12 replies to this topic

[Islander]

Three funds gone like smoke. And, there are others in the bushes. The ABX foretold it all. Now, Buy some 10 -30 year bonds or calls, and sit tight for a while. The Fed is going to have to do something, liquidity or lower rates, take your pick or maybe both, but just looking at this thing unwind is not an option. Oh, and by the way, we topped today too. Best, Islander.

[arbman]

Do you think the Fed will act tomorrow, I don't think so. I think the Fed will act after a good correction. It would be very wrong to rescue at the top, the inflation would go through the roof (or the dollar would immediate take a big dump and trigger a different kind of crash probably). I would think a few months of correction would trigger them to do more than just jawboning...

Edited by kisacik, 17 July 2007 - 08:44 PM.

[Sentient Being]

Islander. I'm behind the 8 ball here on my understanding of what you just said. I'm guessing the funds are killed because of things like sub-prime lending collapse? And you think the government will feel compelled to put their finger in the dam rather than risk a flood?

[ogm]

Islander.

I'm behind the 8 ball here on my understanding of what you just said. I'm guessing the funds are killed because of things like sub-prime lending collapse? And you think the government will feel compelled to put their finger in the dam rather than risk a flood?

There is general risk aversion... a.k.a. Credit Crunch.

Take a look at ABX.. its in freefall. There are dozens upon dozens of Pension funds, Money manegement firms, Insurance companies and who not, that were buying CDO's hand over fist over the past couple years. Last year alone there were about 500 bil in CDO's sold. And now Bear sterns says they aren't worth [bleeeep]. They tried to find buyers and couldn't Thats why Merril stopped the auction.

Anyone who bought that stuff on leverage, like Bear Sterns hedge Funds are practicaly wiped out. Others are just sitting on huge losses. Read this. http://www.minyanvil...dex.php?a=13364.
part 4.

There are 15 tranches of that garbage, and the best ones are going for 95 cents on the dollar, the bottom tranches are completely worthless. Its impossible for them to mark most of that stuff to market, since THERE IS NO MARKET for this.



But its not the worst part.. the worst part is that corporate credit spreads are rising too. There is general stress in the system. LBO's are coming to an end, as evidenced by Cerberus inability to finance Crysler buyout. And KKR yesterday posted some issues too.

Big Banks are sitting on bridge loans, and can't find investors to sell these deals to. This thing is far from over.

Edited by ogm, 17 July 2007 - 08:54 PM.

[Rich]

Oh, and by the way, we topped today too.

I tend to agree.

Rich

[Sentient Being]

ogm,

Thanks for the detailed explanation. I hear this stuff and often wonder how much is hype and who really knows and who doesn't.

You know, much of this sounds like investment 101. In the great depression leverage caused massive distruction when it went into reverse. To see all these professional outfits taking on massive risk with apparently little understanding or caution...it's almost unbelievable. But I guess...it's human nature and repeats every so often.

Edited by Sentient Being, 17 July 2007 - 08:59 PM.

[jawndissedi]

Three funds gone like smoke. And, there are others in the bushes. The ABX foretold it all.

You got that right. But I'm afraid most of the folks on this board think ABX is gold mining stock.

Now, Buy some 10 -30 year bonds or calls, and sit tight for a while. The Fed is going to have to do something, liquidity or lower rates, take your pick or maybe both, but just looking at this thing unwind is not an option.

Oh, and by the way, we topped today too.

Best, Islander.

Actually, we topped on Friday when RUT came within 9 basis points of creating an exact double top with its June high. The cap-weighted Spooz and NDX are too easily manipulated to accurately reflect what the stock is really doing.

[arbman]

Yup!

[Rogerdodger]

I feel like a retard trader. One fund I trade is a once-a-day fund with orders placed an hour before the close. It makes me attempt to forsee the future and take a few shots without price confirmation. Yesterday, I closed the long I took on July 2nd. Tonight's 9 point drop makes me feel like Einstein, only without the funny accent..

[arbman]

This is probably what ogm is talking about the junk yard...