22 replies to this topic

[ogm]

VERY far from the truth. There are many hard shoes yet to drop, many of which I'm sure will effect the market.

To me, the timing of the cut wasn't merely a gift to the large brokerages-but a sign of huge panic-and with good reason. Subprime didn't affect only bad credit-but all credit. As for those chanting liquidity is not a problem-what the heck ever happened to those two buyout a day headlines every morning?

Spooky

Lets be specific....

What is THE truth ? What exactly shoes are you expecting to drop ?

What is the amount of total subprime mortgages outstanding ? What is the default rate ? Shome me the numbers.

Unless you can show the numbers and facts, this is all BS and speculation... OMG the world is ending kinda thing.

What happened to the buyout headlines ? very easy.... the deals stopped making financial sense from the numbers perspective. Market got oversaturated with the glut of deals and low risk premiums.. supply and demand. Can't be simplier then that.


Lets say you keep buying the same stock, first you bought at 10 with 9% dividend, then you bought at 12, then you bought at 15, then you bought at 20.... dividend now only 4.5%. now it goes to 25.... you don't want it anymore.... because the returns on it don't justify the risks.

So you wait till it goes back to 10-12.. because at 12 it makes sense, at 25 it doesn't.....

Simple enough ?

Thats exactly what happened to LBO's and CDO's.... spreads sank too low and the risk in form of defaults started rising, and the market decided not to buy anymore. Why would you buy BBB that yields 6% ? You wait till it yields 15% so it was worth the risk.

Those who were the last to buy into the low spreads and took on a lot of leverage to capture them are now deleveraging. They are forced to dump this stuff at pennies and someone is scooping it all back up.

Once the deleveraging runs its course and the risk/reward finds equilibrium at some level of spread the markets will normalize once again.

In the meanwhile people will be screaming hystericaly and talking about the safety of money market accounts.

Edited by ogm, 19 August 2007 - 02:29 PM.

[SemiBizz]

Yes OGM, the market loves uncertainty..you better load up.

[ogm]

Yes OGM, the market loves uncertainty..you better load up.

Uncertainty brings opportunity....

[SemiBizz]

Yes OGM, the market loves uncertainty..you better load up.

Uncertainty brings opportunity....

For short sellers...

For most of us, this is obvious...



Investing During Uncertainty

Edited by SemiBizz, 19 August 2007 - 02:42 PM.

[thespookyone]

"What is the amount of total subprime mortgages outstanding ? What is the default rate ? Shome me the numbers. Unless you can show the numbers and facts, this is all BS and speculation... OMG the world is ending kinda thing." \ If you believe all that, OMG, why don't YOU buy all that bad paper-and help us all out. The hedge funds that collapsed were more than speculation, the bad paper that lurks is acknowledged worlwide-and spread there, as well. Can I tell who who collapses next-of course not, but to think there is no problem, it is small, or it is fixed is totally naive=period. The default rate will be proven in time, not tomorrow-check the numbers as we go.

Edited by thespookyone, 19 August 2007 - 02:51 PM.

[ogm]

The hedge funds that collapsed were more than speculation...

Gimme a break. Who's naive here ?

10 to 1 leveraged hedge fund that is buying junk rated debt at the time when yield spreads are at about all time lows.... that is not speculation ?

Its speculation and very bad one too. They were total dumb asses.

[mike123]

VERY far from the truth. There are many hard shoes yet to drop, many of which I'm sure will effect the market.

To me, the timing of the cut wasn't merely a gift to the large brokerages-but a sign of huge panic-and with good reason. Subprime didn't affect only bad credit-but all credit. As for those chanting liquidity is not a problem-what the heck ever happened to those two buyout a day headlines every morning?

Spooky

Lets be specific....

What is THE truth ? What exactly shoes are you expecting to drop ?

What is the amount of total subprime mortgages outstanding ? What is the default rate ? Shome me the numbers.

Unless you can show the numbers and facts, this is all BS and speculation... OMG the world is ending kinda thing.

What happened to the buyout headlines ? very easy.... the deals stopped making financial sense from the numbers perspective. Market got oversaturated with the glut of deals and low risk premiums.. supply and demand. Can't be simplier then that.


Lets say you keep buying the same stock, first you bought at 10 with 9% dividend, then you bought at 12, then you bought at 15, then you bought at 20.... dividend now only 4.5%. now it goes to 25.... you don't want it anymore.... because the returns on it don't justify the risks.

