Overall, the bulls failed to meet the bears in full combat, on the open field called the indices. However, behind the scenes, select sectors were walked higher, much to my chagrin. On the other hand, BAC and BCS are trading like they want to go out of business—much to your chagrin.
I covered more of my KIM position into the bell, making it half as big as it was yesterday. And, I covered the entirety of my NOV short.
Basically, being long SRS is equal to having your nuts in a meat grinder. It is the albatross on my fucking neck. It is the piano on my head, the cannon ball on my foot.
The end of the day manipulation in commercial RE stocks is so fucking obvious I am an idiot for not taking advantage of such said events. I mean, when SRS is down for the day, it is almost a given that it will have its face ripped off in the final 10 minutes of trade. Unfuckingbelievable.
As for shorts: I bought a little more SMN and EEV. And, I shorted more of that bitch of a whore XOM. That’s another sector (oil) that is disconnected from reality. Oil is south of $40, yet XOM is a few points shy of $80.
Something has to give. Either oil is going back to $80 in short order, or XOM is going down to $50. Either way, the current relationship between oil and oil stocks cannot continue.
Finally, it’s clear that the trend is decidedly negative. For all the bullshit and propaganda being televised on CN-motherfucking-BC, we are down for 2009—thus far. In the event the bulls make one more swordless charge, “The Fly” is holding a 30% cash position. Moreover, he will (“The Fly”) use such bountiful reserves to bowl on brickheaded bovines, who are keen on betting against him.
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The Fly is God.
Actually made a little money on SRS today.
I won’t hold iETFs for more than the day anymore.
Pretty fast for a Zombie.
I’ll tell you whats brewing Hot Hot Coffee in a pink Dunkin Donuts cup.
Great day for the BEARS with stupid cows buying stocks and setup for tomorrow’s slaughter. MOOOOOOOOOOOOOOOOO. HUGE DOWN day tomorrow and CLOSE at the LOWS.
Why do you not eat oatmeal anymore?
STFU DOG. You’re a moron.
Get in the bathroom, you mush!
I think that’s “anger” that’s brewing.
________
The remaining 30% of moms and pops finally are beginning to look at their 2008 statements…The fuckery is definitely forced/timed selling from about noon onward…look at the 1 minutes…This will continue this week and onward while the statements are opened.
DDawg —
You — and the friction you bring — are a constant source of amusement.
Right or (mostly) wrong.
_______
Devildog you’re like an overflowing toilet spewing the same shit every day. I wish you were right but NO ONE knows what the market will do on a daily basis. Gonna skip over all of your posts from now on.
CHINA OIL is the DEVIL.
SHORT PTR!
I’ve decided each time I consider buying SRS I will instead rub myself against my face.
Moody’s reports negative outlook for United Arab Emirates banking system
The fundamental credit outlook for the banking sector of the United Arab Emirates (UAE) is negative, reflecting growing pressures in the operating environment, which Moody’s believes will weaken the financial fundamentals of UAE banks going forward. Moody’s negative outlook for the UAE banking system expresses the rating agency’s view on the likely future direction of fundamental credit conditions in the industry over the next 12 to 18 months. Key factors underlying Moody’s negative outlook for the UAE banking system include the growing potential for a deterioration in asset quality in light of the property market correction, which began having an impact in Q4 2008.
FLY – Last time I checked, UAE banks were not part of XLF, SKF, FAZ or the S&P 500. Odd no ? BACK TO WORK….
^^^^^^^^
There’s a fookin’ sooprise, eh?
What with the tow’rs tah thah bloody moon, end all?
_____
^^^^
Ach, bloody towel head bunkin’ news has me tahkin’ like oym bahk in the auld country, dontcha knoo?
________
Bottom line we are going to NEW LOWS this quarter. I don’t care about the day to day fuckery. Although, tomorrow will be a BIG DOWN day and a close at the LOWS after today’s bullshit it is a slam dunk. I’m SHORT from 9/19 and 1/6 and holding for those NEW LOWS. I have not made a trade since 1/6. I’m totally SHORT and HOLDING regardless of what the market does day to day. I am not a weak BEAR. I’m one of those BEARS that the bullshit slingers like krudlow hate because I don’t fold. I just laugh at the bullshit like in the REITs today that Fly mentioned above. Too funny. SRS will be over $300 soon. Every night in my dreams I see cows and sheeples hanging upside down with their throats slit. You even been to a slaughter house? I have…when I was 7 years old I sneaked out of the house in western PA and through the woods. Unbelievable seeing a cow get it’s head cut off while hanging upside down from the ceiling and blood flowing into drains in the concrete floor. That is what is coming. So keep buying your bullshit stocks. You will be decapitated and I will eat you with a fine red wine…with a big smile on my face and a pile of money in my safe. You have been warned.
