TRAGEDY IN THE AFTER-HOURS: A WALL STREET TALE OF $XIV (part 2)

Continued from part 1

Tom got a nice bottle of Chardonnay from the mid-town Manhattan liquor store and grabbed an Uber to meet Melinda and her friends for an early dinner, scheduled for 5pm. The market was due to close in about an hour and he felt good about his XIV positions, especially for Grandma. The money he’d make for her might offer a guilt free trip to Italy, a place she always wanted to visit.

Back at the office Chris had been manning the phone all day, shoveling client assets into XIV. It became infectious. Almost everyone at the firm bought some, everyone except Stanley.

“Hi honey, sorry I’m a bit late — had to make a few trades before I left. My Grandmother gave me a rather large order and I wanted to get her a good fill.”

“My beautiful husband to be, always trying to get the best fills. Did you buy us any of this hot stock?,” cried out Melinda while drinking from a large goblet filled with white wine.

“You bet”, and Tom held out a glass and offered cheers.

Markets closed and XIV started to move rapidly to the downside. It closed above $100 and was now printing $85. Tom started to get text messages from the boys back at the firm. Mary texted too. Apparently one of Tom’s clients was gravely concerned about the price movement and wanted to know if there was any news.

“This can’t be. What in…”

“What’s the matter Tom? Something went wrong?”, asked Melinda

Tom looked at his phone and then Melinda with the pallor of a ghost and said “as a matter of fact, something is wrong.”

The steaks arrived and Tom’s guests were chatting away with Melinda, who kept one eye on them and another on Tom.

“Mary, hi this is Tom. What’s going on with XIV? Why is it tanking?”

“No idea Tom. Your Grandmother called and said she told all of her friends at the bingo hall to buy it and she hoped to speak to you tomorrow morning.”

“Great. Hey, I’m at dinner now and really can’t talk. Where is the stock now?”

Mary looked at her computer and said to Tom in a deadpan voice “Sixty-Five.”

“SIXY FIVE! How the hell!”

“Do me a favor, Mary, buy another 20,000 shares of it for my personal account now. I’m sure it’ll bounce tomorrow. This has to be some sort of fat finger flash crash — right?”

Mary replied “20,000 shares. Got it”, and hung up.

The more Tom ate the more XIV crashed lower. By the time his dinner was complete, XIV closed after-hours trading down 80% to $21.

“What the fuck is a termination clause?”, asked Melinda

“I have no idea honey. They’re saying the fucking thing is going to zero. ZERO!  They’re saying a termination clause had been triggered and that it was all in the prospectus,” cried Tom. “There’s nothing anyone can do about it. That’s it,” said Tom desperately.

Melinda enraged by the debacle, screamed out “WHO SAID THIS? Who said it was in the prospectus? We will kill them before they think they can take all of our money and piss away with it.”

“Cramer, hun. Jim Cramer said people were morons for not reading it. He said it was all there in black and white.”

“This isn’t Charlie and the Chocolate factory, Tom. Stocks just don’t close at $100 and open at zero. Cramer can go fuck himself.”

The night cast its shadow over NYC and Melinda and Tom were so incensed by what had happened — they just sat at their kitchen table contemplating the ramifications of Tom’s wayward actions when the phone rang out.

“Who the hell is calling us at this time of night?” yelled out Melinda.

“It’s probably a telemarketer — I’ll get it,” said Tom.

Tom picked up the phone and he heard someone on the other end breathing rather heavily. He could also hear the sound of chewing and the sound of a 4 day old beard brushing up against the receiver of the phone.

“Who the hell is this? I don’t have time for games,” cried Tom.

“I told you.”

“What. Who is this?”

“That’s what happens when you get hooked. I told you not to get involved with that.”

Alerted by the language used, Tom said “is this Stanley?”

“This is what happens when you get that exuberance.”

“How did you get my number, Stanley. What the hell is going on here?”

Stanley just chewed on his cigar, rested the phone between his shoulder and his head and began reading from page 128 of the XIV prospectus.

