rich c

Clarifying 'Speculation'

Value, growth. Active, passive. Top down, bottom up. Buy-and-hold, day trade.... I do not recall any definitively study that suggests one works better than the other.

The best way to beat Vegas is to count cards. The best way to beat the markets is to know more, and I don't mean 'know more' in terms of homework or research. The back room boys at the Goldman's of the world make more not b/c they're any smarter.

Boone Pickens' BP Capital: Rebuilding in 2009

Notice BP increased his holding of CHK. Is something going on here?

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Nat gas.

Shooting for 100% Return in One Month

Glen, you've been bashed enough so I regret my need to 'pile on.' You're young and inexperienced and that explains (versus forgives) a lot. But walk a mile in a pro's shoes and you'll realize a few things, including the fact that MOST retail clients have needs and goals beyond simply maximizing return. Frankly, if the goal of every client were to shoot for the moon and double their money every month it would certainly make life easier (and more fun). Of course, every ‘professional’ would also be out of the business within a year and broke from defending FINRA arbitrations.

When you’re a young non-professional with a few bucks in your pockets then rolling the dice and being bold is expected. That’s the way you learn. But you can’t duplicate that when managing a couple billion dollar book with a herd of regulators and compliance ‘professionals’ looking over your shoulder. Even Buffett (when your age) made the comment that he couldn’t believe how much harder it got the more money he was responsible for investing.

My guess is that at least 75% of retail accounts have no business being in a 'penny stock' (< $5, as defined by the regulators). You'll also learn that with the licenses and responsibilities that go with them (e.g., to "know your customer") do not allow for the spewing of possible returns and targets. God help the ‘professional’ who would even suggest he were shooting for a 100% return (over a month, year…).

Reality is that you are naïve. It is also naïve to assume that just because you give a monkey a typewriter, and he gets a word right, that he can write a book. You’ve got a 700% return on a stock. Great. Many of us have accomplished that may times over our careers. But we’re not so naïve (I hope) to assume that it had anything to do with anything other than ‘table luck.’ Just know that it is an entirely different game managing a few bucks versus a few billion. You're waaaaaaay off base about how things do and should work in the real world.

P.S. It's July so ditch the black shirt. It's a 'professional' thing.

Disclosures: Long ACAS where appropriate.

Hedge Fund Managers Liquidate: Expect Downward Pressure on Top Holdings

From the article, "The liquidation process is likely to place downward pressure on some of the top stocks in Raptor’s portfolio."

How is the title misleading??????


On Jun 04 08:30 AM russ wrote:

> The article is valid and worthwhile, the headline for the column
> is misleading and poorly written

Banks Just Don't Get It

There was a time when the regulators would bend over backwards to insure the (then) montra of asset market exposure, transparency and (no) conflicts. Even when it meant (most of the time) leaving significant money on the table; at least no one could complain that it wasn't properly exposed (by even their thin definition). That seems to have disappeared as everyone is now convinced (for good reason) that deals are being negotiated/made behind closed doors.

The taxpayer (not represented at the table) is sooooooo screwed.

Is Program Trading - Especially SLP - Affecting Trade in the Stock Market?

Good exchange, links...

The fact that the 'pros' come out in force in the last hour is not news, just as the fact the the first hour of the day has always been amature hour. And the TICK is of some use but, like many other indicators of prior value, it too has become full of statistical noice to the point of becoming only marginally valuable.

Market manipulation? We can all speculate. My question would be, what percentage of GS Principal and SLP trades fall at what times during the trading day and what percentage of SLP trades are buy vs. sell?? Plus.....

Since when do the targets of the SLP ("the 500 most active names") need more liquidity????? Let's be honest and call it what it is: SLP = more volume and fees for the exchange = more profits for the Money Changers = more volatility for investors.

Auction the TARP Warrants and Everyone Wins

Auctioning is OK but that empowers the Money Changers. A solution I've suggested is to package the warrants into something traded (a bond, ETF, LP...) that every America can purchase for their IRA, kids college fund.... via an IPO. Let it trade and provide liquidity at a market price. $10.00 initial NAV per share, $1,000 minimum.

If the banks want to buy them, let them buy them back directly from John Q Public via the secondary market at a then market price.

I would do the same thing with FDIC loans, PPIP.... Buypass the Bill Gross' of the world and put these assets directly in the hands of those who foot the bill at par!!

Hedge Funds Should Be 'Regulated Out of Existence'? Time for a Reality Check

I am a little confused as to where the writer stands as he seems to be defending the hedge fund industry with his words yet condemning them with his evidence. For example, to tell me that 'funds' are only responsible for ~1/3 of the CDS market doesn't suggest they somehow deserve a pass. Besides, that's just the CDS market - I recall Buffett's comments having more to do with MBSs in general. Anyway….

Capital is like water in that it flows along the least obstructed path to its desired end. Just as boulders in a stream force water to find a new path, money will always flow away from and around regulation. And the bigger the stream [money], the more it crashes and cuts against anything in its way. If it isn't "hedge funds" it will be some other river bed and form of gravity that carries this greed to its desired end. Soooo….

