Current Market Perspective: Moderately bearish based on three pieces of information:
In my old job where we acted as sellers of protection in credit default swaps (more often than as buyers, anyway), we used to fight like hell to ensure that any restructuring of bank loans was not considered a “credit event” thereby triggering the swap protection and forcing us to pay.
Our rationale was that bank loans were restructured all of the time in workouts with banks… Continue reading
The market is soaring today on the Greek bailout plan, or should we say the European bailout plan because, lest we forget, there are several more countries that still need a bailout.
The plan is amusing to me, though I should not feel amused at all today because my net long exposure is the lowest it has ever been. That means that we are only minimally participating in the… Continue reading
I am about to cover the final leg of my NFLX short, which I had in place for over one year. Are you one of the many who saw this coming? Did you expect a 75% drop in price since the peak on July 13, 2010? Many today say they did. For example, the tone on CNBC this morning? “It was inevitable.”
I am working on a good post for the first “Counterfactual Friday.” Unfortunaltely it will probably not be posted until Monday. In the meantime enjoy the following:
I have attached a link to a terrific article on power law distributions and their ability to explain financial market phenomena as compared with the standard bell curve. Mauboussin has been writing about power laws in finance and economics for… Continue reading
Apparently, Seth Klarman is in the market for capital. This is always news because Klarman has a reputation for shunning capital from new investors and frequently returning excess capital to existing investors. However, the author of the attached story has made the following leap:
“…the fact he is seeking cash from any source is somewhat encouraging.”
A closer look will reveal… Continue reading
As I have written before, any news rumor is good news for the market; the aftershock of disappointment is likely to be much more pronounced. From a Dow Jones Newsire report published online at 5:17pm today:
On Tuesday, the market received a jolt higher in the final hour of trading after the Guardian newspaper reported France and Germany agreed to increase the size of… Continue reading
I am an optimist by nature, and I hope a rational one in the Matt Ridley vein. But, I do not understand the optimism in the market in the last seven trading days (plus forty-five minutes). Markets are up over 12.5% in that period and the reasons are not clear. Three pieces of news to that end:
First, from my perspective, Scott Shellady, a pit… Continue reading
At 3:15 pm on October 4, the S&P 500 was at 1081.89. By 4:oo pm it finished at 1123.95, up 3.89% in forty-five minutes. To put that in perspective, the market was in the 1081 range in October 1998. So, in a span of thirteen years the market was completely flat, and in forty-five minutes investors suddenly realized that they were wrong about the previous thirteen years? (I know a… Continue reading
Where’s the hedging?…
With data flowing in now, it is apparent that a large number of hedge funds are in the red this year and several dozen are down by double-digit rates. They include many well-known names that run billions of dollars.
Experts say many of these funds could face sizable redemptions. After all, in the next 30 to 60 days, these requests… Continue reading