“If we accelerate the ETNs, you will only receive the Closing Indicative Value and will not receive any other compensation or amount for the loss of the investment opportunity of holding the ETNs; or JHD exercises their right to cause an early acceleration due to the termination of our agreement with them under certain circumstances. ”

“Shut up Stanley. You, you shut your God damned filthy cigar filled mouth.”

“Who the fuck is that Tom?” cried Melinda with a cigarette in one hand, bottle of wine in another.

“I think it’s the devil hun. It’s Stanley, but I think he’s the devil.”

Stanley kept going, reading directly from the XIV script, concluding:

“The long term expected value of your ETNs is zero.”

Stanley turned the page, licking a finger to grab some traction, “If you hold your ETNs as a long-term investment, it is likely you will lose all or a substantial portion of your investment.”

“Stop it Stanley, for the love of God. Stop it,” cried Tom.

In the background Melinda could be heard talking to herself “what a marriage this is going to be. I married a gambler, a degenerate gambler who just lost our honeymoon money.”

Then panic struck Tom, remembering he had given Mary an order to buy $1.3 million worth of XIV in the after-hours at $65. His entire account was worth less than that. This trade was placed on margin.

“Oh no. God no,” mumbled Tom, pulling at his hair.

Tom dropped the phone and Stanley began to laugh maniacally on the other end. Melinda was drinking directly from the bottle and Tom was pacing back and forth trying to subdue his panic attack, when the doorbell rang.

Melinda put down the bottle and extinguished her cigarette into a crystal ashtray — and said to Tom “who is coming to our apartment at 9 o’clock at night?”

Tom just stood there, dumfounded, silent.

Melinda opened the door and greeted her surprise visitor and yelled out to Tom “Tom honey, come over here your Grandmother just paid us a visit.”

“How nice of you to come, Grandma. I love your dress. Tom and I were just talking about you.”

Fin.

Happy Halloween!

“Tom, your Grandmother is on line one.”

“Thank you Mary, I’ll take it when I get to the desk.”

Tom was a successful stockbroker at a good investment bank, small but they had a solid reputation. He was to be married in 3 weeks and had just got back from lunch with his buddies Chris, Steve, and Ken when his sales assistant Mary told him in passing that his Grandmother was holding on line one. She had been calling him all day, hoping to speak with him about the wedding and to see how he was doing. Tom loved his Grandmother and sped up his calm and collective gait to receive her call.

“Hi Grandma, sorry I missed your calls. I’ve been out all day, visiting the caterer and the reception hall for the wedding. I can’t believe I’m getting married in 3 weeks.”

Grandma, glad to speak to Tom, replied “oh don’t worry about it Tom. Everything is going to work out fine. Did you and Melinda decide where you’re going for your honeymoon yet?”

“As a matter of fact, we did Grandma,” Tom said with a wide smile on his face. He was always in good spirits and people loved Tom for it. “We’re going to Croatia.”

“Croatia!?,” Grandma shot back. “Yes Grandma, it’s supposed to be beautiful — lots of great architecture.”

“But isn’t that where Dracula lived? You know Eastern Europe isn’t always safe. I saw that movie Hostile…”

Tom interjected with a soft laugh “Grandma don’t worry. We’ll be fine. Plus anyway, I think you’re referring to Romania.”

“What’s that Tom?”

“Dracula Grandma — he lived in Romania, not Croatia.”

“Oh that’s nice sweetie. Listen, how is my account doing? I might need some money soon. Every since your Grandpa died I’ve been lonely and I want to take a trip somewhere nice.”

“Your account is doing great. You know I keep a close eye on it.”

“Do you have any good tips for this old Grandma? My friends at the bingo hall always ask me for some tips — because they know you’re a big shot stockbroker in NYC.”

Tom kicked back in his plush chair and said with a grin “as a matter of fact, I do Grandma. I am buying XIV for all of my clients.”

“What’s that sweetie? I could not hear you.”

