Fat Arby

The Jury is Still Out on the Monolines

People, people, people ( I didn't copy/paste, btw)...where have you been for the last 80 years? This is THE AMERICAN Way! Big, established companies have the benefit of the doubt in tough times. AFter all , they've been around for a long time and have always come through, have they not?
So, why worry? Your money is safe in them bonds, and if , for some reason, the market comes crashing down and inflation skyrockets and municipalities start declaring 'bad times are here', well, it was no one's fault! They just market forces!

Ambac, MBIA Are Still Shorts Amidst This Wink-and-Nod

Yes
and the best way to play this?

either get in early, as some bad-ass traders did last year, or with an options strategy. Alas h/s= 20.20, but a straddle works wonders with these stocks because you just never know which way the news is gonna go! All you know is that the volatility will be incessant. My may put is in the dumps right now but, had I bought a call instead of buying back my short put (I had a vertical which I turned into a long ) my losses would have been covered and I'd still have time for a move to the downside.
Shorting is really an expert's game. A better way to play these is with options. However, it's not child's game either, but the potential for profits, in a short-term frame, is still there.
We're dealing with a whole lot of bonds here and with an explosive situation that could lead to a lot of troubles in a lot of municipalities in a lot of states, so SP and Mood need to be extremely cautious when issuing their ratings. It is plausible, however, that given enough publicity and downward pressure and earnings/loss reports they might get around to finally doing it. When that day comes, it won't come as an isolated incident in the market; it will likely be within a framework of other negative news that will see the market lower.

Friday's Turnaround: Raid on the Shorts

hey swamp

You need to get 'married'. Understand?
If you have THAT much exposure to this or that , you ABSOLUTELY and without question HAVE to own the opposite derivatives. I know you think you're invincible, as do I, but the truth is that getting that money back is easier said than done.
Think about the trader who's short the March 1333. That 's a good strategy, to be sure, but it's really just half a strategy. Why not have a calendar short, or hedge it with a [cheaper] strategy like a butterfly call -not that I know wtf i'm talking about, really, i've just dabbled in these- but the math is sound. So should your gains be thought of in terms of ebb and flow, though mine have been ebbing for some weeks here, unf. But, yes, my theories are sound albeit naked and slightly out-of-step with the whole mechanism. I'm looking into it, though, looking into it...

Friday's Turnaround: Raid on the Shorts

No one can know everything. I too lost a good deal of value on my put options and wonder how and when I can make up for the loss.

One advisory that I have told me to stay out of US Equities until a clear direction could be had, that is, a move below SP 1300. Until then, they said, STAY OUT. But did I listen? No. Why? I was used to the easy trading scenarios of late 07 and Jan 08. I'd just double up or simply redo what I had done and made sure I took profits when they were there.
When the big sell off days of Jan happenned, a bunch of ceo's and billionaires got together and said WE NEED NEW MONEY. PERIOD.
So they pulled a few strings and made sure they had the liquidity available to them. They've been fighting the shorts ever since and those, like myself, who are relatively new, really feel it when things don't work out because , like I said, we're not used to these massive injections of cash into equities.
Should companies go broke? It's a tough one to answer, but the practical answer is that they do and have done so for a long time. Think 'MIssouri Railways' is still around? How about Braniff? Enron?
sure, new rules come about after these massive illegal profit taking schemes are discovered and I'm certain when Ambac goes or when Countrywide declares more and stricter mechanisms will be put in place to deter these types of activities.
In truth, Ambac and other reinsurers are not really working for the health of the economy. There's a whole other agenda that they have been pursuing with the capital that they have had access to since inception; same with countrywide, and I'm not just talking about lavish parties. If I simply told you what I believe is hapenning you'd most likely simply dismiss it as a 'loco' who needs to see a shrink.
However, if I told you that certain of our 'technologies', like the Concorde and even, say, the human genome project, are not scientific experiments but rather the pursuit of minds gone mad you might agree with me, right? Think about it. If the concorde is so great and flies so fast, why hasn't the ENTIRE planet assimilated and pursued that technology? Why? Why do we still have jet planes?
Yes, there are A LOT of answered questions when it comes to why certain companies are in the trouble that they're in. In fact, banks and their credit issues are the ones who have caused the bubbles in Asia and even the ones who pushed the US economy to the brink in 1929. The exact same thing is being repeated here and a lot of people have a gut feeling that all's not well and, as such, the natural outcome of such a scenario is the dissolution of these companies.
However, don't expect them to go down easily or quietly. They will pull every trick they have, and then some, to get at the money, whether it's through the Bernanke's Fed or through massive capital movements in the equities market or through selling their souls to foreign investors.
Once they've put all their resources to work and they're out of options, then you can expect the companies to start declaring bankruptcies and for the economy and the dollar to start regaining strength. Until then, don't overlook straddle strategies; that's been my weak area and where i've taken some punishment for not owning calls as well as puts.

May the blessings of liberty be with you now and always.