In The Air Tonight – http://www.youtube.com/watch?v=0FvWFpU_uAw
DD,
Go play hide and go F*&! yourself
Reading between the lines of Bernanke’s speech, I see “banks are fucked and I have no idea what to fucking do about it.”
Something has to give. Either oil is going back to $80 in short order, or XOM is going down to $50. Either way, the current relationship between oil and oil stocks cannot continue.
Why not go long crude oil contracts while shorting the shit outta XOM and CVX
DevilDog, come over to my place for some head cheese and fava beans. Sluup, sluuup, sluup.
President-elect Barack Obama’s choice to run the Treasury Department and lead the economic rescue effort disclosed to senators Tuesday that he failed to pay $34,000 in taxes from 2001 to 2004, a last-minute complication in an otherwise smooth path to confirmation.
Timothy Geithner paid most of the past-due taxes days before Obama announced his nomination in November, an Obama transition official said. The unpaid taxes were discovered by Obama’s transition team while investigating Geithner’s background, the official said.
DD-
Just curious, do you place your pinky in your mouth a la Dr.Evil as you type these predictions?
http://www.youtube.com/watch?v=jTmXHvGZiSY
Paulson gets crucified for working at GS yet Geithner can’t even pay his taxes on time. God help us all.
What’s next? Spitzer in charge of a anti-prostitution task force??
Karl Denninger is going to love this…
Does anybody see Geithner still getting the nomination?
People have been denied lesser posts for far less.
From the bit above it seems he had no intention of paying until the team came knocking, and $34K ain’t a trivial amount anymore. Last year, maybe, but not anymore.
DevilDog, Is this you ? http://en.wikipedia.org/wiki/Armin_Meiwes
“As is known from a videotape the two made when they met on December 25, 2001 in Meiwes’ home in the small village of Roteburg, Meiwes amputated Brandes’ penis and the two men attempted to eat the penis together before Brandes was killed. Brandes had insisted that Meiwes attempt to bite his penis off. This did not work, so Meiwes used a knife. Brandes apparently tried to eat some of his own penis raw, but could not because it was too tough and, as he put it, “chewy”. Meiwes then sautéed the penis in a pan with salt, pepper, and garlic, but by then it was too burned to be consumed.[3] According to journalists who saw the video (which has not been made public), Brandes may already have been too weakened from blood loss to actually eat any of his penis. Meiwes read a Star Trek book for three hours whilst his voluntary victim was bleeding to death in the bath. Meiwes apparently gave him large quantities of alcohol and pain killers, 30 sleeping pills and a bottle of schnapps, finally, he kissed him once and killed him in a room that he had built in his house for this purpose, The Slaughter Room. After stabbing Brandes to death in the throat, he hung the body on a meathook and tore hunks of flesh from it; he even tried to grind the bones to use as flour. The whole scene was recorded on the two-hour video tape. Meiwes ate the body over the next 10 months, storing body parts in his freezer under pizza boxes and consuming up to 20 kg of the flesh.”
cheesefries, that’s because paulson pays zero taxes, none, he is a fucktarded commie rat bastard. I hope he dies hideously.
Seems like the DEVILDOG bearometer is off the charts lately, looks like we are setting up for a mega rally based on prior performance. His excitement is entirely palpable, just hope he doesn’t wet his pants.
oil may go up slightly, but i doubt it’ll hit 80. for oil, i like to watch steel as it’s oddly a macro leading indicator (multi-month/year timeframe). see the chart.
Barry Ritholtz:
http://www.ritholtz.com/blog/2009/01/why-might-a-madoff-plea-deal-take-place/
Why Might a Madoff Plea Deal Take Place?
A guilty verdict is a slam dunk in a trial. However, that does nothing for the $43 billion in lost assets for the folks who were taken (i.e, investors/confidence marks). and, it seems that Madoff’s remaining assets, versus what was stolen/lost/embezzled are a mere pittance.
Hence, the possible Madoff deal. One theory floating around is that Madoff will implicate the major banks (HSBC, RBS, Santander, BNP Paribas, Nomura), fund of funds, referrers in his massive fraud. Once he rolls over and sings, alleging they knew (or should have known) it clears the path for a massive litigation frenzy against any and all of the parties involved
OH MY GOD
Did anyone just see Fast Money and the CEO of Athena? Its George Bushs first cousin. And what do you know, drinking runs in the family. The guy was WASTED. Im not joking when I say he could be on coke too.