“XIV Grandma. It’s an ETN that’s tied to the volatility index. It’s down recently, but up more than 400% the past 5 years. Easily, this is my top idea and would bet the ranch on it.”

“Then do it,” shot back Grandma with a sense of boldness in her voice.

“Do you want me to buy you some, Grandma?”

“Yes, put all of my available cash in it and call me in the morning to let me know how it’s doing.”

“But Grandma, that’s $400,000 in cash. I can’t do that.”

“Just do it.” And she hung up the phone.

Tom was buying XIV for all of his best clients. It was an inverse bet on volatility and had been the best performing ETN the past 5 years. Whenever markets went up, volatility got hammered and XIV swam higher. In recent days, markets had gone lower and XIV was on sale, like it had been numerous times the past 5 years. Seeing this dip in price, remembering all the times he missed out on buying XIV on the cheap, Tom acted boldly and bought millions of dollars worth of it. He even put his entire joint account with his soon to be wife Melinda in it.

“What ya doing playa?”

“Hey Chris — just placing an order for my Grandmother. I have to head out soon. Melinda and I are having dinner with some friends and I have to pick up a bottle of wine.”

“BYOB?,” Chris asked while fiddling thru some of Tom’s papers on his desk.

“Yep.”

“Say Tom, what are you buying for Grandma? Got a tip for me?”

Tom finished buying Grandma $400,000 worth of XIV and look Chris dead in the eyes and said “XIV, buy it for all your clients, even your Grandmother.”

Chris’s smile dropped and he put Tom’s snow globe down and went back to his desk and started buying XIV.

While at his desk, Chris told everyone sitting next to him what Tom told him and they all started to buy XIV too. See, Tom was a great stock picker and was rarely wrong. Chris told them that Tom had just put his own Grandmother into XIV and his entire joint account with Melinda into it, money that was sacred and was earmarked to be used for their honeymoon trip to Croatia.

It was 3pm and Tom closed his office door and said goodbye to Mary, walking briskly for the elevators when an arm grabbed him from behind with the almost super human strength. Tom turned around quickly and it was Stanley, the often ignored old man of the firm. Stanley was 90 years old and had been a stockbroker his whole life, but now he just walked the halls listlessly, talking to himself while chewing on a cigar that looked like it had been in his mouth since the 50s.

“Listen to me you punk,” Stanley said to Tom while squeezing his arm tight.

“What Stanley? Let go of my arm — you’re hurting me.”

Stanley released Tom’s arm and showed him a stack of papers in his hand, violently shaking them into Tom’s face.

“Look here on page 128 of this prospectus you young punk. Look here I say.”

“Stanley, I love you buddy — but I have to go. We can talk tomorrow,” said Tom with a sincere smile on his face.

“Page 128 you son of a bitch. Read it. Here. Look at it. Read it.”

“Tomorrow Stanley, promise. Page 128.”

As Tom stepped into the elevator — Stanley just stood in front of it — staring at him with a look of death on his face. The doors closed and the elevator made its way down — and he thought he heard Stanley say “you will be dead by tomorrow” — but he wasn’t sure with all the noise the elevator was making.

END OF PART 1

Continued

IBANKCOIN LAUNCHES; SHORTS GET THEIR BALLS CUT OFF
Mon Nov 12, 2007 9:09am EST 28

Is it any surprise?
As you know, we are due for some sort of space magic type bounce, considering the relentless selling of last week.
Also, the shorts are way over zealous, selling big banks below or near book value.
Again, with my money, I want to be long the banks for the upcoming short squeeze, which will be brutal.
Within my positions, the big stand out is HANS. That fucker has booked almost 10 points, since its earnings day massacre.

Considering the recent run, I don’t want to buy more HANS here. Wait for a dip.
My guess, the market sprints 2% today, effectively “de-balling” the jerk offs who shorted into Friday’s close.
On this bounce, CFC, BWLD, VMW, VMI, GRMN, and MVIS are worth a look.
Finally, my fucking “shotgun to the head pick,” VMI, is starting to piss me the fuck off, with its queer price action.

