All this chatter espousing the “long term” viability of bank stocks is absurd. If you were “wise enough” to invest in [[LEH]], [[MER]], [[MS]] and [[WM]] ten years ago, and held like a good little investor, how’d that work for you?
This notion, spearheaded by old fuckers, like Vince Farrell, is starting to piss me off. As a matter of fact, I threw my trader/servant at the LCD screen today.
As you know, I’m not a rapid fire trader. I like to build positions and hold them for a few months, or years, depending on the share performance. I will tell you this, anyone who is telling you to just “buy and hold” is a fucking moron and should have his/her drivers license revoked, for being mentally impaired.
In other news, Icahn loses again, via [[YHOO]]. Ever since Cramer jumped on the Icahn bandwagon, misfortune has hit the NYC billionaire like a dose of reality at [[TMA]].
Looking at the shares of [[LEH]], I do not think the firm will be independent for much longer. Expect to see some sort of consortium bailout soon.
For the day, I booked a modest loss of 1.2%, partly hedged by gains in short [[AAPL]] and [[FTK]].
By the way, the recent price action in FTK has been sweet.
Lastly, after reading over 100 10-q’s from financial companies, a few common themes are abundant.
1. The [[V]] ipo reliquified many banks. As a matter of fact, I’d guess that 75% of the banks I researched realized a gain from the Visa ipo. If you recall, the V ipo was priced during the peak of the credit crisis. Somewhat suspicious, if you ask me. By the way, gains from V, to the benefit of bullshit banks, were in the billions.
2. They’re all being very conservative with their potential losses. I believe most of these CFO’s are understating the true potential loss.
As a result, I am almost ready to start selling a new set of stocks.
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good old reading statements.
Shit. LCD screens? What kind of bullshit is that? My monitors are all plasma.
I’m talking TV’s fuckface. TV’s.
I still have a CRT in the basement if anyone wants it.
Bottom is in, feel free to drink Blue Monsters and Buy Stocks.
Shit. You’re TVs are LCDs, too? Fuck dude, LCD monitors and TVs. I’m sorry.
May I suggest next time just throwing a $30 pair of your Kolhs dress shoes?
You moost have joozy PicoP for image eventually.
Not sure about LCDs and Plasmas but I can pick up UHF channels just fine if I extend the rabbit ears on my Philco television.
when’s your 5th reverse horseman being announced?
HA!
http://www.zshare.net/download/135263651fad2e8d/
I urge you fuckers to read these quotes.
cubs – can you post that DRYS smaller or link it?
also, i prefer good old tube tvs. i havent found a better pic than my sony wega. it’s huge, sure, but so is my office. so fuck off.
http://img505.imageshack.us/my.php?image=dryshssp3.jpg
Nice chart Cubs.
From an email:
Today’s urban legend was the proposition that Bernanke is about to morph into Paul Volcker, the inflation fighter.
Let us look at that proposition in the cold view of fact. Primarily Bernanke would need the support of the present Administration as Volcker enjoyed during the early 80s.
Having that support, which is most unlikely, Bernanke would then have to:
Slam monetary aggregates down, primarily the hidden M3, hard and fast. There are questions if in fact that can even be done mechanically.
Close down the Begging Bowl loan window at the Fed; something that is currently called auctions. Demand repayment of the so-called but perma-rolled over 28 days loans by not rolling them over at the next auction.
Be willing to allow financial bankruptcies to go bankrupt.
Not be swayed by pleas for help from the good ole boys at derivative-rich international investment banks.
That is ludicrous under present circumstances and therefore will not happen.
The Urban Legend then goes on to point out the following:
The markets are discounting a 1% interest rate increase by year end. Yes, that is so, but always keep in mind that rates where currency levels are concerned is a game of net competitive rates, not the static rate levels of either the dollar or euro. That is to say the differential rates between the rate of return on US dollars and the rate of return on euros is a criterion to valuation. With the present ill will between Trichet and Bernanke you can be sure that the ECB would call and raise on any move by Bernanke. The net differential interest rate would then remain the same or favor the euro. The dollar at best would remain the same, but more likely decline.
The message transmitted to businesses by a fight for the net differential rate of return between the dollar and the euro would seriously discourage economic activity. Tax revenues for cities, states and the Federal government would all but disappear, causing every dollar sensitive deficit to explode.
Such a chain of events would be the kiss of death for the dollar. As goes the dollar so goes gold, but in the inverse.
our entire economy is just in one big “stall”… let’s just try to stave off the meltdowns for as long as we can and maybe things will pick up again. like when you have the flu, sometimes you just need to puke everything up to feel better. somehow with the kudlows and farrells of the world this isn’t viewed as a healthy thing. they are wrong, we need a good purge.
BanD, my “tauts eggsackly.”
