Wednesday, February 18, 2009

Some Random Thoughts

I trust you all saw the American Express (ticker AXP) news that hit yesterday

"Defaults on loans packaged into securities rose to 8.29 percent from 7 percent in December, while payments at least 30 days overdue climbed to 5.28 percent from 4.86 percent the month earlier,"

I remind you that this is from Amex, not Capital One, or Discover, but Amex the Goldman Sach of the credit market. Speaking of Goldman.....

There are lots of rumors last night and now news today surrounding margin calls at the venerable firm of Goldman Sachs. Specifically it seems the most senior of senior partners are experiencing them. I would be remiss if I did not admonish these 'masters of the universe' the sage advice bestowed upon me long long ago. That being to never, ever, ever, under ANY CIRCUMSTANCES meet a margin call. It is the markets way of telling you that you are wrong.

I fully realize many may think it hubristic of myself to want to offer advice to these moneyed thinkers of Wall St. but given their track record I felt compelled. My work is now done.

I heard this morning that 'The Maestro' Allan Greenspan is now on the nationalisation of the banks bandwagon. I obviously must be the dummy in the room for advocating the stance of letting them all go under, thereby permitting many solvent banks of which there are many to take their place. As to why the leading lights of the administration, the Fed, the Treasury and academia are loathe to 'let them go under' can be debated ad nauseum but rest assured that if their solutions and recommendations till now is what passes for intellect and acumen I am proud to embrace and exhibit my ignorance.

Simply put they are idiots, the lot of them, for not being able to see and state the obvious.

And if they are not idiots then they are complicit in the looting and pillaging of the nations coffers. For some strange reason the word treason continually comes to mind.

Poor President Obama and his round table of economic priests want to stabilize housing prices. Does anyone see the insanity in the statement stabilize housing prices? It is completely understandable for academics like Susan Wachter, Professor of real estate and finance and the prestigious Wharton School of Business, and her ilk to believe their own blather but you Mr. Paul Volcker? Please tell me you do see the insanity in this, and you have voiced not only your opposition to it on moral hazard grounds but on the basis of fundamental economic laws.

It has been said before but where oh where are the adults ? We are in desperate need of some !

Professor Wachter can continue to enlighten her legions of zombies at the Wharton School about the need to meddle and interfere in order to avert "systemic risk". All because she says so ! All this as the poor marks that are the parents of her students, continuing to pay through-the-nose-tuition, emerging no better served than had they attended the local community college while working in the real world but once again I digress.

In the midst of all this there is an upside we can use.

I humbly suggest to our Joint Chiefs that we, as a nation, curtail all our military spending on missiles, tanks and standing infantry and instead in their place unleash the likes of Professors Wachter, Roger Farmer and Ken Rosen upon our enemies and their economies. The havoc and mayhem these 3 and their ilk would reek upon our foes economies and their populace would be unrivaled by traditional weaponry.

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 2 units Ultrashort S&P500 ticker SDS @ $69.80 stop @ $66.15
Long 2 units Ultrashort Real Estate ticker SRS @ $53.80 stop @ $47.18
Long 1 unit US Gasoline fund ticker UGA $21.85 stop @ $20.38
Short 1 unit Wells Fargo ticker WFC @ $20.20 stop @ $20.20
Short 1 unit Apple ticker AAPL @ $102.05 stop at $102.05
Short 1 unit Apollo Group ticker APOL @ $82.95 stop @ $86.32
Short 1 unit Goldman Sachs ticker GS @ 96.95 stop @ $96.95
Short 1 unit Microsoft ticker MSFT @ $19.20 stop @ $20.71
Short 1 unit Darden ticker DRI @ $28.95 stop @ $28.95

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