Commodity selloff due to margin calls

[MrDODGE]

Quote from mokwit:

Hedge funds have frozen withdrawals so that will stave off some selling from them.

Too bad if you had your money in one, at least with index funds you get the same performance, don't have to pay 2/20 and can pull your money out ahead of a market crash rather than being forced to ride it all the way down to where the fabled "orderly" liquidation will take place.

Where do you see this news?

 

[mokwit]

I am extrapolating that those that have been reported will not be the only ones - I suspect they will be the tip of an iceberg (as in big freeze) to come.

Don't forget that many of the USD1b plus hedge funds are MULTI strategy so have slime exposure. They are multi strategy because teh IPO pitch was that tjhis gave the kind of stable revenue streams that supposedly made the start up with no track record as stable as GE.

One of the best pieces of advice is to read the IPO prosectuses of concet stocks a few years after after they have crashed and burned. It will be beyond your comprehension that anybody could actually have believed this - some did.

 

[nutmeg]

One of the best pieces of advice is to read the IPO prosectuses of concet stocks a few years after after they have crashed and burned. It will be beyond your comprehension that anybody could actually have believed this - some did.

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Are you referring to fig & bx?

 

[mokwit]

Quote from Mercor:

Major hedge fund commodity selling on its way...They dump the commodities before anything else

Yes, the way they can structure is that unleveraged equities are collateral for leveraged positions which are unwound first - equiteis falling will of course will accelerate that.

 

[mokwit]

Quote from nutmeg:

One of the best pieces of advice is to read the IPO prosectuses of concet stocks a few years after after they have crashed and burned. It will be beyond your comprehension that anybody could actually have believed this - some did.

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Are you referring to fig & bx?

I was referring to the internet boom has history has yet to judge PE and HF's. I also think it will appply to the concept of commodities and China will grow to the sky, just like the internet was going to. Disclosure: I am short BX .

 

[Bogan7]

I can see a major reweighting coming up where traders will be getting out of commodities and back into equities that should provide a short-medium floor on equity prices

 

[mokwit]

Quote from Bogan7:

I can see a major reweighting coming up where traders will be getting out of commodities and back into equities that should provide a short-medium floor on equity prices

...............assumong the decline is not big enough for commodities margining to wipe out their equity - even on the less than exchange margin that HF's use - remember many commoddities, even copper and gold are VERY thin when everyone wants out together

 

[jficquette]

Quote from 5Pillars:

Gold has some unique dynamics affecting it that oil does not - gold holding strong should not be a surprise at all with our current financial situation.

The bigger they are the harder they fall.

John

 

[BosyBillups]

With "1 and 1000 year events" and poor liquidity environments, I assume that a HF will have trouble levering up on the short side, no?

 

[paysense]

<b>The Great Unwind has begun, Citigroup warns</b>

For once a major firm is giving timely, pertinent valuable advise.

"We are now confronted by a broad bloodbath in the credit markets," Citigroup said. " The most leveraged paper is falling in value because it is leveraged, and now the least leveraged paper is also falling in value because it is owned by leveraged investors."

http://www.marketwatch.com/news/sto...CF4-BE26-74EA4B9C9330}&tool=1&dist=bigcharts&

pS