__
Taleb has got some ego, but you gotta like it… from an interview I cadged over at Dooc’s Crickets blog:
On Bernake and the credit crisis:
“It was my greatest vindication. But to me that wasn’t a black swan; it was a white swan. I knew it would happen and I said so. It was a black swan to Ben Bernanke [the chairman of the Federal Reserve]. I wouldn’t use him to drive my car. These guys are dangerous. They’re not qualified in their own field.â€
“I wouldn’t use him to drive my car!” LOFL!!
_
Good post Fly, always appreciated.
What, you do this for a living or something?
More happy talk from the Dooc’s Taleb article:
…And what (Taleb) knows does not sound good. The sub-prime crisis is not over and could get worse. Even if the US economy survives this one, it will remain a mountain of risk and delusion. “America is the greatest financial risk you can think of.â€
Its primary problem is that both banks and government are staffed by academic economists running their deluded models. Britain and Europe have better prospects because our economists tend to be more pragmatic, adapting to conditions rather than following models. But still we are dependent on American folly.
The central point is that we have created a world we don’t understand. There’s a place he calls Mediocristan. This was where early humans lived. Most events happened within a narrow range of probabilities – within the bell-curve distribution still taught to statistics students. But we don’t live there any more. We live in Extremistan, where black swans proliferate, winners tend to take all and the rest get nothing – there’s Bill Gates, Steve Jobs and a lot of software writers living in a garage, there’s Domingo and a thousand opera singers working in Starbucks. Our systems are complex but over-efficient. They have no redundancy, so a black swan strikes everybody at once. The banking system is the worst of all.
“Complex systems don’t allow for slack and everybody protects that system. The banking system doesn’t have that slack. In a normal ecology, banks go bankrupt every day. But in a complex system there is a tendency to cluster around powerful units. Every bank becomes the same bank so they can all go bust together.â€
He points out, chillingly, that banks make money from two sources. They take interest on our current accounts and charge us for services. This is easy, safe money. But they also take risks, big risks, with the whole panoply of loans, mortgages, derivatives and any other weird scam they can dream up. “Banks have never made a penny out of this, not a penny. They do well for a while and then lose it all in a big crash.â€
__
Anybody who really thinks the credit crisis was an example of a “black swan” is not qualified to manage an empty piggy bank. That swan was whiter than Obama’s mamma in wintertime.
i figure we’re going to have to eat our inflation pie and like it.
if they sold inflation at dunkin donuts and gave me a free slap in the face with it, then i’m a buyer each morning at 7:15.
Sorry, more Taleb… this shit is just too good not to share:
“Governments and policy makers don’t understand the world in which we live, so if somebody is going to destroy the world, it is the Bank of England saving Northern Rock. The biggest danger to human society comes from civil servants in an environment like this. In their attempt to control the ecology, they don’t understand that the link between action and consequences can be more vicious. Civil servants say they need to make forecasts, but it’s totally irresponsible to make people rely on you without telling them you’re incompetent.â€
Bear Stearns – the US Northern Rock – was another vindication for Taleb. He’s always said that whatever deal you do, you always end up dealing with J P Morgan. It was JPM that picked up Bear at a bargain-basement price. Banks should be more like New York restaurants. They come and go but the restaurant business as a whole survives and thrives and the food gets better. Banks fail but bankers still get millions in bonuses for applying their useless models. Restaurants tinker, they work by trial and error and watch real results in the real world.
_
If you live in Iowa and are affected by the flooding there is no need to panic. I have called Sean Penn and he is on his way to save you. Here is an action pic of him on his way: http://www.hyscience.com/archives/sean%2520penn.jpeg
Obviously someone in Massachusetts reads this blog
THE University of Massachusetts today rescinded an honorary law degree awarded 22 years ago to Zimbabwean President Robert Mugabe, calling his politics “egregious” and his leadership an “assault on human rights”.
Also from Taleb interview:
And you and me? Well, the good investment strategy is to put 90% of your money in the safest possible government securities and the remaining 10% in a large number of high-risk ventures. This insulates you from bad black swans and exposes you to the possibility of good ones. Your smallest investment could go “convex†– explode – and make you rich. High-tech companies are the best. The downside risk is low if you get in at the start and the upside very high. Banks are the worst – all the risk is downside. Don’t be tempted to play the stock market – “If people knew the risks they’d never invest.â€
Sounds like a MaVIS endorsement to me.
I’m “all in” tomorrow.
___
Jake, all in in what… all in on the short side?
all in on the banks? or MVIS?
Fuck you. You’re dead.
Before these devastating Corn Belt floods, the USDA estimated we’d have 23 days worth of corn inventory (a record low level of inventory) between the current 2008 harvest and the 2009 harvest.
After that record low inventory estimate was published, God decided to fuck you. He felt it necessary to put 10 million acres of the most fertile farmland on the planet underwater.
Corn is going to at least $12. Soybeans to mid $20s. Corn has never traded for $7 until this week, so I never thought in my wildest dreams that I’d believe buying corn at $7 was the easiest money you could ever make. But it is.
