Manifestor

Who's Blowing This Bubble - And When Will It Pop?

I have a good indicator for when to get out of this rally. When the commentors in Seeking Alpha suddenly go silent or turn even moderately bullish:-) That appears to be at least an year or two away. Until then, interest rates will be low to zero, hiring will increase albeit slowly, unemployment will come down below 7%, emerging markets will again reach their peak, DOW and S&P will not be far behind, AAPL will be at $225 per share, GDP will be about 3.5% YoY, IRAQ war, Guantanamo will be history. Keep the comments coming:-)

Accounting Rule Changes Creating False Rally in Financials

It is the unintended consequences of M2M that hurt the market. The second order effect that caused an adverse feedback loop (in a down market) made the market go awry. The suspension of the uptick rule that came into effect at the same time just added salt to the injury. The problem happened so quickly that it did not give any time for the banks to deal with the downward spiral in asset price markdown.

Having said that, if market is poised to move up, the second order effect of the M2M can provide a positive feedback loop this time:-) Perhaps they should leave it alone or fake tuning it to give market the kick.

How Much Are Goldman's Level 3 Assets Worth?

"...- then it suddenly becomes a $500k house - and you just lost $500k...."

This is an example of the alarmist hyperbole that 'pelican' talked about. Do you ((prague) have any proof that he (GK) doesn't have any positions directly or indirectly on these stocks. Why doesn't he (GK) say it then.

Will Lehman Follow Bear into the Woods?

The article's last paragraph, to quote again,

"Amazing what the power of rumors is doing in this market. Some powerful hedge funds who have the ears of journalists must be making some huge dollars in this era, simply by betting short and starting worst case scenario rumors. Anything to make a buck... not that they'd do anything like that (ahem)" ...

summarizes it all very beautifully. I would add internet bloggers in addition to the journalists mentioned in the above quote.

Do you think the relaxation of the uptick rule for Shorts made it easier?

Fed's Strategy to Halt Debt Meltdown is Not Working

I don't see any disclosures from the author. To quote Trader Mark in seekingalpha.com/artic...

"Amazing what the power of rumors is doing in this market. Some powerful hedge funds who have the ears of journalists must be making some huge dollars in this era, simply by betting short and starting worst case scenario rumors. Anything to make a buck... not that they'd do anything like that (ahem)" ...

summarizes very well the situation here. I would add internet bloggers in addition to the journalists mentioned in the above quote.

Book Value Can Be Deceiving for Financials

Can you (the author) explain why you think "the worst of the mortgage crisis is yet to come". Are you referring to the adjustable mortgage rate resets and the coming quarterly write-downs or do you foresee additional factors that trigger more crises.

Goldman Sachs and Mean Reversion

I do not agree with this logic. Reverting to the mean may be true over the very long term but not a plausible reason for short term moves. Clients, customers prefer successful companies, companies who have outperformed in the recent past. It is indicative that the near term future for them is likely to be good too. Secondly, there is significant difference between generated capital, preserved capital and capital infusion from outside investors. The last one invariably involves dilution of shareholder value. BSC and Citi fall in this category.
As to why GS is being taken down, it may be that investors are taking profits or are concerned about the broader risk to the economy. In my opinion though there is a different reason. Large fund managers have identified and employ techniques for moving a stock down (especially when the volatility is rising, as it is now) both through computerized trading techniques as well as by manipulation of retail investors through media, newsletters and blogs. Cramer himself eloquently talked about this two or three quarters ago around the time when GS was going to announce their earnings. This is what is happening to RIMM, GS and perhaps several others. Otherwise why would two Real Money articles that are short term bearish on RIMM appear for free in Yahoo Finance when these are normally for subscribers only. I can cite other examples where I felt there was an effort to manipulate my (a typical retail investor's) opinion.