So you wait till it goes back to 10-12.. because at 12 it makes sense, at 25 it doesn't.....

Simple enough ?

Thats exactly what happened to LBO's and CDO's.... spreads sank too low and the risk in form of defaults started rising, and the market decided not to buy anymore. Why would you buy BBB that yields 6% ? You wait till it yields 15% so it was worth the risk.

Those who were the last to buy into the low spreads and took on a lot of leverage to capture them are now deleveraging. They are forced to dump this stuff at pennies and someone is scooping it all back up.

Once the deleveraging runs its course and the risk/reward finds equilibrium at some level of spread the markets will normalize once again.

In the meanwhile people will be screaming hystericaly and talking about the safety of money market accounts.

Total Mortgages about $17 trillion. Subprime 18%. Subprime defaults more than 20% with CFC. That is $600 billion. This is only the start.

VERY far from the truth. There are many hard shoes yet to drop, many of which I'm sure will effect the market.

To me, the timing of the cut wasn't merely a gift to the large brokerages-but a sign of huge panic-and with good reason. Subprime didn't affect only bad credit-but all credit. As for those chanting liquidity is not a problem-what the heck ever happened to those two buyout a day headlines every morning?

Spooky

Lets be specific....

What is THE truth ? What exactly shoes are you expecting to drop ?

What is the amount of total subprime mortgages outstanding ? What is the default rate ? Shome me the numbers.

Unless you can show the numbers and facts, this is all BS and speculation... OMG the world is ending kinda thing.

What happened to the buyout headlines ? very easy.... the deals stopped making financial sense from the numbers perspective. Market got oversaturated with the glut of deals and low risk premiums.. supply and demand. Can't be simplier then that.


Lets say you keep buying the same stock, first you bought at 10 with 9% dividend, then you bought at 12, then you bought at 15, then you bought at 20.... dividend now only 4.5%. now it goes to 25.... you don't want it anymore.... because the returns on it don't justify the risks.

So you wait till it goes back to 10-12.. because at 12 it makes sense, at 25 it doesn't.....

Simple enough ?

Thats exactly what happened to LBO's and CDO's.... spreads sank too low and the risk in form of defaults started rising, and the market decided not to buy anymore. Why would you buy BBB that yields 6% ? You wait till it yields 15% so it was worth the risk.

Those who were the last to buy into the low spreads and took on a lot of leverage to capture them are now deleveraging. They are forced to dump this stuff at pennies and someone is scooping it all back up.

Once the deleveraging runs its course and the risk/reward finds equilibrium at some level of spread the markets will normalize once again.

In the meanwhile people will be screaming hystericaly and talking about the safety of money market accounts.

Total Mortgages about $17 trillion. Subprime 18%. Subprime defaults more than 20% with CFC. That is $600 billion. This is only the start.

Remember the capital with most banks are not that big. CFC already negative when mortgage portfolio is priced to market. Bearstern also only has $10 to $20 billion in capital. 20% drop in portfolio price will bankrupt them all. If real estate drops 50% overall, all US banks will go under including GSEs.

[pdx5]

Yes OGM, the market loves uncertainty..you better load up.

Why do I get this feeling OGM was not in the market in 1987 or 1974?
But I could be wrong.

[thespookyone]

"10 to 1 leveraged hedge fund that is buying junk rated debt at the time when yield spreads are at about all time lows.... that is not speculation ? " Although it is clear you have a great pair of rose colored glasses om, ogm, let me remind you that those "dumb asses" as you say weren't buying all junk-at the time purchased, much of that debt was rated tripple A. And they weren't the only purchasers, either. How much is Goldman holding?-I notice you seem to like financials lately. How much is in equity funds worldwide? How much in money markets. No need to argue between you and I really, as the twenty five years I've made my living daytrading-I always need someone to take the other end of the trade, TIA.

Edited by thespookyone, 19 August 2007 - 07:40 PM.

[ogm]

No, I wasn't in the market in 1987 and I don't like all financials.. mostly the big banks. Brokers present value to certain extent, but very selectively. And yes, those BSC people where dumb asses. They knew exactly what they were buying. And still leveraged 10 to 1. What killed them is not WHAT they were buying but the LEVERAGE. but they had to pick up the yield and they decided to take that risk. Their own fault.

Edited by ogm, 19 August 2007 - 08:03 PM.