OH MY
CAP- That’s disgusting and going a bit too far…
Dog,
I think you a little more off kilter that usual…you have been upgraded from Koresh to Dahmer…for obvious reasons
a great addition for the site would be to block certain user comments. that way i dont have to listen to devildog. Hes on repeat for the next few years
Debildog = unhinged
The debildog contrary indicator is off the charts = BIG GAP UP TOMORROW.
Someone needs to tell Devildog that markets don’t close on the lows EVERY DAY even in bear markets. Geeez.
When I read his same “MARKET CLOSING AT LOWS” post every day, it makes me laugh at the ridiculousness of it all.
Note if you did the opposite of Devildog’s inflection post (when he changed sides) late last week when he said market would rally Friday and Monday and sell off Tuesday, you would of made money EVERY DAY and banked it HUGE overall.
Point to ponder. NVDA missed revenue estimates by 39%, but closed up on the day.
CAP-
What the fuck is a matter with you boy? Do you (still) have a dick fetish?
Hey Fly, here’s a suggestion. When you have a new blog posting, have someone post a comment in the last blog posting that a new one is posted, so the comment discussion fully carries over.
Another thing you can do, is use vbulletin forum s/w (really cheap), so we can have running topics, discussions, and build a real community. Plus you can monetize pageviews with google adsense every 10 posts, that’s what the big sites do.
Anyone thinking of shorting HBC or buying puts? Its all the pony tail brothers have been talking/writting about.
Anyone think this bank is fucked or is the buying some kind of hedge or options play?
Anyone?
new lows last month last week yesterday today tomorrow next week next month this quarter….. timing is impecable…. SDP nice timing the trade….I agree with Jake its mildly amusing
Jim Goldman is a fucking midget.
to Ass Napkin, I think the pony tail bros, just hype a big game and make most of their money selling advice to any idiot willing to give them 5,000 dollars to be a member of their optionsmonster website……
but I see worst news going forward for banks than good….here is the reality:
TARP was supposed to be a one time fix all, it was signed into early oct. that’s 3 months ago…..it was supposed to shore up all big banks and insure that credit would unfreeze…..here we are 90+ days after it was signed into law and nothing has happened the way it was planned…..
This means to me, banks are still WAY under water.
If citi, one of the biggest receivers of TARP money with a 300 billion FED backstop guarantee on their bad debt was not able to have that right the ship (which I guess after today it did not) and as of today had to sell the engine out of their only car…..It just seems to me worst news further out than good…….
Big players were on board today with 273 million shares of C traded and 243 million of BAC traded today……hedge funds were dumping today.
that’s the way I see it…….
and I also see the DOW around 6000 if the current mess is not cleaned up……problem is the broom is already just about worn out.
I agree, the DD inverse correlator is running with machine precision. Tomorrow will be huge up, and DD will be nowhere to be seen.
Cramer was (rightfully) outraged & dissing the ultra etf’s. He basically said the people who run them are crooks and the SEC should not allow these products.
He used the example of Marc Fabers recommendation of shorting China thru FXP last year. He was right on China but way tf wrong with FXP because even he, didn’t know how that ultra worked.
China got cut in half last year. SO one would think FXP would double … NOT ! It also got cut in half.
These people should go to prison with Madoff.
That said … I (stupidly) trade these things .. they’re like crack.
Juice – For crying out loud, FXP started 2008 in the $70s and went as high as $200. If you were long from the $70s and sold it at $150 + you made a killing. Now if you were foolish to buy it at $100+ after it peaked at $200, u lost big time. With these inverse ETFs you need to know when to hold ’em and went to fold ’em.
Anyone who was long SKF SRS FXP SMN SDS etc from the early part of last year and didn’t make decent money with them should be banned from trading.
EDIT: Juice my comments were not all directed towards you. A lot of people are complaining about these iETFs which to me is unfair ‘cos I made good money of them and they did what they were supposed to at least in my opinion.
the problem with DEVILDOG is that he seems to justify his positions in long timeframes (we all agree SPY is going to 0 eventually), but his comments talk like he’s trading in intraday timeframes (short squeeze bitch!) and shows really poor judgment.
don’t gloat on intraday moves if you’re trading on multi-month/multi-year fundamentals.
also, he appears to be holding SRS for long-term. stupid.
Cap – true true … they are not vehicles to hold .. strictly for trading. But who knew in the beginning?
In fact, the best play comes after they triple or quadruple. They are “sure thing” shorts. I’m thinking DTO is gonna be a fabulous killer, sitting duck short, at any moment. Though, I can’t get a borrow on it.
devildog also said he went to college with the founder of dupont. the guy is just a lying sack of shit.
