You can smell the panic, can’t you? The wagons are circling around [[LEH]] and they are going to be forced to raise capital, in the most egregious dilutive way. I know the banks have been shaking the banana tree for capital. I believe the number is upwards of 125 billion dollars (I do not keep track). To think that they still need capital, after all the money that was raised, is shocking and gay.
Case in point what a little leverage can do to your business: BSC, LTCM. The fact of the matter is, the credit crisis has not gone away. The toxic paper on the banks’ sheets are still toxic, due to a depressed housing market.
Just the other day, I decided to call an old client (old in number of years, not age). He had about 3 million dollars with me and was a pretty sophisticated guy. He was young, rich and lived in a 4 million dollar house.
He was in the real estate development business. He’d build great big houses and sell them for absurd profits. On the side, he was a big time real estate speculator, always looking to flip for a quick profit.
A few years ago, he took all of his money out of the market, due to his struggling real estate business. He thought it was a good idea to sell his stocks and put the money to work “in his business.”
Sadly enough, after speaking with him, I found out he lost everything. He is now in bankruptcy and his 4 million dollar house is in foreclosure.
The moral of the story: don’t ever think it can’t happen to you, because it will.
When managing money, I always plan for the worst case scenario—but hope for the best. This is why, to a large degree, I haven’t been out there, with guns blazing, trying to catch the trade of the day or week. As you know, I have been hedged with short positions, since November of 2007. In my estimation, and I could be wrong, the market will trade much lower, over the next 6 months.
If I’m correct, I will be rewarded with gold rings and large cannisters of ambrosia. Being wrong is not an option, since it never happens for an extended period of time.
See, “The Fly” is like the New York Yankees. He may lose a few games, but at the end of the day, he’s winning the World Series and punching some old guy in the face, with a jelly donut.
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no prob … they’ll just print some more
Bernanke’s comments this morning told us that the money printing machine has been turned off.
Perhaps this year it would be better if the Fly was more like the Tampa Bay Rays. Who would have thought? If I can afford the gas I may even go to a game this summer. Free parking and you are allowed to bring in food.
Ags are breaking to the upside…go figure
My ags positions include: Short Pot, Long Pot, Pot $230 calls…can anybody find a more retarded trade?
Does anybody find it hilarious that Lehman is saying for the second time “Uhh…we might need to raise capital or maybe we may not…oh btw, the amount is $4bb”
My first reaction… after news: “let’s see if I can still short more Lehman”
ruh roh … someones pulling the plug on this misguided rally
nevermind – Paulson just stuck his finger back in the dike. Sometimes he gets tired of doing that and the thing drains a bit. He’s fighting the good fight and a losing battle.
…punching some old guy in the face, with a jelly donut.
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Just make sure that dude’s name isn’t Ryan Malone….apparently his face is made of stone.
BTW: anyone else notice that google finance went to real time quotes?
Treasury has resurrected the 1 yr T-Bill. Our govt is strapped for cash.
Don’t you mean the Mets, and not the Yankees?
See, “The Fly†is like the New York Yankees. He may lose a few games, but at the end of the day, he’s winning the World Series and punching some old guy in the face, with a jelly donut.
LOL, Great Analogy, except for wrong century. What have the Yankees won in the 21st century? Right Nothing.
Btw, did I tell you Yankee Sucks…
As you know, I have been hedged with short positions, since November of 2007. (sic)
We knew this?
According to the “adopted didactic” model, I’m assuming?
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If I’m correct, I will be rewarded with gold rings and large cannisters of ambrosia.
Fancy!!
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Great post Fly, so on point. Five stars from me. A developer just like your client went under during the zoning approval process on our land parcel in southern CT, leaving us high and dry, with no closed deal, and wondering how long we’ll end up keeping this asset. Thank God I believe in asset class diversification.
Yes Jake. You knew of my short positions.
I’m pretty sure you meant The Chicago Cubs. You know, the team with the best record.
Yankees? Never heard of ’em. Without losers, where would the winners be?
FYI, for all my fellow Lehman loppers, and for you future ones, as wel:
LEH just tapped it’s 61.8% fib retracement line at $31.62, and I mean hit it to the penny, so I would wait a bit in order to “attack” again.
I’d look for at least for a little bit of a bounce, as the 61.8% fib has been traditionally a strong line (it being “The Golden Ratio” and all that).
