Wednesday, April 8, 2009

Perception and Confidence.....Really ?

I wanted to write about this issue earlier today when the article linked below came out but backed off because I needed to focus on the charts. But after a brisk hour walk with my perfect dog and thinking on it I changed my mind.

So let me see if I understand this short selling brouhaha correctly. The powers that be don't want to ban short selling, they just want to curb it's abuses cause they are worried about the perception and confidence of our capital markets.

Yet today we got this gem......

"The U.S. Treasury Department is planning to delay the release of any completed bank stress test results until after the first-quarter earnings season to avoid complicating stock market reaction, a source familiar with Treasury's discussions said on Tuesday."

"But officials are worried about how the market will react to the stress test results if there is not a clear recovery path for a bank that is deemed to have a large capital need. The last thing Treasury wants to do is set off a panic, the source said. "

You've got to be kidding me right? This is some short of sick and twisted oxy moronic joke of some type no ?You don't want to release the stress test results of the banks for fear of creating a panic yet you're worried the dastardly short sellers will pile on indiscriminately to the pathologically lying, insolvent corporations and erode investor confidence in the markets?

I am truly left speechless. No need to wonder any longer why lying dirt bags whose lies and misdirections I have chronicled in the blog can get away with what they have and are not behind bars. The government is condoning the behaviour by participating as the lead sled dog.

Just like when King Henry Paulson and Fed Reserve court jester in chief Bernanke told us the economy was resilient and subprime was contained.

Just like when Barney Frank and Chris Dodd told us Fannie and Freddie were well capitalized.
Just like when Alan Schwartz of Bear Stearns and John Thain of Merrill Lynch came on TV and tell us they are well capitalized only to see the former blowup less than 72 hours later and the later raise $8 billions within a week.

I never will get a job interview with NASA but I am bright enough to figure out what is eroding the perception and confidence of our capital markets and it most surely is not short selling.

What on God's green earth is happening to us ??

Please make this all stop !!!

I came across this piece by Peter Boockvar over at Barry Ritholz's site the Big Picture. I have taken the liberty to put them in bullet points for easier reading.
  • Short sellers (SS) didn’t get people to buy homes with no money down,
  • SS didn’t convince people to buy homes with teaser rates,
  • SS didn’t convince people to lie about their income on their mortgage applications,
  • SS didn’t tell banks/brokers to lever up to such huge levels,
  • SS didn’t tell Greenspan to cut rates to 1% and leave it there,
  • SS didn’t invent FNM and FRE,
  • SS didn’t tell the OTS, OCC, FDIC, Fed, SEC, FFIEC, FTC, FHFA and all the state regulators to twiddle their thumbs all day,
  • SS didn’t tell the rating agencies to rate AAA on anything that moved,
  • SS didn’t tell banks to lend to commercial real estate investors on a property where the rent didn’t cover the mortgage payment,
  • SS didn’t tell the average consumer to spend more money than they make and borrow difference.

Short selling is a legitimate form of speculation that fully enhances market liquidity and price discovery.

Here, here Peter. I couldn't have said it better myself though I really wish I had!

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 1 unit Ultrashort Real Estate ticker SRS @ $44.15 stop @ $41.88
Short 1 unit Darden ticker DRI @ $35.30 stop @ $37.51
Short 1 unit Autozone ticker AZO @ $158.80 stop @ $163.06

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