surprise, who really knows what's in some little slice of some trust holding who knows what? Why would anyone expect liquidity is that? Madness. Mass delusion.

Quant funds are in trouble. I read that "unexpected" events not remotely probable under "statistical" probability models are causing losses. Gee, what a surprise! I've written about that before. I learned almost 30 years ago from Fischer Black that the markets had "outlier" events that can't be modeled with statistical distributions. More greed at work to get those fees. We're seeing the fear now - what will be under the next rock that's picked up?

Goldman Global Alpha Fund down 8% in July. Hmmm. That' possible - my Alpha fund lost about 16% from the July peak to August 1. But I dropped from +51% to +35%, still OK ytd. The geniuses at Goldman at down 16% for the year. And the smart "rich" are paying them big fees for that? Sheesh. Gullible fools.

Some commercial paper issuers have illiquid MBS in their portfolios. Sheesh. How stupid is that?
Was all Wall Street under a mass delusion that beefers and derivatives provide wonderful liquidity in everything? I heard quite often - that beefers are GREAT since they provide liquidity. And that derivatives are GREAT since they provide liquidity. This sounds like a version of the greater fool theory. They were/are all in the same crappy paper and when anything happens unforeseen, like running out of rocket fuel at the frat mixer, they all head for the exits at once. Sayonnara liquidity - that fantasy of beeferdom.

Hmm - another "I told you so" seems appropriate, here and in another forum I posted much on last year and before.

PS: "hehe" is my Beavis & Butthead style chuckle :-))) hehe hehe hehehe, he said "butt"! :-)))

PPS: still using time diversification on adding o the big cap fins. Those were solidly green yesterday, but I figure that at some time until late October, I'll get a good entry for the last half. I think I'll make 30%+ on these investments over the next year. Uhhhh that's the "plan".

P^3S: Those little slices of MBS really were designed to be held to maturity in a diversified portfolio, not traded like stocks. But being originally based on high quality FNMA and Freddie Mac MBS or GMNA securities, Wall Street geniuses applied the math to much more complex underlying securities and sold them the same way. I guess no one really thought how they would figure out what's really there is they wanted to sell. Dumb!

P^4S: Since when do hedge funds give money back on demand? Those are sounding more & more like non-bank banks every time something new comes out. If it looks like a bank it should be regulated like a bank. Ditto re looking like a mutual fund. A hedge fund should have limited redemption demands. This just shows more & more that hedge funds are way, way over the line and need serious regulations to prevent them from causing big problems.

86 comments:

Bud said...

Roflmaoo.....are you saying one shouldn't invest with GS? That is prolly the most ridiculous thing you have ever said. And you have said a few. I feel very confident in saying GS has done very very well for it's clients.

PS. Look at GS chart. It's a double last 2 years.

Bud said...

Madness? Delusion? Crazy? Those are the markets i thrive in. Virtual indeed.

mern said...

phillies sux!

Bud said...

Here you go frosty

Longs

CAVM csco/jnpr sympathy
SMSI big volume yday
SIGM nch
CLNE spin cornering the stock?
LNN thin....and explosive..nch

Darksides

RL death spiral ..belo 200dma
(frosty luvs their polos)
SIF at 50dma = 20.27
TRCR belo 16 cracks hard
TEX freefall
CALM belo 50dma 17.14 splat
TATTF death spiral?
JDAS more red candles in its
future?
HLYS lmaoooooooooooo
MFW similar to CPY and PPD

others....watching MDR FWLT closely
red bars on earnings usually follow thru

PS. i make a worksheet every nite ( sun-thurs ) ..of course news events and futures and gaps determine my decisions the next day...but i like to have a list of stox in my head before i go to bed

Bud said...

I try to keep my trading goals and strategy very simple. I want to be green every day. I don't care if i hold(short) a stock for 10mins or 10 days. I don't care if i make 10cents or 10 dollars in it. Any trade.....no matter how small the profit....is a successful trade to me. I used to really beat myself up for exiting too quickly. No more. Thoses trades won't hurt. The key for me is to avoid big losses. Those are a killer.
So at the end of the day ....if i'm richer by $100 or $10,000....i call it a sucess...and move on to the future.

