My buddy at Legg just told me that HR has secured all the conference rooms for mass firings.
Legg Mason says bottom is in
- Thread starter ogarbitrage
- Start date
Probably not. Redemptions are over for the time being. This huge cache of money, sitting in short-term Treasuries will (must) find its way back into equities over the coming months. On top of this, the government will be spending hundreds of billions of dollars, not to mention the hundreds of billions being save in oil/gas by the average person. All, in all, the fuel for market advance, i.e. cash, is in abundance, and will slowly lift the market until it reaches escape velocity, at which times, shorts will throw in the towel and become longs. Then, we will have the beginning of the next Bull cycle. Nothing like the 20s, but a good chance to make some good money.
The HF redemption thing is a huge issue. It just freezes up even more money. Many HFs are insolvent.
Quote from Corelio:
Ok, so explain to me why hedge funds are blocking redemptions? Also what does it mean going forward when hedge funds will in fact have to meet these "blocked" redemptions?
Yes, some hedge funds have blocked redemptions. But it is all a temporary dislocation. All of those redemptions must find their way back into some allocation class. Hedge funds were about a 10% allocation class. Probably go down to 5%. But all of the money will find its way back into equities or bonds. What the market is trying to do, is to provide and orderly method. I am sure that things will get much more in shape once Obama gets in and we have competent management back in our government, as we had during the Clinton years.
Not so huge. My ex pulled out money from her financial planner because he was a joke, and now she is steadily plowing back the money in a more constructive manner. In the meantime it is sitting in cash, but it will all get back into the market. This is one of the reasons, it appears that the market is bottoming. I am not calling one, because I have no idea, but it is sure acting like it is. I am looking for a 50% retracement over the coming year, as all of this dislocated money moves from Treasuries to equities and bonds.
With all due respect your line of reasoning lacks factual evidence and it is solely based on personal perceptions.
Sure the market may rally violently from here as it always does in bear markets. Factual evidence shows it. Paper and pencil on hand and some historical data will show.
Blocked redemptions as a temporary dislocation? On the contrary, you are witnessing a major fundamental and structural dislocation in the financial industry.
The road to recovery will be long and arduous. But as a first exercise I suggest that you try to quantify the amount of garbage that HFs hold in their portfolios. Look back to the amount of private equity deals in the past several years that plowed our corporate structure with leveraged debt. Also try to quantify the degree of liquidity in their portfolios to get a small glimpse as to why stocks got smashed to the ground.
The dislocation I speak of is the hundreds of billions of dollars that were redeemed, yet still haven't found their way back into the correct allocation mix, and are sitting temporarily in Treasuries.
As for the hundreds of thousands of homes that people can't pay for or are not interesting in buying, well, the government will borrow and print, until some market bottom put in place. The costs will be borne mostly by those holding U.S. dollars, which are either in Treasuries, CDs, savings, etc. It is a scandalous way to handle it. I would prefer taxing the top 1%, who got away with all of this scammed money, and have parked it in Swiss banks. But I do not think this will happen. They have power, and they know how to wield it. Plus they've got the head wolf in charge of Treasury at the moment.
But the net is that the government has unlimited ability to print and borrow, and as long as every government around the world is doing the same thing, then we have an overall devaluation of cash and savings. It is despicable, but that is what is going to happen.
Legg laying off 8% of workforce.