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Hello from your favorite Pessimistic Investor

Anything related to investing, including crypto

randallg99

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probably one of the most prudent moves.... and apparently selfless of BAC... but reality is that if BAC didn't step in, their purchasing power would have been severely damaged today.

it's gonna be ugly. I have some real low stink bids in there, so low that if they go off, I might be a little concerned about the health of the market!

think loooooooooong term, I keep telling myself.
 
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AroundTheWorld

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Can anyone tell me why the feds baled out Bear but not Lehman?

Lehman just too ugly?
Feds decided that baling out won't work?
Something else entirely?
 

Edge

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Can anyone tell me why the feds baled out Bear but not Lehman?

Lehman just too ugly?
Feds decided that baling out won't work?
Something else entirely?

I don't think anyone can know for certain, but I think there had to be a line drawn in the sand somewhere. I also think the FED risked some scrutiny as to what their mandate actuall is, by law, if they stepped in again.

Check out the attached story, it's pretty long, here's an excerpt indicating the line in the sand and where the FED set the boundry:

The Truth is that Merrill, Morgan Stanley, and even Goldman are all in the same boat. The Fed and Treasury actions have given them roughly six months to "cut that crap out", but they didn't. They didn't sell off their portfolios of junk, but what they did do was take the liquidity they were given and speculate in the commodity markets, earning a nice profit and allowing them to report better-then-disaster "earnings" while hiding the trash in "Level 3" buckets on their balance sheets.

Tilt: Game Over - The Market Ticker
 

Edge

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it's gonna be ugly. I have some real low stink bids in there, so low that if they go off, I might be a little concerned about the health of the market!

think loooooooooong term, I keep telling myself.

Randallg, i'm not picking on you but it seems like you are doing all this great research (I always read and appreciate you research) to put the odds in your favor, but I don't understand your execution.

You have been SOOO right about so much going on in the market. Why are you still looking for stocks to hold long for the long term. Wouldn't it be easier to sell short crappy stocks in a crappy market this past year than try to find diamond-in-the-rough stocks to buy long to fight the trend? It's like you've been giving everyone the answers to the exam, and then opting out for a tougher test.

IMO, you've known the market was weak, you've been sharing your pessimism, you should be laughing all the way to the bank today instead of playing defense and looking for counter trend bargains.
 
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JesseO

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<-----Captain Obvious : Anyone see how far the DOW tanked today? I hear lots of world markets are draining down as well. How far do you guys think we're gonna drop in terms of the economy and stock market?
 

randallg99

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Can anyone tell me why the feds baled out Bear but not Lehman?

Lehman just too ugly?
Feds decided that baling out won't work?
Something else entirely?

a million theories out there.... firstly, Fed believes tax payers are already on the hook for too much now that FRE and FNM zapped a lot of gov't cash.

also, remote possiblity of more failures in the banking sector is going to require a lot more effort than can be afforded on a wall street brokerage house.

Lehman Bro also had a portfolio that was probably not worth saving... too many bad obligations and defaults would have been to lengthy and tiresome to work out... or in your words, "too ugly"

main problem is that the US gov't is the only entity willing to pony up... why should the tax payers be on the hook that even the "shrewdest" wall streeters don't want a part of?

FDIC will need all the cash they can get so maybe saving the banks is main priority
 

randallg99

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Randallg, i'm not picking on you but it seems like you are doing all this great research (I always read and appreciate you research) to put the odds in your favor, but I don't understand your execution.

You have been SOOO right about so much going on in the market. Why are you still looking for stocks to hold long for the long term. Wouldn't it be easier to sell short crappy stocks in a crappy market this past year than try to find diamond-in-the-rough stocks to buy long to fight the trend? It's like you've been giving everyone the answers to the exam, and then opting out for a tougher test.

IMO, you've known the market was weak, you've been sharing your pessimism, you should be laughing all the way to the bank today instead of playing defense and looking for counter trend bargains.


thanks for the compliments. being "right" hasn't made me a lot of money, but it certainly saved my a$$.

yes, I should be laughing until I pee in my pants, but I am admittedly a monday morning quarterback (now I can use football puns while the games on) when it comes to timing the markets. I have a very difficult time stomaching risk - especially when I manage other peoples' portfolios. picking up on trends for the long term seems to have been my forte

I have kept tights stops in and have made some good money on trades while getting smacked on others ie SKF. There were times I rode SKF from 100 to 130.... meanwhile, I wouldn't touch it the other day when it was below 100.... (but of course now it's up 35% in 3 days!)

that said, I did offset much of the losses with covered calls and buying them back.... a "rolling process" if you will.... and I have had significant gains this year just up until last week despite being heavy in cash

that said, I could have made much more money in this market, but there was a terrible disconnect between the actuality of events vs. the equities markets. The negative news that is constantly pounding the airwaves has not proportionately affected the equities

I still believe, despite all of what's occured in the past several months that the equities markets still has a way to go before reaching bottom, so maybe its time to pull those triggers... hey, I still think we're in the 4th-5th inning...

but before evaluating the financial sector and scrutinizing it, my main focus was PMs. I had bet with miners and other metals that inflation was on its way up and gonna take hold thus gold would be on its march to $2000. INstead of seeing rate hikes, we're on the verge of having rate cuts ala japan style....