Oberg: The Perils of the ProShares Ultra Shorts
By RealMoney Guest Contributor
1/13/2009 1:25 PM EST
URL: http://www.thestreet.com/p/rmoney/etf/10457651.html
Editor’s note: This column is by Eric Oberg, who worked in fixed income, currencies and commodities for Goldman Sachs for 17 years before retiring as a managing director.
One of these days in your travels, a guy is going to show you a brand-new deck of cards on which the seal is not yet broken. Then this guy is going to offer to bet you that he can make the jack of spades jump out of this brand-new deck of cards and squirt cider in your ear. But, son, do not accept this bet, because as sure as you stand there, you’re going to wind up with an ear full of cider.
— Sky Masterson in Guys and Dolls
I was amazed at how much discussion my piece and subsequent Q&A on levered, short-sided ETFs generated, particularly for a holiday launch. We received a number of comments at RealMoney and TheStreet.com about how this helped to explain the perplexing (under)performance of these securities — and the chat rooms were abuzz.
For the chat-roomers, let me clear up one thing — contrary to speculation, I am not a disgruntled loser in these things; I have never bought or sold a “bear” or “bull” levered ETF. Their construct has fatal flaws, and you can do what these set out to accomplish much more efficiently in a margin account.
In reference to the quote at the top, you will not catch me uttering, “Daddy, I’ve got cider in my ear,” as Sky Masterson did after being hoodwinked into a bet as to whether he could get Sgt. Sarah Brown of the Save-a-Soul mission to accompany him on a dinner date to Havana, Cuba. Yet many professionals, who have been deemed “smart money,” may feel like invoking that very line as they towel their ears dry.
There were a couple of interesting news articles that hit Monday that sadly highlight how some of the smart money has been gaffed by these. I mentioned that these products are really marketing gimmicks and not created for professionals, so I was stunned when I saw some professionals get suckered in.
Barron’s current edition of “The Roundtable” has a review of the 2008 professionals’ picks. At the beginning of 2008, Marc Faber made the prescient call of being short China. He recommended two ways to do so: short the iShares FTSE/Xinhua 25 Index (FXI) ETF (which was down 46.7% — nice call) or to buy the ProShares UltraShort FTSE/Xinhua China 25 (FXP) (the double short on the same index which the FXI is long). The FXP ended up being down 57.2% … whoops! We saw the same thing with the ProShares UltraShort Real Estate (SRS) — the 2 times levered ultra short fund ended up doing worse than being long the very index that was down ~40%. Wrong execution of the right idea.
The second article of interest was in the morning’s Financial Times. This was an article on the hedge fund Harbinger, and how it had thrown up “the gate” and restricted redemptions. The article went on to describe how Harbinger got the subprime call right, and through six months of 2008 was up more than 40%, yet closed the year with a 27% loss.
A lot of the chat rooms associated with these levered ETFs pointed to Harbinger’s ownership of the ProShares UltraShort Financials (SKF) ETF as a validation of these securities as a smart buy (Harbinger owned 3.5 million shares as of Sept 30, 2008, according to the 13-F filings). I wonder now, in light of the second-half performance, how Harbinger feels about the efficacy of this position vs. employing the capital elsewhere.
On the message boards, several people said, “Oberg just doesn’t know how to trade these things — you have to know how to ride the bumps.” That is simply a naïve intellectual position to take. Maybe I could have chosen a measurement point that reflected outstanding performance (note: my dates were entirely coincidental … I just started examining these things right around Thanksgiving), but it really doesn’t matter. An efficacious trade or hedge should perform more or less in line with expectations, regardless of the point in time of measurement. If you cannot measure it at any point in time and have it perform as would be expected, then you are in an inefficient positional expression of a view. If you cannot admit that, then you are rationalizing. When you rationalize a position, nine times out of 10 you will lose money.
I stated in the original piece that there are only three reasons someone would buy these:
1. they are uninformed (and indeed, the Journal of Finance research piece I referenced, which was co-authored by someone at the SEC, showed that reduction in margin requirements leads to increase in uninformed traders),
2. they are trying to circumvent the margin rules, or
3. they are attempting to manipulate the markets.
