I know they do great work and have an eye for fraud. But what is your opinion of that firm, the way they destroy shareholder value with a singular blog post? To be fair, I suppose it’s no different from an analyst research note at Goldman or Morgan. However, not all short only research houses are created equally.
Due to the success of Muddy Waters, many copy cats have sprung up, especially on vagrant, low brow, website: Seeking Alpha. The perverts at SA don’t have a clue about stocks. I really believe many of them are rookie investors, trying to make a name for themselves by besmirching publicly traded corporations.
To be a successful contrarian is to be a genius. When markets are going lower, if you are able to muddle through it and make money on the long side: you’re a genius.
The same can be said about successful short sellers in run away bull markets. Those guys are insanely smart.
But the question I want answered is this: who is getting Muddy Waters’ research before it is published? Is it sold to selected hedge funds? Judging by the sudden drop in NQ today, I’d guess that answer to be NO. If the report was leaked in advance, the stock would’ve careened lower before the news.
Either way, this adds a very unwelcomed element to trading. It’s the equivalent to skipping through a minefield in a banana suit, while gorillas try to peel your skin off.
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Best just to wear the ol’ banana hammock…
nice bat and pumpkin… now we know why the site was down…
Fly, have you ever been to China yourself?
never
Even in the case of SA, their premium members get the “research” a day before it is published. Everything is for sale in this country. I am positive NW rersearch is leaked.
Finding accounting fraud amongst the Chinese burritos may be different from the S&P 500.
lol
http://seekingalpha.com/article/1762832-nq-mobile-nq-live-is-a-game-changer?source=feed
http://i43.tinypic.com/f1a0yw.gif
they “destroy” the value of something because they have credit for being right about something , so the hft market follow . hfts’ are mainly short .
“Who is getting Muddy Waters’ research before it is published? Is it sold to selected hedge funds? ” sure someone is acessing something ( for a price ), but it’s not the big GS&co funds . Or just they get paid for call out a name on a research for some underground -late and far to unwind- reasons
Muddy Waters turned some people’s day into shitty waters.
ahah it’s usual . but chinese burritos deserve this many times.
I have a healthy amount of fear as well as respect for what they do. As an observer of the market it’s brilliant and entertaining. It is pretty interesting from a “Nicholas Taleb” perspective that they can single handedly create their own small isolated black swans at will. Fortunately, I don’t think they will grow the influence to move more than a stock or two at a time.
As one who is managing his money with certain assumptions not prepared for an event that so greatly surpasses the standard deviation (NQ was event about 10 times the ATR), it is scary.
Goes to show you the dangers of global liquidity still being down nearly 50% from 2007 highs. What happens if the event is not some research report isolated to one particular stock, but instead tightening credit? No reason to think that happens any time soon… but if it happens it could get real bearish, real fast.
you forgot to put QBEN and fed tricks nto the math . a market real bearish real fast is not a possibility . in this moment at least .
Don’t misunderstand…
Liquidity is never an issue “until it is” (see 2008). I agree that it is very “long odds” to expect an extended decline at this stage in the game. My bias is still upwards for the foreseeable future… yet the big secular bull breakout still remains unconfirmed.
Still, I don’t think there is any reason to suspect that something like credit and liquidity will tighten too sharply anytime soon…
However, that does not mean that one cannot have a healthy respect for the slightly increased chance of an extreme move. The infamous “fat tail” which is most likely to come once everyone has forgotten about it… i.e not yet.
I think the market spent most of 2009-2012 worrying about this kind of crap and now they are starting to become just a hair complacent even though the retailer investor still hasn’t truly started to arrive to the party.
I think most likely, we continue on as if there isn’t substantial risk and as if credit won’t tighten…. My view remains that I think we probably get some kind of a major breakout and stock indices more than double.
BUT, at some point over say the next couple years we may continue to become at increased risk for a 1987 or 2008 repeat as everyone starts to become increasingly complacent about those risks.
Markets right now are looking for an excuse to rally, and they will regardless of what happens on the way up. But when the tide turns, all of these subtle things will become a major issue.… again I don’t anticipate the tide turning, but it’s still important to be cognizant of the risks.
the market spent most of 2009-2012 rallying
qe is the tide that keeps the market going