(great football game keeps my mind off the markets, lol... go birds!)

anyway, it's hard to pinpoint where the markets are going to stabilize.... everything from oil, metals, commodities, equities are all getting a beat down....

also, there's even a report tonight that the Chinese economy is getting "gov't intervention for stimulus" ...

so being majority in cash makes it easier to watch where the dust settles. Riding up from these levels (and lower) will make us a lot of money.

that said - what are good ideas for the ride down? treasuries are inflated out the ying yang, their yields are so loooow.

Edge and Kidgas have been stressing ETFs... and puts.... just wonder if the premiums are all built in now

wow - my birds are playing great....
 
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randallg99

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oh, I almost bought MER at 20+/- this morning to play the buyout... glad I didn't.... the fact that its still at 17 proves that this stuff is still toxic.

it's probably a good trade to pick up SKF again even after the 35% jump in 3 days
 

andviv

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so, randall, you are playing the game not to lose, instead of playing it to win, and win big?

funny, I thought of you today when a coworker who invests in the market was all happy telling me how much money he was making these days thanks to being shorting the financial institutions in the past few weeks... so I remembered what you have been saying and thought this is how randall is also making his money these days.

I wish I were half smart than you, edge or kidgas, to understand how the market behaves.
 

randallg99

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so, randall, you are playing the game not to lose, instead of playing it to win, and win big?

funny, I thought of you today when a coworker who invests in the market was all happy telling me how much money he was making these days thanks to being shorting the financial institutions in the past few weeks... so I remembered what you have been saying and thought this is how randall is also making his money these days.

I wish I were half smart than you, edge or kidgas, to understand how the market behaves.

you give me too much credit...

my investment strategy dramatically changed when I made significant amounts of money a few years back and then I began managing family members funds.

but to better answer your question, my capital preservation mode is a very defensive strategy and my offense was gold/silver markets.

my losses are quite minimal compared to many of my peers....

Is this game insane or what????

Woohoo!

EAGLES!!!!!!!

thank goodness Romo plays for dallas! lol


some bad reports about AIG - they were just downgraded from A+ to A- (by the same rating companies that didn't know how to rate toxic subprime) .... other rumors just began to fly across bloomberg/CNBC .... looks like they need the 75bil by tomorrow night or they go bk, too.

the after effects of an AIG collapse will have much more severe consequences on the markets than Lehman... about 500 bil worse....
 

kidgas

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If you are thinking about playing SKF but are concerned about the recent run-up, consider this:

Figure out the entire position that you would like and split into thirds. Buy SKF (the first third) and buy the Jan 130 puts. Wait 4 weeks or so. Then reassess. If SKF has gone way up, then the puts will have lost value but not as much as the gain in SKF. You still have booked some profit. Lock it in at that time by buying some more shares and puts that are close to the current price.

If SKF is unchanged, then you might want to wait a little longer for more clarity unless the above has happened sooner than 4 weeks (you might have wanted to have moved at that time).

If SKF is way down, then you will have lost money on SKF but the puts will have offset some of that. If you still like the trade, pick up the next third with some puts. Leave the 130 puts alone. You could sell some calls at a strike midway between the two purchase prices to help mitigate your overall cost and lower the basis. Just a quick thought.
 

Russ H

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Randallg99 said:
. . . the after effects of an AIG collapse will have much more severe consequences on the markets than Lehman... about 500 bil worse....
The Fed just bailed out AIG:

Fed to provide $85 billion bridge loan to AIG: source - Yahoo! News

$85 BILLION loan and an 80% stake.

Wow.

Y'know what is really ironic here? We're getting Federalized businesses (Fannie, Freddie, now AIG)-- and I know this was NEVER the intent of this administration.

Please no political comments-- just an observation on my part.

-Russ H.
 

AroundTheWorld

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Well, the question that sticks in my mind is...

What does this mean for the long term to the value of the dollar? Seems to me this would just accelerate a long term down trend.

And another observation.... for two nights in a row, I have heard people on NPR news mentioning either 1929 or the great depression.... one comparing and one talking about how it is different... but it must be on their minds.
 

randallg99

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The Fed just bailed out AIG:

Fed to provide $85 billion bridge loan to AIG: source - Yahoo! News

$85 BILLION loan and an 80% stake.

Wow.

Y'know what is really ironic here? We're getting Federalized businesses (Fannie, Freddie, now AIG)-- and I know this was NEVER the intent of this administration.

Please no political comments-- just an observation on my part.

