Archive for September, 2008

  • Short the SEC
    , September 18th, 2008 at 10:12 pm

    This is simply outrageous. The WSJ article isn’t clear on what will happen. It appears that the SEC is merely considering a ban of shorting, but it’s far from a done deal.
    This is so ridiculous, so delusional, that I can’t believe it has a prayer of really happening. Banning short-selling? Are they kidding me? The backlash would be overwhelming. At least, I hope it would be. The SEC would be denounced by every major financial organization on the planet.
    Short-selling is the free speech of Wall Street.
    Half the computer models on Wall Street would explode! Consider this:

    About a third of U.S. equities trading is already being done using algorithmic trading, with that figure expected to soar to more than 50 percent by 2010, said Brad Bailey, a senior analyst at the Boston-based researcher Aite Group. “I’m even afraid I’m underestimating that number,” Bailey said.

  • Oopsie!
    , September 18th, 2008 at 4:36 pm

    From the NY Times:

    Editors’ Note: September 18, 2008
    An earlier version of this article cited two sources who were said to have been briefed on a conversation in which John J. Mack, chief executive of Morgan Stanley, had told Vikram S. Pandit, Citigroup’s chief executive, that “we need a merger partner or we’re not going to make it.” On Thursday, Morgan Stanley vigorously denied that Mr. Mack had made the comment, as did Citigroup, which had declined to comment on Wednesday.
    The Times’s two sources have since clarified their comments, saying that because they were not present during the discussions, they could not confirm that Mr. Mack had in fact made the statement. The Times should have asked Morgan Stanley for comment and should not have used the quotation without doing more to verify the sources’ version of events.

    (Via Ribstein via CalculatedRisk)

  • Morgan Stanley
    , September 18th, 2008 at 2:59 pm

    Shares of Morgan are now going for about four times earnings. I think the shorts are trying to break this bank and it won’t work.
    I bought some shares for my personal account just before the close. I don’t expect to hold this position very long.

  • In the Last Six Weeks
    , September 18th, 2008 at 2:25 pm

    Jos. A Bank Clothiers (JOSB) is up 62%. It’s now the big gainer YTD on my Buy List.

  • Seven Possible Shorts
    , September 18th, 2008 at 2:00 pm

    Short sellers are a pretty happy bunch this week. In fact, the Brits just banned short selling for the next three months. Every likes to blame shorts for things that go wrong, but shorting is really the free speech of Wall Street.
    I don’t do a lot of short selling, but here’s a list of potential shorts from one of my favorite bloggers, Timmy Sykes.
    American Dairy (ADY)
    EPIQ Systems (EPIQ)
    Tanzanian Royalty Exploration (TRE)
    Converted Organics (COIN) and the warrants (COINW)
    Valence Technology (VLNC)
    A-Power Energy Generation Systems (APWR)
    Just glancing over these stocks, they appear to be truly awful. I’m not exactly holding my breath for Converted Organics to make that big jump to the NYSE. Tim’s strategy is basically to look at crappy penny stocks and get ready to pounce when the charts look good, meaning bad.
    Short sellers have one big advantage over the rest of us: When things go wrong, they go really, REALLY wrong. There are far more crappy stocks that plunge 50% in a single day than there are good stocks that double in one day. To be a good short, you need to be very patience. Also, not having a soul helps.
    I should try more shorting. I look through gobs of balance sheets everyday and I’m amazed by how much garbage is out there.
    You can sign up to Tim’s Alert service here.

  • The Vix Soars
    , September 18th, 2008 at 12:30 pm

    This is getting out of a hand.
    vix091808.png

  • Kraft Will Replace AIG in the Dow
    , September 18th, 2008 at 10:24 am

    Sorry, Google. The winner is Kraft.

    Kraft Foods Inc. will replace American International Group Inc. in the Dow Jones Industrial Average effective Monday, a further sign of the woes afflicting the insurance giant.
    The change comes as the federal government late Tuesday agreed to take over the troubled insurance giant in an $85 billion bailout.
    The composition of the Dow industrials was last changed in February, when Bank of America Corp. and Chevron Corp. replaced former Kraft parent Altria Group Inc. and Honeywell International Inc.
    Robert Thomson, managing editor of The Wall Street Journal and overseer of the Dow’s makeup, said not adding a financial company to replace AIG is prudent at this time “because of the extremely unsettled conditions.” He added Kraft was added because the index has no food companies.

    Kraft was effectively a member of the Dow until last year when it was spun off from Altria.

  • The Panic of 1873 Begins 135 Years Ago Today
    , September 18th, 2008 at 9:05 am

    panic1873.jpg
    On Thursday, September 18, 1873, the Panic of 1873 reached crisis proportions at 11:00am on Wall Street, when H.C. Fahnstock, the New York partner of Jay Cooke (one of the leading gold market participants), announced that Cooke’s office was closed. Cooke, in his Philadelphia office, admitted it was true, and the most prominent banker in the country was suddenly bankrupt.
    Robert Sobel, writing like Stephen King in Panic on Wall Street, said the “coal-black steed named Panic” quickly “thundered riderless down Wall Street,” where “a monstrous yell went up and seemed to literally shake the building in which all these mad brokers were for the moment confined.” Along with Jay Cooke, 37 other banks and two brokerage houses closed their doors on this date alone. In the ensuing days, the losses increased and the NYSE was forced to close down for over a week. With the situation growing dire, the secretary of the Treasury decided to infuse the economy with $26 million in paper money and the market eventually re-opened.
    Jay Cooke failed over trying to construct a second Transcontinental Railroad, but demand could not support a second line. He was merely a symbol of gross over-speculation in land and securities, followed by the issuance of too much paper money, resulting in higher inflation. (Sound familiar?) The Panic of 1873 started with a bang, as over 5000 businesses failed in the last quarter of 1873, but the Panic lingered long, as another 5,000 failed over the next five years. Panics hit America every 17 years, on average, for about a century, from 1819 to 1920 (in 1819, 1837, 1857, 1873, 1894, 1907 and 1920). The word “panic” aroused such a negative reaction (in 1894 and 1907) that Herbert Hoover invented a less threatening word for the 1929 event—connoting a small pothole in the road. Hoover called the 1929 panic “merely a depression.”
    (Via: Gary Alexander)

  • Weird
    , September 17th, 2008 at 4:25 pm

    On Monday, the S&P 500 lost -4.7136%.
    Today, the S&P 500 lost -4.7141%.

  • The Three-Month T-Bill
    , September 17th, 2008 at 2:58 pm

    At one point today, the yield on the three-month Treasury bill (^IRX) hit 0.01%!!
    One Freakin Bip!!
    This means that the risk-free rate is now in direct competition with the underside of your mattress.
    one%20freakin%20bip.png