The fact that professional investors could get caught up in these is just mind-boggling to me. Let’s give them the benefit of the doubt, and assume that they are not attempting market manipulation — I’ll leave that up to the regulatory bodies to sniff out. (As a parenthetical aside, I will also choose not to debate whether a fund’s potential pro rata contribution measuring anywhere from 10% to 40% of a stock’s daily volume is meaningful or not (it is…).) Let’s also assume that these larger “sophisticated” investors do not need to circumvent the margin rules, as they should have some access to capital, somewhere, if they truly are legitimate and deserving of their “2 and 20.” So maybe that just means they are uninformed.
Leaving aside the oxymoronic concept of aggressively shorting a passive basket of stocks — I mean, c’mon, if you are so convicted that you want to lever a short, how about a little selectivity? — let’s see if they could have figured this out, and indeed whether an ordinary retail investor could have figured out the dramatic failure of these instruments in advance.
My guess is, unfortunately, they must not have read the offering docs; it just viscerally sounds so good — “Wow, a product that easily allows me to be 2 times short an index!” Yes, even the “sophisticates” can fall prey to gimmicks. But even still, what if they had read the offering docs?
I have just finished re-reading the 165-page prospectus for one of these funds. It is my opinion that in no way, shape or form have they adequately disclosed the volatility risk — in fact, they have a longer passage for risk associated with foreign investments than they do this concept of volatility eating away at returns outlined in my prior pieces. The “Statement of Additional Information” goes into a little more detail, but is still insufficient to explain the miserable failure of these as a term trade or hedge.
I believe the purveyors of these products were careless, reckless and perhaps even grossly negligent in disclosing the risks. Either they were a) completely clueless as to how dramatically these could underperform due to volatility (in the prospectus, they use 15% volatility and show underperformance of 70 to 220 basis points … in the 68-page “Statement of Additional Information,” they show volatility of up to 40% and underperformance of ~900bps, with the index down 40% … nowhere remotely close to the underperformance we have seen), or b) they knew that performance looked horrendous at high volatilities but chose not to disclose. Given they show the tremendous potential outperformance of these if volatility is very low, my guess is they knew exactly what it would look like in the type of volatility environment we have seen, thus making “b)” more likely … but, then again, if they knew of this risk, they’d disclose it more thoroughly, right? To be fair, I have no idea which is the case, but this raises my eyebrows a bit.
Furthermore, the purveyors simply highlight that these seek to replicate (plus or minus 1 time or 2 times) the daily returns, and that they “do not seek to achieve their stated investment objective over a period of time greater than one day” … despite presumably knowing full well people do not view mutual funds as one-day holds. Indeed, investors are sent a prospectus when they execute a trade, meaning that there is at least three days’ price risk before they even get the prospectus, and that alone is enough to cause damage.
In my mind, that is kind of like advertizing on the side of a cigarette box, “Not smoking these may have health benefits” instead of “Smoking these may be hazardous to your health.” Both are true, but one does not fully disclose the risks of using the product. Maybe the cover of the prospectus should just say, “This product probably won’t do what you think it’ll do.”
As I said — viscerally, these sound quite appealing. But their performance is more painful than a random walk. Nothing hurts more than being right but at the same time losing money — I mean, Marc Faber and Harbinger must be horrified to see their names forever in print next to these gimmicks (at least the individual investor can remain anonymous). The sad thing is that anyone with a margin account can create a far, far more efficacious position to reflect bearish views. And for these professionals, there really is no plausible excuse but laziness.
For those who argue, “Yes, but I’ve made so much money trading these” — I’ll tell you what: I will start an ETF based on an index linked to a random number generator. Whenever it is up and you are in the money, you can sell it and tell everyone in the chat room of your genius in knowing how to “ride the bumps.” But for everyone else: If someone shows you a brand new deck of cards, on which the seal is not yet broken…
Juice,
Do they have options on DTO ? U might try selling naked calls. The best way to play these iETFs is to start selling naked calls once they start their parabolic rise. Sell in small increments. Once the top is in, the pay off is huge.
Juice sez: “Nothing hurts more than being right but at the same time losing money”
well, I’m usually wrong, and lose money, so I guess if I’m wrong with these leveraged ETFs (which do the opposite of what they’re supposed to), that’ll make me wrong and making money?
Furthermore, if these ETFs do shitty even when they’re supposed to do well, then why not short the inverse ?
Fly
Did you mean “Jim Goldman is a small person?”
“Midget” is so politically incorrect!
That fuckin’ dwarf.
Champagne wishes, and caviar dreams.
…so just short the short instead of going long or visa-verse. Problem solved.
momo,
if Madoff gets a deal that will be confirmation that the entire system is rotten to the core and we are done.
Fly –
I think it’s more than just us who have gotten their balls handed to them by “The Beast” SRS.
It’s a fucking sham, as we will likely learn when these assholes run out of time.