January 24, 2008

Buying stocks? Shorting stocks? Or happy on the sidelines?


* Fed slashing rates down to 0% in a desperate attempt to create a new bubble somewhere, anywhere

* Congress and Bush dropping hundreds of billions of election-year dollars from helicopters (although they can take their lousy $300 and stick it - that don't buy much these days)

* Government spending taxpayer money on banks and insurers too big to fail - including a potential multi-billion dollar nationalization/bailout of MBIA and Ambac - plus the upcoming massive and historic bailouts of Fannie and Freddie

* Fannie jumbo limits going up (since we're run by corrupt monkeys)

* Stock prices down drastically, including juicy ones like Apple, Google and foreign ETFs

* Credit meltdown still just starting, with lots of writedowns and bad news still to come

So, is a stock market recovery starting, or will it just be a brief sucker's rally, followed by an even deeper crash?

My only advice, worth nothing, is to keep an open mind, be patient, and be very, very careful. This market feels like gambling, not investing. DOPES got slaughtered these past few weeks, don't be a DOPES.

(by the way, anyone see the hilarious Societe Generale trader who just lost 'em $7.2 billion secretly making terrible bets on the market - ouch! Wonder how his performance appraisal goes this year)

29 comments:

keith said...

I love this story. Remember Nick Leeson? His fraud was only $1.4 billion. This one is massive by comparison. Could you imagine being this dude, going home at night knowing what you've done? Amazing. All because of out-of-control commission-based pay at the investment banks. Made people do STUPID things, that ended up taking the banks down in the end.

http://news.yahoo.com/s/nm/20080124/bs_nm/socgen_dc

PARIS (Reuters) - French bank Societe Generale (SOGN.PA) disclosed one of the biggest alleged frauds in financaal history on Thursday, adding to a wave of gloom surrounding world markets battered by credit market losses.

SocGen, France's second-biggest listed bank, said it had uncovered an "exceptional fraud" by one of its traders.

It said this would cost the group 4.9 billion euros ($7.16 billion) and announced plans to raise 5.5 billion euros through a capital increase to shore up its balance sheet, also reeling from a crisis in global credit markets.

Anonymous said...

you gotta see this

http://www.youtube.com/watch?v=ALn0GBkM_5c&NR=1

Stuck in So Pa said...

Anonymous said...
you gotta see this

http://www.youtube.com/watch?v=ALn0GBkM_5c&NR=1

January 24, 2008 10:42 AM
===========================
Holy F@cking Sh#t! That was hilarious. I love the way the other traders don't bat an eye, break stride on the phone, or attempt to intervene, like it goes on everyday! That was great!

amigauser said...

YES I will be buying large cap Value, Finance and Tech stocks.
The average return in the stock market after the FED begins to cut rates is about 18%, plus this is an election year, so they will do whatever it takes to make the market go up.

I will not being as retarded as to buy gold/silver

tangelo mozilo said...

Seems like we have a new "Rogue Trader."

Societe Generale = Barings Bank

Anonymous said...

One guy defrauded $7.2 billion

Wow! That's a bank robbery!

anna nicole lives said...

I am dollar cost averageing back into mutal funds.Yesterdays rally will be gone soon.Buy on the dips.Looking fo dow 10500.

Did any of you see the loser casey serin on dr phil? was watching yesterday and he was on their wineing about loseing his wife.I guess rosy palm is getting worn out?

Ed said...

I've been buying like mad the last couple of days. Benny B has his magic printing press at full throttle and cash is not where you want to be.

Not trying to pick stocks, just buying the indexes, SPY, IWM and the Qs.

I'm with amigauser on this and have been saying the same for the past week. In an election year when both sides are tripping over each other to show "they care", they will do whatever it takes to prop up the economy.

$150B stimulus package is just he begining. By Sept/Oct we'll have a 1.5% Fed Fund rate and probably another "temporary" $250B stimulus package.