The most beautiful thing would be a retrace back to the 50% line at $35.08 or so, but I wouldn’t bet it’ll get back there anytime soon. The next sweetest spot would be at yesterday’s “hesitation zone” of $33.70 or so.
Happy hunting.
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Yes Jake. You knew of my short positions.
In early January, I did.
Boca,
I’d feel a lot more comfy holding Southern CT land (Fairfield County, by chance?) than Florida land right now.
You should be fine.
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Jake
http://flyonwallstreet.blogspot.com/2007/11/closing-comments_08.html
Nov. 8, 2007.
Eat it.
Shoot, I have 2-3 offices(shells), and a few warehouses in Orlando, FL…
Commercial real estate there is DEAD! Can’t find buyers, and once I do, can’t find a bank that will finance it. Anybody wants to buy one…and have cash…
http://www.norbridge.com/Index.htm
Like the Fly, I decided to take the conservative approach and sold the majority even though I was getting killed on taxes, limiting the risk premium. That was in 2006 (Avg. ROI near 50%-100% yearly). Great times…
Stock update:
QTWW is now grinding oxycontin, methamphetamine and coca leaves in a “mortar and pestle” apparatus. Plans are to then take that substrate and soak it for two hours in butane for easier “smokeability.”
Fly,
You “say” there (if this is not a “rewrite”) that you’re going to go short, but you never made any short plays. In fact, as I recall, you continued to beat on Shed and myself (and maybe Bruce) as “bearshitters.”
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Have to thank you for highlighting this Jake comment, though:
MON’s trend will break when it hits $120.
As all $80 dollah stocks go to $120, right?
Light???
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See, “The Fly†is like the New York Yankees. He may lose a few games, but at the end of the day, he’s winning the World Series and punching some old guy in the face, with a jelly donut.
LOL, Great Analogy, except for wrong century. What have the Yankees won in the 21st century? Right Nothing.
Like Boston in the 20th? Think we’ll keep that streak alive like you guys did after you traded us the Babe for a cow and a handful of magic beans?
Don’t worry, only 24 more World Championships until you draw even with us. If you are lucky, the sun will not have turned into a Red Giant and consumed the Earth by then.
Treasury has resurrected the 1 yr T-Bill. Our govt is strapped for cash.
Soon to be followed by the “10 months and a lottery ticket-bill.”
ADawg, you know you gotta be innit to winnit.
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Thanks Jake. Actually it’s in rural New Haven county right next to a National Park, beautiful site, perfect for a small development of luxury homes. Too bad all the developers are either broke or can’t get a loan right now. We just have to be patient, I keep myself busy on other things.
BigMike, I feel your pain. Trump’s oceanfront luxury building, not too far from me, is the only development in Boca that I’ve seen actually has any ongoing construction activity. Otherwise it’s completely dead.
Jake, haha, you’re killing me on QTWW.
Beware, Jakes a fibber, 61.8% of the time.
Boca, howabout that Pink Hotel? Did that go condo?
That’s one of the landmarks of my youth, visiting the grandparents down that way.
The pink hotel meaning The Boca Raton Resort Hotel built by Mizner in the 20’s? That’s right down the street from me, going very strong and expanding (sorry forgot they have construction there on a convention center right now).
I forget who owns it now,at one point I think a hedge fund or private equity fund owned it.
They hosted the G7 meeting there a couple of years ago, FBI all over the place providing security. I think it’s a favorite vacation place for Bush and Clinton too.
Do you mean the Boca Raton Resort? Very fancy although I don’t recall it being pink. The Don CeSar Beach Resort in St. Pete is pink I believe.
Mizner also laid out Coral Gables in the ’20s.
Yeah, TC, the original old Spanish style building is Florida (aka pale pepto-bismol) pink.
if they rotate out of energy into tech/retail financials things are going to be very hard on the bears. Unless you short energy which nobody has the balls to do.
Fuck FL. Soon to get multiple hurricane hammers. Best you all move to higher ground.
Didn’t he hedge by shorting POT?
Boca,
I’m pretty sure that Morgan Stanley Realty Fund owned both that and Kiawah at one point in the early to mid nineties, both long since sold. All those guys went off and joined Julian Robertson at Tiger Fund to make an additional pile of money.
They had their own mini-fund called something stupid, like “Leopard” or something like that.
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