Thursday, January 24, 2008

Big Fraud

Gosh, a single trader caused a $7 Billion fraud at Societie General !!! After those huge UBS losses, I guess we now see why Europe has been a source of the panic selling. Nick Leeson and Howie Rubin redux ... it's deja vu all over again.

Yesterday was a huge outside day reversal from a new low on high volume - that's a "key reversal" and can signal a technical bottom. Basically everyone who had wanted to sell had sold and no sellers were lower. When the selling dried up, sensitive traders turned around, started covering shorts and bottom fishers scooped up cheap stocks. This built on itself and created a wave of buying. Financials and retail led as beefers decided these "early cycle" stocks were the place to be. Tech, energy and miners were still weak. So ... the beefers created a panic when the Fed was showing no leadership and then created a bounce . All this action is sort of like a "Lord of the Flies" society of unsupervised adolescent boys going crazy ... which is what the Fed, SEC and the rich have given us.

We have to live with it, though. At least the Fed seems to have learned a lesson, viz., gradualism doesn't work at turning points. We need more rate cuts next week - 50 or 75 bps. And we need a followthru day, which is a big gain on higher volume on IBD days #4 thru 7 preferably.

I have GOOG and AAPL on my long term buy list. I'll wait until they stop going down to make adds. I also am thinking of buying more of certain energies and miners. Over time I plan to consolidate my positions into larger blocks of fewer stocks. I think that will be easier for me to manage for taxes and taking advantage of beefer rips & dips.

If you don't have a cash reserve, be a bit careful now. The beefers might try to "retest" the lows.

PS: I have some short term losses this year so am not inhibited from making changes by LT gains dates in this position consolidation process. I'll probably sell CSCO, ORCL and buy more GOOG and AAPL. I also got some EDU and might get some more. I think my energies, miners, and deep water drillers need some consolidation, too - no net selling, just concentration.

45 comments:

staggerlee said...

that is a jaw dropping story.

man i went out yesterday and the dow ripped 600 hundred pts

BAC almost up on the yr.

nice job bman

mfl59 said...

Glad to see those big cap fins coming off their bottoms for ya Bman....

Can the financials become the leaders of a new bull move? Not that I'm saying such a move is about to begin-but when the time does come....

Bunkerman said...

uh ... that's why I started buying them last year, mfl ... to be leaders on a new leg up.

Obviously the beefers didn't agree then and they have all the chips nowadays so control the ST moves.

But I still think the big fins gain market share and will increase margins as they wil have the relationships and cheap money from deposits and not have to rely on brokers and others to find business.

Bunkerman said...

UNP good numbers ... thsoe rails are making money.

Uh ... rails = real = no recession.

Bunkerman said...

good jobs number - no recession.

Bud said...

big fins will increase margins? what are you talkin about Bman?

the margins on subprimes was super-high....and according to you the 'beefer' business will soon be gone

fins have to go back to the old fashioned way of makin money.....opening branches and clearin checks........the growth rates in earnings is gonna be in lo single digits

that's a very lo-margin biz

Bud said...

UNP fell 30 points in a month

Bman sounds like cramer now.......down 30 points.....bounces a few points.....and he announces

"no recession"

lmaooooooooooooooooo

Bunkerman said...

ooh Bud ... you seem to have a hard time distinguishing between the real and the virtual.

Wall Street is not Main Street.

Net interest income will increase for the big fins and all the deals and loans lost to the likes of BSC and Wall Street via loan brokers will have to come back to the big fins.

All those little mortgage companies are gone now, too. Corporate spreads are way up, too.

Bunkerman said...

people with caller ID are spooky - they know it's me before answering.

Frosty said...

Bunkerman...there is no more creative place than wall street...Bud is not a creative, positive or a foward thinking type person...new products and services will replace those that were lost in this round of distruction...if there is a buck to be made and there always will be, banks will have a product and angle to fill the void...silly little man...if the mitt fits, you can't convict.

Bunkerman said...

median home sales prices down about 1.8% year over year - What's the big deal ? That's rounding error.

Frosty said...

XLF gappa filled just over 28...SKF down 40 beans, worth a shot for a little ping pong one would think...with the $IVX I think establishing a new higher trading range 25-45, makes sense...friday's have belonged to the darkside.

Bud said...

so lemme get this right

banks will figure out a new way to make money?

i don't even think frosty worked in the mail room at a bank........sounds more like custodial services


lmaooooooooooooooooooooo

mfl59 said...

I hear ya on SKF...i went with the SRS myself Frosty....who's buying homies and reits after 2 big up days? as they say those are the fools....worth a shot indeed....

Bunkerman said...

I traded XOM for more CVX.

Bunkerman said...

no, Bud ... sheesh ... their competition is going away and all they have to do is raise prices and go back to doing what they did 20 years ago - an oligopoly.

Bunkerman said...

sold CHK to buy more DVN.

sold COP to buy more CVX.

consolidating into what I really like LT.