The momentum has shifted now too. The media is back on board with NOW IS A GREAT TIME TO BUY STOCKS mentality. Joe 6 Pack will be pouring his money into mutual funds once again.

Be Prepared said...

1. Get a copy of Schindlers List
2. Watch it carefully.
3. Substitute "Warsaw Ghetto" for your city or town.
4. Substitute German SS/Gestapo for American Government.
5. Substitute 'work camps' for FEMA camps/corporate employment/suburban lifestyle-McMansion dwelling.
6. Substitute 'slave labor' for homedebtor - debt slave.
7. Substitute 'Special Treatment" for working US taxpayer.

I like the part where they hang the Nazi Camp Commandant. I envision other high officials receiving their justice too.

See any parallels?

start digging said...

"""
The employee, who moved to the trading floor from the back office in 2006, helped with the investigations throughout the weekend, said Mustier. He said he doesn't know where the trader is now.
"""
Old Vegas style "helping" I bet.


"""
The trader didn't enrich himself from the fraudulent trades, which began in early 2007, and his motivations are unclear, Bouton said at the press conference.
"""

Because the only trader in the universe who doesn't get a performance bonus (which makes up the majority of their income) was the one to do this. Yeah, right.

Anonymous said...

Good point Keith.

I just got burnt yesterday when the market swong from negative to positive.

It's ok though, I will recoup in the next couple of days.

Danny

Malcolm said...

Be Prepared said...

>I like the part where they hang the Nazi Camp Commandant.

A bit of trivia for you... in real life, it didn't go as they showed it. When they hung the real Amon Gothe, they kept making mistakes as to how far they had to drop him, so they wound up having to try 3 times before he died.

Anonymous said...

bought spy yesterday near the bottom. sold today at the open.

3rd Generation said...

"A bit of trivia for you... in real life, it didn't go as they showed it. When they hung the real Amon Gothe, they kept making mistakes as to how far they had to drop him, so they wound up having to try 3 times before he died.

January 24, 2008 2:24 PM"

Sounds a bit like the Bernanke method and PPT protocol only Gothe is the American working taxpayer...

George W. Bush, - Boy Genius.

area 51 said...

That is so awesome. And SG has the 'nads to say,
"Hey, we just lost $8B, we got rogue traders flushing money down the toilet, we have no control over our people, we have no idea what they're doing....

"Hey, so can you loan us $5B????
We're good for it, you can trust us.........."

Anonymous said...

Government spending taxpayer money on banks and insurers too big to fail - including a potential multi-billion dollar nationalization/bailout of MBIA and Ambac - plus the upcoming massive and historic bailouts of Fannie and Freddie

Another proof that GOP loves socialism, when it benefits themselves. But some idiotic Republicans here think that this money will come from Mars, not from you and me.

So after the Republican bankers gambled the house away (literally), they get a bailout from the Republican administration by using your taxpayer money. If that's not socialism...

And please save it bootlickers, since there's no justification here, no matter how you soulless pigs sugarcoat or spin it. YOUR GOP LOVES SOCIALISM.

Anonymous said...

SocGen, France's second-biggest listed bank, said it had uncovered an "exceptional fraud" by one of its traders.

Dirty French a$$holes who pose like they're better than anyone else. French people are a disgusting bunch and I see these idiots immigrating more and more into America and South America.

Hey French bastards, if you hate America so much, why don't you stay at your stinky and minuscule single, living out of bread and paying tax to the wazooo to support zillions of African immigrants. Nice way to live...and die broke. Next time you see a Frenchy here in the US, spit on their faces.

FaceDown said...

I'm too much of a novice to play the stocks with confidence. So, I am keeping my gamble small. On the PM side of things it has been much easier for me to read the market (I've been lucky). Gold has been my friend.

The majority of my funds have been on the sideline. I've probably been putting 20%-30% at risk in stocks and PMs.

For experienced traders this may not be the case...but it is scary out there for me.

Anonymous said...

