Wednesday, September 26, 2007

Unloading Losers for Dummies

5 easy steps on how to create a market into which one can unload a monster losing position without punishing.

  • Step 1 Get into a position which you now find under water.
  • Step 2 Average down said position to lower your cost, dollar cost averaging.
  • Step 3 Repeat step 2 averaging down more as the stock falls, as it is a better deal now!
  • Step 4 Finally realise the writing is on the wall. What you should have seen earlier is now widely known, start planning exit strategy, before more bad news hits.
  • Step 5 Realise you can't get out without crushing the stock so put in call big newspaper and tell the lazy boob on the phone mucho financial magnet is buying into above losing position. As said imitation financial reporter spins story, to his investigatively challenged clones, amid dreams of the Pulitzer, you sell into nirvana.

The airwaves are full with stories, rumors and innuendo that Warren Buffett, among others, is taking a minority stake in Bear Stearns. It's one of those moments in time where watching bubble TV (CNBC) is better than comedy. Maria and Dylan fawning over each other about how they knew how cheap financials were and how the 'smart money' was buying the dip. Pure comedy ! My take on this is if you don't know already is this is nothing more than a pump and dump scheme.

Any of you out there still trading on news ?? If so you get what you deserve.

Now we get word from Charlie Gasparino that Jimmy Cayne(CEO of Bear Stearns) was soliciting Chinese investor(banks) interest in Bear Stearns. Should be a match made in heaven considering how Chinese banks cook their books. To the Chinese banks the Bear Stearns balance sheet(on and off) should look like Mother Theresa's check book. What a joke and to think there are people trading off this, gotta love the free markets. Now on the fat chance Warren Buffett is buying into Bear Stearns which I highly doubt, consider that he went into Solomon Bros. to bail out his old buddy Gutfreund. Now we have to assume that the same man who called financial derivatives weapons of mass destruction has now changed his mind and wants to climb in bed with them? Buffett is a master at his craft yet he has had messes(airlines) and has a mess on his hands with M&T Bank (MTB). Why would he want another one? Good trading to you all.

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