The Great USA food panic of 2008 is about to begin.
And all you city slickers who think you’re so smart trading stock certificates to each other are going to feel the pain.
Fuck you. You’re dead.
Don’t panic.
Eat fungus.
Otts — do they have enough shit lying around to grow all that corn replacing fungi?
_
They have flat-screen TVs with cable news on 24-hrs a day in the growing rooms – an endless supply of b.s.
Uglier shoes.
They have flat-screen TVs with cable news on 24-hrs a day in the growing rooms – an endless supply of b.s.
For the ‘shrooms?
Sorry man, but I went “cold turkey” on the psychedlics after college.
_
Fly, u da man
So you’re saying the banks are again hiding losses, this time with the V gains? Someone said the European & Asian banks are even more “conservative” wrt declaring their losses.
I said it months ago, Mother Market is bigger than the Fed.
Jim Rogers said the Fed had $800 billion to backstop everything. They’ve burned $400 billion so far. If a few more major banks go down, they can only watch. Dumb mf’s.
Shinedown: http://www.youtube.com/watch?v=_gWYnxvimU8
The Taleb way is to invest 10% into a large no. of small high tech startups? Venture capital? You need to be rich to start the Taleb way. The banking system ain’t restaurants – that is the way it was in the late 1920s before they started dropping like, well, flies. Northern Rock was not “saved”. The bank was salvaged because the confidence of the banking system requires it and there was a basic bank operation that could be continued.
Welcome to another Bear Market Rally.
Nothing like them.
Q’s broke 200 day. Watching this closely.
i would like to sincerely thank all you idiots for giving me the chance to get shorter, particularly the $COMPQ buyers.
c’mon, you can get it to 2550 today, lets see what you got.
Null, thanks for buying my QLD, SSO, and MVV.
Kidding of course. But today’s rally has been right up the alley of the rSI2 playbook.
FITB taking the homo hammer in unprecedented* fashion.
__________
(* Uh, I mean, except for KEY yesterday…)
_
Who’s your favorite dead cat?
Felix?
Tom?
Sylvester?
Brian Setzer?
Lute Olsen?
Mine is currently ANF. Oh thanks you thanks you, mistah Mahkets for tha free moneys!
__
peanut butter jelly time!
FTK has made me 1% in my account, I got in at 17.64.
LEH short also banked me about 1%.
Nice work The Fly.
wood-
i knew you were kidding.
agreed on the RSI(2). i have been following your posts for the last year, and i incorporated the RSI(2) in my analysis a couple months ago. its very useful.
i aint trippin – 18 months from now we will be flirting with DOW 10k.
Tell Timmay to “pinch his nipple.” Seriously… go on to chat, it’s easy.
-DT
Speaking of LEH, for any of you that missed the most recent blood bath, she just tapped her downtrend line about three times (in the $25.25 area) on the fifteen minunte chart this morning and is looking (stochastically, at least) to turn south again.
Bon voyage, fuckers.
_______
How fucked up is it when the market and oil trade in tandem.
Regional banks getting killed. STI,WB,WFC,etc. and the KRE (regional bank ETF) is down 3.50%. Make sure you don’t have more than the FDIC max. at these banks-just in case.
TC, why don’t you call Cramer and ask him if your money is safe in those banks…
Nice Jake, time to take this thing down.
lol cubsrock, nice idea.
CubsRock- I just called Cramer but he can’t come to the phone. He is busy feeding the cows and goats at his farm.
WAKE UP SMALL FLY – TELL US TALES OF DOW 9,000
YOU MAY WANT TO SWITCH TO steak au poivre
Seriously Fly, how many beers can you drink?
Shh. Don’t tell my mom but I just made 4k overnight scalping BOOM.
Boomer- Do you ever dream about “BOOM”?
Nope. But it has kept me up at night before. And also given me many wicked case of the shits. Its sort of a nostalgic thing for me.
Truth is, I think it is dead and I’ve lost faith in mgmt. So, its only scalps and shorts for me now.
Back in the day, when it was running, and I had like 40k shares….it was ridiculous…one day I made 250k in 15 mins.
Prolly aged me at at 5:1 ratio. Like dog years.
Has anyone seen Boomer?
I fear he’s “off the wagon” again.
_
FITB dragged off it’s walker and into a nearby alley where last report is, it’s being beaten over the head repeatedly with a pillowcase full of “D” batteries.
_
Note to Fly:
Stay away from the “rich man’s bourbon” on school nights.
___
Boomer-Have a good weekend… I think I’m going to take my youngest son to go see
Fourplay featuring Larry Carlton, Bob James, Nathan East & Harvey Mason
Think I would enjoy?
Yes. Yes. Yes. Larry Carlton is amazing. Whole band amazing. Do it. You might like it more than your son.