Let's stay focused on the real problem and that is a constantly outdated regulatory system and that systems seeming inability to un-tether itself from the political process as well as the political and financial elite. Because, after all, if we really wanted to solve the problem it would be as easy as defining the (smaller) playing field and tossing-in a few simple rules that even allow for murder and (financial) suicide. Make all the money you want, continue to slit your collective wrists (which they would), just don't step off the field of play or break the simple rules to win. My first rule would be, if you want to remain unregulated, unaudited… then you do not have access to our (regulated and orderly) financial markets. It is access, after all, that makes them 'too big to fail.'

But here are a few suggestions for starters:

* We're bringing back Glass-Stegall, separating the banking system from the 'shadow' banking system. Period. One we protect, one we don't. Everyone in attendance (like banks) must decide on which side of the white line they want to be, player or spectator, but not both.
* Deal with outside investor money? Then we're forcing you to register and submit to the same regulation and oversight as broker/dealers do. Period. You know, the stuff we would all desperately love to avoid (like margin requirements, suitability, FINRA audits, net capital rules, Reg T, compliance departments, the ridiculous arbitration process….).
* We're bringing back trading curbs, (a stronger) 'up tick' rule and tighter margin requirements. OK, so maybe they really didn't work and it's not that we don't trust you, but….
* Unlike today (e.g., Maddoff), all operational processes must be outside and arms length to include clearing, trustee and accounting. Just like an individual account at a B/D, customers will receive no less than quarterly statements from an outside clearing firm.
* And then there's that whole audit process (or lack thereof). Any firm over $100MM will be required to have outside AUDITED annual financials as well as audited return calculation. We all know there is huge error in average industry return calculations (as a result of, e.g., survivor bias and hit or miss reporting).

And those are just a good start. Call yourself a "hedge fund," long/short, quant, buy/write… it's just a name. But you want access? You want to step outside your limited field of play? Then you play by a tougher set of rules. Sorry about that.

Smartphones: The Mobile Industry Is About to Get 'Blown Apart'

Personally, a really good article/study (and great consumer graphs). And thank you for putting the iPhone in the right box: high consumption, low utility. It's a great toy.

A key problem with the tech industry is that NO ONE want to be what they are. Software guys what to be into hardware. Phone providers are obsessed with software. Long distance providers want to sell computers and TVs.

The paradox of this industry is that while the 'openness of innovation' has fostered great growth and invention, the lack of clear rules and boundaries continues to create havoc with the consumer. This industry needs a tennis court, with clear rules and thin out of bounds lines. As consumers, we're paying needlessly to watch the current players slam balls all over the place. Tennis is best played between the lines. Great points are those that are extended rallies with balls falling close to the lines but clearly in.

The Top 12 Brands Likely to Disappear

"Well-known brands," yes. Venerable brands, hardly.

We would have all been better off had the Gov. let Chrysler parish the first time. And good riddance to the others.

America, let's stop spending so much money!!! Make AXP, MC and Visa the next to fold!!

CDS: Toxic Product or Toxic Investors?

That should have said: $170 TRILLION. My brain locked just thinking about it!!!


On Apr 21 02:28 PM rich c wrote:

> ....What percentage of the top firm's $7 TRILLION (!) in
> CMOs are 'toxic'?

CDS: Toxic Product or Toxic Investors?

Your article points to a much larger problem and that is that NO ONE seems to be able to (or want to) tell us exactly what a "toxic asset" really is???? I've bought and sold 'distressed' financial assets for many years and never in my days have I seen more people trip and fumble over a term like we have in "toxic." I mean, is it securitized? Performing? Delinquent? Non-performing? In forclosure? Sub-prime? 'Scratch and dent?' Is it bigger than a bread basket? Red? Green? Are these assets on balance sheet or off? What percentage of the top firm's $7 TRILLION (!) in CMOs are 'toxic'? Which ones? And God forbit, can we actually see an inventory of these assets?

Honestly, it is a bit like a helpless Dr with a patient running in yelling about sever pain but then won't let the Dr. close enough to really analyze the situation.

This also explains in large part why the Treasury's various programs will fail b/c NO ONE can define how big the hill is to be climbed or what gear may be needed for the climb. If no one can answer WHAT, then do not expect the market to answer HOW MUCH.

As a buyer, when you can give me a detailed inventory of WHAT, then we have something to discuss. Until then, who gives a flip as anything else is just fodder for the likes of Seeking Alpha reading??

P.S. George Soros speaking = agenda (political, financial or both).

P.S.S. "Like other derivative contracts, if there's somebody losing money on it then there's likely to be somebody making money on the other side."

And that differs from any other transactions why??? Stocks007, to say that CDSs are just another derivative is either simplistically brilliant or disingenuous. I vote disingenuous. And for the record, ALL 'derivative' product comes much closer to the 'toxic' camp then legitimate commerce. We both agree that more regulation is necessary but disagree, it seems, on the degree.

