Monday, November 15, 2010

SEC - Lost and Misguided

 Juxtapose. According to dictionary. com juxtapose is  a verb used to place close together or side by side, esp.for comparison or contrast. For those of you out there who actually care about what is going on I want to juxtapose 2 recent events, A) to show you how far off our rocker "our system" (our culture as Charlie "hypocrite of the year' Munger called it) has gone and B) to show how misguided and lost the cops on the beat or more appropriately, the nincompoops at the SEC have become. 

The first event as you may or may not recall was the story of  SEC Charges Rail Workers with Insider Trading. I put out a piece on this news story entitled The SEC - Nothing Has Changed.in which I recounted the story. Here is what my friend Dennis Gartman had to say on the situation:

"The SEC is taking Gary Griffiths and Cliff Steffes… two men who worked in the “yard” and not in managements at the railroad… to task for trades they’d done in the stock and options of their company when they noticed a large number of non-company individuals walking around in the “yard” and who were asking a surprising number of questions regarding railcar movements, tonnage carried. The SEC’s claim is that when the men, and their families, bought a rather surprisingly large amount of options on the company’s shares because they had noticed “an unusual number of daytime tours” of the “yard” by “people dressed in business attire” and had assumed that perhaps their company was “in play” that they were in receipt of illegal “insider information” and thus must not only disgorge any profits they’d made, but must pay a massive fine and may even have to serve time in jail. From our perspective, Mr. Griffiths and Mr. Steffes were simply doing excellent “research.” They’d seen something unusual taking place; they made an educated guess as to what the unusual activity meant; they acted upon their guess by buying options on their company’s stock and they profited by the wisdom of their “research.” The SEC thinks otherwise and the SEC is wrong."

Okay. Now I didn't go to Princeton, Harvard or Yale (thank the Good Lord as I might be as mind numbingly compliant, in agreement and as lights out stupid as the rest of the illuminati in charge). I have never worked for Goldman, JP Morgan. or the other crime syndicates. I have never been a member of the lucky sperm club fraternity. Maybe jsut maybe I'm from flippin' Mars as I am at a complete and utter loss as to why Steffes and Griffiths have been charged. They did absolutely NOTHING wrong. No wait now! Acutally, they did do something wrong. They actually THOUGHT ! They didn't create toxic garbage and peddle into pension accounts. They didn't hide worthless rotting assets in offshore entities at full face value. They didn't sell the same security to the multiple accounts. They didn't forge signatures and documents. No, Griffiths and Steffes used that novel concept called powers of observation. 


Okay now. Enough. You got that story. 

Now lets rewind back to Friday Sept 24th and the visit to the mis-information network CNBC by  the omnipotent, all knowing one David Tepper of Appaloosa Management in which he has some gems of wisdom for all us igits:

"but before the Fed comes in with money, up until that point, the stocks can go down a little bit, but not that much, cause I got a put, ya gotta love a put, um especially when the government's issuing it, so I can't go down that much"

His visit and comments on CNBC led me to submit my post Investing is Easy, in which I was quite unforgiving and direct in my criticisms where I said:


"In case you didn't know that all you had to do was listen to hedge fund mogul David Tepper of Appaloosa Management on the propaganda network this morning. Does anyone have any idea how many times he remarked how EASY investing is? For some strange reason I lost count. My losing count might have had something to do with Mr. Tepper's nauseating arrogance which truly was unbearable. My only question for the boobs and boobs in chairs over at CNBC is either how long till Tepper's hubris makes you barf all over him or at what point do you get sick of his self aggrandizing drivel and simply pop him right in the nose?"

I knew my comments where guaranteed to elicit the Tepper apologists from the woodwork and like clockwork my email was full. 

Okay now that we have that. Lets fast forward to today. The 13F's for the 3rd quarter have been filed and are now public,  remember now the 3rd quarter ended Sept 30 which was the Thursday following Tepper's Friday appearance, 6 DAYS for those lacking a calendar or possessing only Ivy league math skills. 


The link here will take you to Mr. Tepper's fund holdings (hat tip to Zero Hedge for that link!) You also need to be aware that financials represented over 50% of Tepper's holdings. So given all this from the "Economy gets better, stocks go up. Economy gets worse QE 2 and stocks go up" manager what are the facts. Well fact is he dumped:

  • 18% of his Bank America stake
  • 11% of his Citi stake
  • 19% of his Wells Fargo stake
  • 19% of his Fifth Third stake
  • 19% of his Suntrust stake
  • 75% of his Hartford Financial stake
  • 19% of his Capitol One stake


I have a question for the SEC.


CAN ANYONE THERE SPELL P-U-M-P and D-U-M-P ?


You were so blatantly incompetent or on the take (take your pick) you couldn't uncover Bernie Madoff even with Harry Markopoulos placing the evidence on your lap until the mushroom cloud was visible to Donald the dunce400 miles away. Not a single operator from the ponzi scheme most commonly referred to as the U.S. housing industry is behind bars even with all the evidence available about what went down. Fund managers like Tepper can come out promoted the markets, aided and abetted by the likes of CNBC who provide the venue, to execute a centuries old scheme of pumping a market in which to unload to.

Yet, in the face of all this, you, the SEC have the onions to go after a couple of nobodys from a railroad yard. Men like Griffiths and Steffes who, traded with a touch of common sense and observation skills the junior high paper boy is equipped with, are now charged and villified as insider traders. All this as thugs, no Max Keiser said it best, financial terrorists like Mozilo, Raines, Mudd, O'Neal, Fuld, Prince, Rubin, Paulson, Cassano, Blankfein, Dimon, Dodd, Gramm, Greenspan, Bernanke, Geithner, (shall I keep going?) not only remain on the loose, they still possess the loot. 


Did I get that all straight? Correct me if I omitted anything.

Seems to me our financial structure has just become one big free for all. Right? What was it the poet 50 Cent said? Oh yeah.... I remember "Get rich or die tryin'

Hey 'Money Honey' Maria Bartiromo of aider and abettor central CNBC, remember your questions to all those CEO's and resident pundits about restoring trust in the markets? These events I just juxtaposed for you are a huge hint. Hopefully you can find time to so some REAL business journalism and discover it, possible in between flights on Citigroup's private jet.


Housekeeping notes:


On Friday I was stopped out of 2 units of TLT one unit at $96.09 for a 1.2 pt loss and one unit at $95.95 for a loss of just over 1/2 a point.

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

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $60.30
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $52.60
Long 1 unit U.S. Dollar Bull ticker UUP @ $22.56 stop @ $21.44
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.38 stop @ $7.84
Long 1 unit Powershares Gold Dbl Short ticker DZZ @ $8.61 stop @ $8.04
Long 1 unit Barclays 20yr Treas Bond ticker TLT @ $96.37 stop @ $94.94

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