Don’t you fuckers know there isn’t going to be enough fresh water supplies to sustain the fucktarded population growth in the world, short term?
Milk the farmer. He has loads of money.

Very simple narrative being played out here, so let me translate.

This is what the Fed said.

“We just touched 2% core inflation to pick one measure. Just touched it for a few months and then we’ve fallen back,” Powell said from Washington. “So I think we would need to see a really significant move up in inflation that’s persistent before we would consider raising rates to address inflation concerns.”

I do not know why rates were edging higher the past two weeks, but they’re knifing lower now. The 10yr is off by 5bps to 1.78%. Aside from liking stocks here, I also like gold, not for defensive purposes — but offense.

Rates have correlated nicely with gold the past year and we have a shot at breaking or meandering inside the Fag-Box to the upside.

Aside from my guns drawn approach to stocks, I am also long TMF, double upside treasuries — because I believe. I believe in a world where rates are all negative and I can buy property with a negative yielding loan.

Markets have responded kindly to the Fed, no rape. The price of gold is hugging $1,500, at the same time bonds are spiking. I like it. I like it. I fucking like it.

Good shit. Talk tomorrow, fuckers.

Ever since I was a very small boy I’ve been trading stocks. You were out slapping hockey sticks across your friends face while I was at home paper trading an imagined stock market taken from my WSJ. I didn’t grow up around anyone who traded or had money, so it was completely organic — this obsession of mine. Religious people might say Le Fly was born to trade stocks, help others extricate themselves from their middle class maze of hamster wheels and oppressive debt. While you might imagine yourselves to be better than me or even in the same league, bear in mind that this is not true.

My last 27 trades, fucked faces.
STMP +19%
ARWR +6.4%
GME +5.1%
TROV +9.9%
TROV +9.9%
MNK +7.8%
BBBY +9.3%
(MLNT -10%)
CARB +2.7%
PDD +12.46%
LULU +1.5
(NVCR -10.3%)
LPG +3.6%
EW +2.6%
ANTM +3.1%
SPOT +16.8%
OKTA +4.6%
BYND +2.96%
(FIZZ -6%)
(TREX -7.5%)
(ASMB -8.5%)
(BLDP -2.65%)
SPNS +4.4%
ZEN +6.1%
CROX +4.55%
OSPN +4.1%
TZA +2.4%

I took the CROX and OSPN trades today, mostly for fun — not because I wanted to, but because I could. I netted over 4% on both, annualized return off the fucking charts. I had TZA from yesterday and just parlayed that for a small win. Markets are responding favorably to the Fed, so I removed my hedge. And let’s not forget the ZEN, big win post earnings. This is what I do every single day.

Let’s not forget.

Into the close, I assume markets will remain strong. I have 35% cash now, following my sales, so I might be inclined to venture out into the deep blue for a few more fish.

As you gents go about your day, willingly placing your ass out there for the world to see. I just wanted to remind you that the Fed is making a decision at 2:30pm and they’re liable to RAPE you for dressing inappropriately.

I know, the victim is never at fault; but you shouldn’t be walking out there with your ass hanging out either. By ass hanging out, I mean fully invested, margined to the hilt, tilting sideways and out of bullets.

You cannot do that.

This was your last reminder.

The stock looks so fucking good, I can see it running straight to $10, chopping off the cocks of all the Johnny Come Lately short sellers who got in for the move to $00.00. My only apprehension, of course, is the actual specter of an intraday bankruptcy note or perhaps some upstart FUCK FOR BRAINS like Citron issuing a tweet with a price target of negative $50 per share.

Clearly the stock wants higher and I have big balls. I mean, I buy anything and have no qualms about playing this game. But the stock is already up sharply and the entire state of California is under God’s wrath, presently burning down with great alacrity. It’s hard, Ringo, real fucking hard justifying buying this stock up here.

But the stock is down from $70 and what if they make it?

WHAT IF THEY MAKE IT?!