Bud said...

PENX darkside also on my list. Below 50dma ( 27.64) cud start an avalanche.

Bud said...

Less than 10% of my positions last for more than 10days. Usually those are stox that i have on takeover rumors.

Bunkerman said...

I didn't say don't buy GS. I said their Global Alpha Fund sucks. GS is not immune to looting its clients. They make great money doing that.

Bunkerman said...

Bernanke the Ostrich looking more and more accurate.

ECB seems to get it. Sheesh. DC dopes!

Bunkerman said...

ECB injects 100 billion euros into system. Ben did nothing, but talks about inflation risk. Sounds more & more silly every day.

Bud said...

Lmaoooooooooo.......looting.

maverick said...

die MFW die

mfl59 said...

the "fat tail" events sure seem to come up a lot....investors still fall into the trap of these quant funds that can outline a 99.9% probability distribution of their returns...wonderful until that .1% event rears its ugly head...but thats the game...as Livermore said, people never change....that's why the same patterns emerge over and over again...

Bud said...

You didn't like mr G. Ben is an ostrich. Have you ever liked a fed chairman?

PS. As i have said before.....Fed power greatly overexaggerated. To me they like the refs in a hoops game. Players on the field determine the outcome...refs there to basically keep time and call a few fouls. That's it.

Bud said...

Godammit frosty!! They really need to reinstate the uptick rule. Or else all stox goin to zero. Lmaoooooooooooooooooo

mfl59 said...

Wouldnt real buyers be excited by the lack of the uptick rule? If stocks fall to such cheap levels, shouldnt they be licking their chops to buy all they could?

Bunkerman said...

Looks like euro beefers are getting liquidated. gld, silver, oil, copper getting hit hard.

Paris markets down 3%

Bud said...

Absolutely mfl.

Bunkerman said...

It must really suck to be a beefer underperforming. THey bot the usual suspects yesterday and come to work this morning down a few % again.

Digging their graves.

Long term, it will be good when half get liquidated. Short term they cause a lot of volatility to help Frosty, Bud and their minions make money ;-)))

Bud said...

Spoos gettin pummelled. Looks like beefers running retail stops. Lmaoooooooooooooo

Bunkerman said...

Real buyers are people too and can get shaken out wiht beefer scares. And if they have stops, they get taken out.

Indexers don't care or people like me don't really care for financial reasons. I just don't like the uptick rule since it lets beefers do their antics and scare people out of the markets. The markets need the public to get stocks way higher faster.

It's good someone on this blog cares about the common man ;-)

Bud said...

Lmaooo....the common man.

Bunkerman said...

roflmao.

the hundred year event of the decade.

reminds me of boxing - they have a "Fight of the Century" every decade :-))))))))))))

Like the recurring non-recurring loss lolololol

Spin-em said...

...Great job..F-money..

Bunkerman said...

Looks like the right move on XLF wsa to get short at old resistance at 35. Hope someone did it. It's always hard to hit the best entry on shorts.

Frosty said...

SFK a little sugar....moving stops up to 81.75....not the xlf Bunkerman...the pro shares double juice...u know like the double quarter pounder...twice as good.

Frosty said...

friken' trading curbs....dump those things and let the market get to where it is going.

Frosty said...

UNG Bud making his move? nah MLF going to corner it.

Bunkerman said...

ah, yes, I had a double QP with cheese yesterday.

mfl59 said...

B man how many times per week are you eating MCD?

Bud said...

roflmao...mfl


Saw a good flic last nite....Stranger than Fiction.

Will ferrel plays an irs agent. Funny. Watch it B'man.

Bunkerman said...

Hmm. I think it's about once every two weeks, maybe three weeks. Too bad. Those are good burgers!

Bunkerman said...

Usually I make my own lunch. A box of healthy soup ["Cambell's Select] & some fruit. The McD's are treats or me :-)

Or I fry up a Angus burger with cheese [Valveeta or course] myself. One slice of bread & some pickles & fruit.