Big Banks: Pulling Off the Ultimate Bait and Switch

They got what they always wanted: A bad bank!

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We already have 'bad banks' - they go by the names of C, BAC, JPM..... I see no need to create new ones, do you? Let’s liquidate the ones we have, shall we?

Wobatus, how would all this impact the little guy, 401(k)s, pension plans.....? It already has. You, me, the author... are already saddled (or will be) with ALL the losses. Those in NY who are in bed with those in DC will make sure THAT happens, rest assured. As someone once said, ‘Washington-based solutions are designed to protect the guilty by wrapping the solution around the innocent.’ That’s what is happening here.
Plus, the beneficial ownership I have in 'Mutual Fund ABC' of .0000000099999 of a share of C or BAC has already been destroyed by the several hundred thousands of dollars in bailout and 'stimulus' that my family has been saddled with over the next generation.

Soooooo the question to me is, when and how to take the medicine? For me, they are insolvent so shut 'em down NOW. Go ahead and shoot the full dose or medicine up my butt NOW. I’m know that time is capitalism's friend, not Washington or Wall Street.

IF I WERE KING FOR THE DAY, I WOULD: Shut-down the five largest banks and back-fill as needed with smaller community banks; bring back Glass-Steagall…. NOW!; require hedge funds and private equity to register as broker/dealers, regulated by the same FINRA and SEC rules the ‘rest of us’ follow - no access to our free (and regulated) markets without full registration and regulation!!; revise the outdated Reg D ‘accredited investor’ code; install a tougher ‘up tick’ rule; term limits (retroactive!); force the State of New York to pay $5 Thousand to each tax payer in America for each year they’ve sent Chuck Schumer to Washington…. And then I would break for an early lunch before tackling tougher issues.

Wells Fargo: Risks Outweigh the Benefits

Well THANK GOD for this post !!! I can finally sell my WFC and sleep better. What should I do with my C and BAC???

Just now 'initiating coverage' (on WFC)? Isn't that a bit like saying, "I've been asleep the past 18 months but figured I should go ahead and have an opinion." Jeez. Why bother, friend?

I just think it's great that folks stick their neck out and write for this site. But hopefully you guys didn't spend a lot of time thinking about this one??

BofA, Wells Fargo: No Equity After Accounting for Bad Loans

From the days of the original ‘money changers,’ bankers have NEVER made good investment bankers. We’re talking right brain vs. left brain stuff. Fortunately we had Glass-Steagall. But our illustrious congress (Reps and Dems), upon Bill Clinton’s signature, saw fit to eliminate this important piece of legislation that separated our balance sheets from those of the Money Changers.

We need a return of Glass-Steagall - Obama’s guru, Paul Volker, stated as much in a recent speech in Canada. God knows our legislators and regulators aren’t smart enough to deal with the two together – this requires a bit too much gum chewing and tummy rubbing at the same time. So separate the banking system from the shadow banking system. Insure one, let the other live or die on its own, totally burdened with all the appropriate market risks, without a Gov safety net. Separate systems, separate ownership (which is key – everyone needs to decided in which world they want to stand, not both). But as for our current situation…

Everyone with a brain, it seems, agrees that mark-to-market is a problem. But we’re spending too much time talking about price. The real and only question should be, ‘who owns long-term the increased valuations b/t mark values and REAL market values (whatever they are)? Let me suggest that it is those who actually pay taxes (versus all the other slackers for whom our current Gov/administration seems to cuddle-up with) who should see that benefit over the long-term.

Those who subjected taxpayers to undo risks and a terminal raid on their wallets as they reached for ever-higher, out of the box profits put their institutions, shareholders and the taxpayer in harm’s way. And boy have they!!! $5 Trillion in combined total assets for the Big Five against $170 Trillion (!!) in combined notional derivative contract (9/30/08 numbers). Just commit those two numbers to memory if you what to be on top of the next shoe to fall!!??

“We appreciate that you guys made mistakes, we really do. Had you had the opportunity to do it all over again you would have done things differently. You’re sorry (or so you say). We get it. You realize, now, how risky derivatives products are and you won’t do it again” (note: This isn’t the first time derivatives have played a key part in tanking more than a few banks and thrifts, each swearing their derivatives portfolios were net hedged. And in walked the FSLIC (then) to say, “Surprise!! We’re here to shut you down.”)

“But just like you’re telling your borrowers who can’t make payments, we (the taxpayer) are here to foreclose on our collateral. We’re really sorry these assets aren’t worth what you think it is. We’re really sorry to put you on the street. We’re sorry about that lost Golden Parachute. But you are, now, 12 months delinquent and we’re unable to continue to fund your mistakes. So hand over the keys and we’ll have to take it from here.”

Shut ‘em down, put the notional contracts and mortgage portfolios in a ‘lock box’ to pay dividends to future taxpayers, un-available to law makers (do they actually make laws anymore?). Fill the banking void with local and community banks and set strict limits on M&A/growth activity – it shouldn’t be ‘too big to fail,’ it should be ‘too big to allow to survive.’ It really is that simple.