This is the stuff pipe dreams are made from, ordinary guy, blogger, looking at the big stock and thinking about the things he can do with the profits from the big stock. Oh, the dreams of grandeur. I could perhaps buy myself a NEW LAWNMOWER, or even better, A NEW FUCKING BENZ that can break down on me costing my inordinate sums of dollars and incalculable stress, thereby shortening my lifespan to such a degree that buying PCG would be a moot event, a cancellation of sorts as all parties lose under such a scenario.

For the day, I sold ZEN +6.1% and bought two other fishing poles in the hopes of capturing some more fish. I have an eye on markets here for a large move downward and will trade the volatility, as prescribed.

I donated my dining room table and chairs to charity over a week ago, because I bought a new table and chairs. But that fucker has been delayed and now I’m living without a table, forced to eat at or around counters, dropping crumbs all over the place. Between this and the fact the kids eat like birds, I’m thinking about taking a break on my Chef-hood. As you know, Dr. Fly has been a master chef in the kitchen for the better part of the last year, whipping up all sort of grandiose dishes, all learned in the traditional French technique for the benefit of those around me.

Are they grateful?

Of course not. But I do it for me, because it’s therapeutic.

Today is Fed day and we’re looking at another absurd interest rate cut. However, should they release a greasy statement, indicating no more cuts for 2019, you should expect stocks to decapitate themselves.

The Fed is widely expected to cut interest rates by a quarter point on Wednesday, its third rate cut since July.

The consensus view is that Fed Chairman Jerome Powell will indicate that the Fed is pausing in its rate cutting, and that the central bank will watch the economy to decide future moves.

On the matter of gold, you cannot touch it whilst rates are edging higher. Right now we’re in an odd spot and I prefer cash over uncertainty.

Easily my favorite holiday of the year, Halloween is a time for one to prep for the colder climes ahead and relish the fading days of good weather. This of course most aptly applies to northern cities or denizens of repute where the seasons change. In totally degenerate locales in the US, the Deep South, Florida, and California — people there do not see seasons other than hot and hotter. This resolute constant in temperature makes people slothful and filled with boredom, leading to wanton vagrancy, which is why those states are leading us towards end of days.

I could not find anything worth buying today, so I didn’t. I took out a hedge, raised cash to 30%, and decided to take it easy. The most difficult part of my life now is dealing with the fucking dogs, barking all day and night, acting like insane idiots outside. Hungry and angry — they are incorrigible forms of life. My wife loves dogs and would probably have more, if not for me. I don’t see the upside to owning a dog, after raising humans for over two decades. Now I can’t even leave the house for more than a day, without finding responsible lodging for them and/or sleeping at a fucking dog hotel. If forced to choose a side, dogs rock vs dogs suck, I’d have to choose suck. But they only suck because they’re in my house, pissing and shitting on things, which makes me a bad owner. My life is crazy enough, being a professional blogger of stocks, than having to sit down with the dogs and teach them how to roll over by way of weaponized bacon.

More or less, owning a dog is a 10-15 year sentence of toil. In my opinion NOT WORTH IT.

That should piss off about 75% of you fuckers.

There’s not a whole lot going on today. Markets are more or less unch and fuckers are steadying themselves for Trick or Treating this Thursday. I don’t feel like buying anything. Nothing looks interesting. Plus, and it should be noted, leadership stocks have been getting wrung out for the past two months. High sharpes have been splayed across the ground, stomped into mush.

An interesting man would be selling short here — for a trade of course, nothing too serious.

Perhaps my demeanor will change later on today — but these sort of headlines piss me off.

What’s new in my life?

Working out every morning, taking it easy. I was on the verge of nervous collapse in NJ, in spite of having nerves of fucking steel. I’m reading Jurgen, a 1920s comedic smash hit. I’m growing a beard, and pleased with my new confines.

Being mentally strong is just as important as physical, if not more. For years I worn myself out and thin. I thought it would be easier after I quit money management — but that wasn’t true.

I’m also re-starting my 2008 book on the collapse, showcasing my blogs. I have a totally new spin on it and might start writing fast and creatively soon.