Or have a can of tuna fish with some pesto and ... some fruit.

Frosty said...

Bunkerman...ie your short xlf 35...so you see it breaking 32 on the way to test the 30 handle? that means we get BAC 45.

Frosty said...

if you are listening to cnbc right now we could get BAC at the 10 handle.

Bunkerman said...

Hmmm. Looks like a stalemate. No sellers lower and no buyers higher.

Bunkerman said...

I think more bad news needed to get 32 re-test on XLF. Who knows - sounds like Europe bought a lot of that crap.

Interesting, I noticed a year ago the fin engineers were creating "super AAA" classes of mortgage trust paper & remembe rhearing they were doing it to get teh European banks and other foreing banks into those classes. The idea was they were AAA with no checking necessary. I think even some central banks bought it - like the Arabs and other non-major central banks.

It seemed silly at the time - why were the regular ratings not sufficient? I just brushed it aside. Now I see why they did it - package garbage & sell it as gold. Sheesh!

Frosty said...

Bud...you better hope the fins melt down...if W pulls this off and we are all systems go as Bunkerman believes, hildog's odds go way down...funny how many liberal minded folks vote the wallet.

Frosty said...

GCA like UTI yesterday, squeeze into earnings, report and splat...what will drive those until the next Q? those are the type of darksiders that could pay well the next six weeks.

Bud said...

W ...puke. America hates him. And why shudn't they. He's sending GI's to their execution everyday in iraq.

Bunkerman said...

Lincoln was a loser, too, until Sherman took Atlanta. If W wins in Iraq, the D's will look very bad.

That's the problem with the D strategy. Very risky.

mfl59 said...

W puke....lmaooooooooooo

Frosty said...

strike one Bud...belt high fastball...response not even on topic...if you want to hang around for more that a cup of coffee you better get the bat off your shoulder.

mfl59 said...

seems the free mkt is flushing out some of these funds that have no business investing people's money....good news...

Frosty said...

MLF do you mean...DIE BEEFER DIE....!! R.I.P mern.

Bud said...

Win in Iraq....lmaooooooooooooooo

It's over B'man. The US will never win in Iraq. We are coming out. A white christian army will never welcome in a Arab country. Both parties know that....next president is pulling out.

Bud said...

Don't get cocky frosty. So you got 1 pitch past me. I still own your ass bitch.

Frosty said...

I luv it when to talk dirty xoxoxo

Frosty said...

OHB some squeeze play...is it possible to give up an in the park home run on a bunt? nah...I'm hitting the darkside...playing the fringes at the extremes been working. Bud I could use a little fade.

Bud said...

Where is B'man? Must be in the woods digging up his silver bars. Or at mcdonalds?

Bud said...

uh...i meant gold bars.

mfl59 said...

Frosty must have the nat gas mkt cornered...Bman please stay away from MCD...the stock and the "restaurant"

Bunkerman said...

I was taking a nap :-)))

It's gold coins - silver bars. Some silver coins, too.

Bunkerman said...

Mrs. B owns MCD in her Sky Fund. Looking good!

Bunkerman said...

Uh Frosty, if Hildog loses, we have to get mern to go over to Bud's & get his belt & shoelaces ;-))

Bunkerman said...

Hmmm I guess I was right on Bennie's boo-boo. Took a day for the market geniuses to figure it out.

Re-test of lows coming soon. Tomorrow might be scary - ditto Monday.

Frosty said...

the 10th named hurricane of the year will be: JERRY....where can I get some action on jerry? just sold nov hildog calls.

Frosty said...

LMAOOO Bunkerman

Bunkerman said...

Agree mlf. Flushing half these beefers would be a big long term plus.

Bud said...

Uhhh.......that's very true . I will be on suicide watch if that happens.


PS....roflmaoooo B'man

Bunkerman said...

Flushing lots of these beefer trading funds using computers would be a big help, too.

Bunkerman said...

We need index fund buyers - the real buyers.

Frosty said...

the bear isn't even going to give the bull a complementary reach around today....ops expo misdirection day anyone? no one?

Bunkerman said...