Bunkerman said...

sold NE, NOV; bought more DO, RIG

Bunkerman said...

sold CSCO, ORCL; bought more GOOG

Bud said...

well well well


what are these 'buys and sells'

Bman sure is acting exactly like all the ....uh.....'beefers'.....he likes to rant and rave and piss and moan against......'watering hole'


Bman is no different than them.......he sees a cheap stock.....scoops in....and flips it for a gain.....nuthin wrong with that


but to yell and cry when the beefers do it........

what a phony!

staggerlee said...

im sooooooo high

Bunkerman said...

sheesh Bud, I don't have a staff ... I'm not a "boss" ... just a common man ... I need to cut back the number of stocks I have so I can have more time off to work on my milling machine and welder.

No dollar changes in the groups.

IF I was a pseudo-beefer, I'd be flipping those buys I made on Friday & Monday in the big fins. But I'm keeping them LT.

Bud said...

Bman spends 20 minutes ....uh...'workin' with his milling machine and welding..........then takes a 5 hour break to check the stock market

comman man my ass


lmaoooooooooooooooo

mfl59 said...

When is the much anticipated knife fight between Bunkerman and Bud? should be a dandy indeed...

Frosty said...

I put Bunkerman at 2,555,687,000 to 1 favorite MLF 59, if anyone is looking for so action...Bud would be best served to stay away from the k-bar...besides with the plactic kinfe, he can just wide his mouth to coat the blade with lipstick...Bud far too many pole spins last night at the biker bar, obviously a litte dizzy this morning.

Frosty said...

SKF doubled up, avg just over 104.

Mern sounds like you have your head together this morning, what are we doing with MSFT?

Bud said...

"what are we doing with msft?"

lmaoooooooooo


frosty you really are a mean person

staggerlee said...

i need a bong hit

Bunkerman said...

bot a bit a AAPL - 1/2 of planned add to existing position

Frosty said...

hey...I luv the mern...everyone luvs the mern...gotta luv the mern..I just want to take advantage of his skills...after all I'm just the janitor.

Frosty said...

uh Bud...like you didn't hammer AAPL...I say we chip in and get him the big tv.

Bunkerman said...

I don't understant these rich turds on TV saying that $1200 per couple means nothing ... or even $300 for a person under $25K/year.

That's aftertax money and is about a week's pay for those people.

$20K/52 = $380/week cf. $300

$35K/52 = $673/week

median incmoe $55K/52 = $1,057 per week cf. $1200.

More rich & powerful out of touch with reality.

Bud said...

i finally agree with the Bman


poor working families are gettin crushed in the Bush recession


every penny helps

Bunkerman said...

heck, $1200 is a month's mortgage payment on a $200K loan at 6%

Bud said...

i luv nancy pelosi


she is so graceful and smart


poor frosty

Frosty said...

what a deal...the liars and cheaters get a house payment while the average common man with a 401k near retirement takes a 50k hit...help indeed.

Frosty said...

Bunkerman...so we have all the news out on the table, now what?...the ball is back in Ben's court and the market now trusts him again having bet up the odds he will take the k-bar to rates next week...given his track record that sounds a little wrong headed...the last vote for 75 bps passed, but not without dispute....what say you sir?

Bud said...

let's see now......one's a janitor and the other guy's a welder

and they gonna tell Ben what to do?



lmaooooooooooooooooo

mfl59 said...

Frosty are you going to ride SKF into tomorrow sir?

Bunkerman said...

well, Poole is a fool.

I think Ben cuts 50 bps next week and gives amother aggressive statement that continued weakness means more cuts.

meanwhile, data will soon begin to show taht there is no recession and the credit market snd housing markets begin to clear. Jobs are ok. Consumer is OK.

So all the recession mongers find they are in a fantasy house. In a month everyone will be saying the Fed is great and was "timely" [except me], kissing Ben's butt.

Asia and emerging markets continue to grow fast.

And US stocks are so cheap we get a long rally into the spring ... some consolidation and a long rally into fall as beefers underperform and are slowly liquidated :-)

Big fins, exporters, energies, miners, Internet tech and AAPL lead [viz., my stocks]

yearend: stable growth path ... S&P to 1700, Dow 15000 as we culminate in a huge year as McCain is elected President and divided governmetn continues.

Frosty said...

MLF59...indeed sir.

Bunkerman said...

oh ... and corporate defaults and commercial RE defaults remain low ... and by fall big fins are taking huge gains from reversal of prior losses on marks as real defualts are well below "Mr. Market" estimates.

And the SEC reverses itsself on the uptick rule, while Barney holds hearings on hedge fund and derivative regulations.

By fall, banking activities of beefers are prohibited, derivatives are made to require Treasury collateral, hedge funds over $1 billion are required to register as investment companies and obey their rules. And the uptick rule is applied to ETFs.

Ahhh .. heaven !

:-)))

Frosty said...

Bunkerman...chasing the dragon with brother Mern...oh my :)

Frosty said...

Bud...what are you plans for the rebate check?...I say invest in gold...perhaps one of those gold grills or a mr T started kit.

Bunkerman said...

I suggest that Bud buy a roscoe with his $300. There are quite good .38's available for that. He needs more self-sufficiency and less dependence on "the man" :-))