Tuesday, January 20, 2009

More Financial Woes

It seems we have discovered another rogue hedge fund manager in our midst. Mr. Arthur Nadel has "gone missing" along with a reported $350 million in client assets. I do hope his clients realise that Mr. Nadel, an attorney by trade, was disbarred back in 1982 for violating the terms of an escrow agreement. What is that Latin phrase again, oh yeah, caveat emptor.

Yesterday we got news that Royal Bank of Scotland had losses of 22 billion pound sterling absolutely hammering their stock. All this, according to Mr. Steve Forbes, this is nothing more than a liquidity crisis, and if only the accountants and regulators would ease the mark to market restrictions all would be glorious !

Remember now, according to the pundits like PhD (papa has dough) Steve Forbes, it's all just a liquidity crisis. Mr. Forbes I want to introduce you to a concept called insolvency, yes a hard concept to grasp when the money is not yours but try it out.

The U.S. treasury is demanding monthly lending reports from the banks who have received bailout funds. How brilliant in its simplicity. It's sheer elegance. Lets force the banks to do more of what created this mess. At least it's all consistent in one big sort of twisted, perverse, twilight zone sort of way.

We get more news today on the financials with State Street's losses (ticker STT). I remember a reader email claiming State Street was immune to the woes of other banks due to their prominent position in custodial services. I sure hope he had some stops in, but either way it is another example of when the psychology changes, no one and I MEAN NO ONE is immune to it's ravages. You can tell yourself otherwise but facts speak for themselves. But hey, why lets facts get in the way a nice dream.

Hey there's nothing to worry about as the banks are trading below intrinsic book value. This is a buying opportunity of a lifetime. Wait, sorry, I missed that chance. That was back in March of 2008 according to Dick Bove. Considering the decline since then it must be the buy of the millennium.

Given the concerns here and overseas regarding the financials, I am raising my stop on the ultrashort financials ticker SKF to $148.18.

Housekeeping notes;

I was stopped out of my APOL position at $88.70 for a loss of just shy of $3.5 pts on 3 units.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $89.80
Long 1 unit Ultrashort Financials ticker SKF @ $102.60 stop @ $148.18
Long 1 unit Ultrashort S&P500 ticker SDS @ $66.15 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $55.23 stops @ $54.75/$55.670
Short 1 unit Darden ticker DRI @ $27.70 stop @ $28.70
Short 1 unit of Mantech ticker MANT @ $56.80 stop @ $60.14

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