-Russ H.


Welcome to the United States of the Socialist Republic.

it's getting so ridiculous.... where do I sign up for all the losses I took in my businesses, portfolios, and real estate?
 
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andviv

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About the dollar... I've been reading news and comments from other countries and many seem to think that, given the slowing of the global economy, many investors look for shelter in the U.S. dollar as the U.S. economy has been for a long time the more resilient and the first to come back up. Europe and some Asian countries are also getting in trouble so the fast money is moving back to the green in expectation of a faster recovery than any other currency.
Funny, that is something I haven't read anywhere herein the states.

Another observation... the government may be bailing the first big failing entity per industry, but the rest will not get help as their failures will happen months after the first one... so, if you are going to fail and need help, you better be the first one to do it in your industry.
 

randallg99

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Another observation... the government may be bailing the first big failing entity per industry, but the rest will not get help as their failures will happen months after the first one... so, if you are going to fail and need help, you better be the first one to do it in your industry.

interesting theory....

which airline gets the bailout?
auto company?
utility?
tech?

I would venture the auto industry is going to be the only one of the above that will have gov't intervention to avoid serious economic implications.... too much "pride" at stake to let them drown....

it's gonna be a trillion dollar bailout by the time it all ends.

all said and done, IMO unemployment data continues to be #1 future indicator of the economy.... very important to keep eye on these numbers to determine if the gov't can pay for these bailouts .... less payroll = less taxes. Corporate tax losses = less taxes... private and public financial systems will be tested
 

andviv

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which airline gets the bailout?
Delta and/or AA (probably whichever requests it first, accordingly to my crazy theory)
auto company?
Detroit's three (I am expecting a huge loan coming soon)
will they need a bail out? why? hmmm dunno about this one
None.
 
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randallg99

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and today's gold action is why I was following this financial mess from the get - go... bought with both hands today RGLD early this morning...

about time the gold market woke up. I suspect a 30-40% jump in gold... it's absurdly oversold. I could be wrong... but if I'm right, well I'll have bragging rights and a bigger trading account.
 

andviv

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Can anyone tell me why the feds baled out Bear but not Lehman?

In a somewhat related topic....

Velshi: AIG bailout might work out well for taxpayers - CNN.com
Q: Why would the government bail out a company like AIG but let Lehman Brothers file for Chapter 11 bankruptcy protection?

A: Speaking frankly, the world can do without another investment firm. If an investment bank fails, any remaining investment bank can hire more people and take their jobs. AIG is not an investment bank. As a principal insurer, it insures consumers, it insures businesses and it insures business ventures, so it's not just that your corner store needs insurance.

AIG insures things like rigs and Hollywood movies and those subprime mortgage-backed securities. The utter failure of businessthat would ensue from a failure of AIG would be catastrophic and would actually leave the government having to pick up a few things along the way.

The best analogy I've been able to come up with is to use an automaker. When you think about putting an automaker out of business, you put tire makers out of business, you put seat makers out of business, you put all sorts of things out of business. It's the same thing with AIG. There are tentacles. They're just so connected to so many other parts of the economy that the government deemed it more dangerous and potentially more expensive to the economy to have it fail than to give them this loan.

so this also answers another question... probably automakers will be bail out as well, if/when needed. Time to short the Detroit big three?
 
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randallg99

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it just dawned on me that IndyMac wasn't allowed to fail.... they were the first.... does that mean Wachovia, Wamu, Wells and dozens of regionals are going down the tubes?
 
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Russ H

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Randallg99 said:
does that mean Wachovia, Wamu, Wells and dozens of regionals are going down the tubes?

Too early to say . . .

But it's more likely that the Feds will save one BIG entity, and lots of small ones, as opposed to saving just 2 BIG entities*.

-Russ H.

*Disclaimer: I don't work for the Fed, nor do I set monetary policy, so this is just a guess. :)
 

kidgas

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I love the following quote from Jon Nadler's commentary at Kitco.com:

"Let's not use terms like 'overbought' or 'oversold' as they would have little meaning to different values now seen in various assets. Take the charts, crumple them up. The psychology of investors is the only item of significance as regards the next turn in these markets."

Here is the link to his full commentary:

Kitco - Commentaries - Jon Nadler
 

randallg99

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>>>Your 10-15 percent core gold positions should not have to be mobilized unless you have sustained deep losses in equities or other sectors. If you do not yet possess the insurance policy that gold can be, it is never too late.<<<

indeed. for those joining the heavy metals party, they're really just in time.
 
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SteveO

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I would just like to acknowledge your incredible foresight on this issue. Thanks and rep +.
 

Russ H

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Yes, Randallg99, I am thankful as well.

While I didn't agree w/you, I am thankful that you did not take my earlier comments/critique deter you.

Rep speed, for being an upstanding dude, and calling it like you saw it (which it turns out, was right on). :smx9:

-Russ H
 

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