* Fed slashing rates down to 0% in a desperate attempt to create a new bubble somewhere, anywhere



except for gold. they hate gold.

Anonymous said...

Congress and Bush dropping hundreds of billions of election-year dollars from helicopters (although they can take their lousy $300 and stick it - that don't buy much these days)



Amen Keith! 800 + a little out of my pocket was going to get me a Krug.

Anonymous said...

"I will not being as retarded as to buy gold/silver"

No, instead just write like you are retarded, amigauser.

Malcolm said...

Of course under the plan being floated, I'm going to get nothing.

So I guess, thanks for nothing.

I hope everyone else lives it up on my dime. :)

ivan said...

The last couple of days I've been buying stocks. Mostly foreign mutual funds and US tech. Also some gold mining calls.

People should remember that we re not in a general stocks market bubble. There is a bubble in financial stocks and it will continue to unwind for some time however the general stock market is undervalued.

Last stock bubble was almost 8 years ago. Next bubble will be in stocks and commodities. I beleive stocks should perform better than commodities since commodities are not undervalued.

I'm not sure whether we have hit bottom yet, but we are close. Helicopter Ben is trying hard to inflate the next bubble.

eric in vegas said...

"I'm with amigauser on this and have been saying the same for the past week. In an election year when both sides are tripping over each other to show "they care", they will do whatever it takes to prop up the economy."

Sadly I agree. The fix is in and they just can't let things go to shit before the elections. After the elections are over though they won't do shit and finally let things run their course.

Anonymous said...

What the heck is DOPES?

I have been following this board since August and still don't know
what the hell is DOPES!

Tell me pleazzzzzzz

Anonymous said...

bought Ambac

Anonymous said...

Don't believe the 'rogue trader' story, sounds like BS to meeeeee.

Anonymous said...

I've been shorting via puts and short selling since July. Homebuilders and financials - no sense getting cute. I'm up pretty good. Got coooked Wednesday when a couple homebuilder shorts stopped out that I put on last Thursday. My bad, I should've covered into the hole on Monday morning but got greedy. BTW, this is just a limited amount of cash in my trading account for speculating, I cashed out all my long investment positions back when Big Ben made his first rate cut. Now mostly in cash in FDIC insured CDs. 401(k) is 85% money market (best of bad choices) and 15% stock as a hedge in case the Fed actually can work miracles.

sandman said...

Keith, you're right. Now is the time for reflection.

The game is slightly rigged (some say it is compeletely rogged - but the dynamics of the market mean even the people in power cannot totally control it - manipulate it yes - control it no).

I believe we are seeing insitutional investor vs. joe investor.

Anecdotally, I know a guy who thought 2005 was a great time to buy a house. He did. Yesterday, he's saying buy stocks now. STOCKS ARE CHEAP! THEY CAN ONLY GO UP!

If enough people like him agree, it puts a weight on the market - even against the fundmentals. Although in the end the fundamentals catch up and he loses. The question is when.

I agree. This week feels more like gambling.

I closed the majority of my puts last week - in 3 months 100% ROI. I still hold long puts on consumer goods - especially big ticket - the fundamental there are f*cked. Even with the $600 Dominos check.

To bring a specific example - I still own puts on HZO - they are f*cked. Boating company. Good grief. People aren't paying they're auto loans - who's gonna pay or buy a luxury item like a boat. HZO slashed their 2008 forecast a week ago. Their revenue is going DOWN, down, down down. They admit it.

Today, they are up 8% - on no news.

This is crazy. For these guys - I still have a slim profit in my puts (6%). But I will hold - as the fundemantals are whacked. We'll see if I am right or wrong.

The question is:

Will the idiot I know who bought the house in 2005 buy into something like HZO - becuase it is "low" and skew the market.

Time will tell. T

he instiutional investor will know the fundamentals are wrong and get out.

Like I said Int Investor vs. J6P?

Maybe.

Mock me if I'm wrong.

But let me know your... thoughts.