I suppose any beefer with any significant position in those oddball slices & dices of debt trust has to sell everything else to fund redemptions, since they can't sell those.

And since the Street won't lend a nickel against them. That could be a lot of beefers.

Bunkerman said...

I've never been good at reading ops expo.

Put writers might be hurting. Wasn't that another "can't lose" proposition last few years?

Bunkerman said...

sure looks like real buyers are scooping up the big banks

Bunkerman said...

Wasn't August 15 a big date for giving beefers redemtpion notices? V-J day might be a big one.

Bunkerman said...

Don't be a hero on longs. Friday & Monday might be scary.

mfl59 said...

you expecting "the big one" Bunkerman?

Bud said...

Weather permitting i'll be golfing tomorrow am.

mern said...

quite the whippy day. cant remember such whippy since, COUGH, 3/00.

in local news gas prices went down 15 to 20 cents per station from 8am yesterday to 6pm yesterday, across the board, about 20 stations.

my neighbors across the street backed up like a pack of thieves and bolted in the middle of the nite.

2 nites ago, the family next door, vanished like a virgin on prom nite. ive had people knocking on my door looking for them.

both now have grass knee high, and just abandoned thier homes.

GREAT JOB ELMER!!!!!!!!!!!

action speak louder than words. u say on tues your main concern is inflation, but 2 days later u inject 24 billion into the system?????????????????????????????????????????????????????????????????????????????????????????????????????????????????

well at least the buck spiked against the euro maybe that croissant will only be 18.50 next week.

2 bubbles popped, 2 more to go!

gud luck with all that!

im in cash, staying in cash, and watching from the cheap seats

maverick said...

Damn...Crackerville really does exist. LOL. Bravos on their way to "suxville". Good luck mern.

Spin-em said...

Eagles suck..

mern said...

mav please forward utube links when cramer freaks.


DIe cramer DIE!!!!!!!!

mern said...

g girls will lose both games to the birds!

how much u wanna bet, bitch?

Spin-em said...

box of chocolate juniors says you dont know what your talkin bout..lol

mfl59 said...

birds are garbage...donny will be traded next year...eli looks like unitas in camp so far

mfl59 said...

die dollar die

mfl59 said...

beckham finally coming in to play....long live posh!

Spin-em said...

billy unitas...rofl

we want the fatty QB

but we'll send Donny back to Big Mamas house lookin for soup

Bud said...

Spoos down 13 at 910pm as i write this. CFC news a joke afterhours. Some stox for tomorrow

Longs

none tonite ....plenty of time to get long ...why tomorrow?
"the trend is your friend"


Darksides


KMGB belo 18.5 splat
HOC death spiral
PCAR edge of cliff at 80 ...a
frosty special
VECO death spiral
AGU headed to 200dma = 36.91
MOS see CF,TNH , 50dma pierced
HDNG big red bar on earnings
VSEC death bar..closed belo 50dma
first time since jan4,07
CBI collapsing
RVBD rollover pattern? but i've
been wrong on this one b4
PENX closed belo 50dma= 27.80
timberrrrrr!!!!!!
PCS ipo price was 23.....we'll
be able to cover there

i see alot off rollover patterns but i'm not gonna post them since they more dangerous.....unless u really want them....i know frosty likes to fade as many as i post


PS. i don't think CSCO fills that gap. earnings were strong and they have no subprime exposure.


Looks like it will be sunny. teeing off at 8. back around 130.

Bud said...

one more darkside

BLOG was priced at 17.....yup...that sounds about right...lmaooooooo

Frosty said...

Mern...surpirsed you aren't writing more tps reports....
hence having no time to post....I should sue the entire industry given the crap people have been pumping to me....go make a baby.

Frosty said...

Bud...heck of a list...you are alright despite how right others are.

Frosty said...

gmen...iggles....we all know the power in the nfc is much farther west and a little further north...thinking folks around here need to get their bearings....a very wise man once said ppfftt.

Bunkerman said...

Thoughts about the big one have passed through my mind. But I'm not expecting it. Another couple whacks in other areas are needed.