Panic on the way up?

Arnie · Oct 28, 2008

Anyone else catch Barton Biggs on Fast Money? Not sure 'cause I had it on in the background, but I think he said we could have a panic on the way up.

stock_trad3r · Oct 28, 2008

I didn't see the segment. Anyone have a link? but I agree there will be a monster rally for the rest of this year.

shortie · Oct 28, 2008

Quote from Arnie:

Anyone else catch Barton Biggs on Fast Money? Not sure 'cause I had it on in the background, but I think he said we could have a panic on the way up.

"panic on the way up" = short covering? what did he mean?

ASav · Oct 28, 2008

Quote from shortie:

"panic on the way up" = short covering? what did he mean?

I think he means that for every pop, people will pile in thinking they are missing the rally. So they will panic that they are not in the rally, buy willy nilly and send the market higher.

murray t turtle · Oct 28, 2008

Quote from Arnie:

Anyone else catch Barton Biggs on Fast Money? Not sure 'cause I had it on in the background, but I think he said we could have a panic on the way up.

====================
May have said it,Arnie?????;
overdue for a bear rally, anyway.

Fed day may give a hnt

;
actually since 5day highs were taken out,eod,today,
probably just your ordinary ,perhaps fierce bear rally

Arnie · Oct 29, 2008

Found it. Its in the middle portion of the video

http://www.cnbc.com/id/27425336

âWe had a panic on the way down and we will probably have a panic on the way up. I think by the end of the year we could make up a lot of ground thatâs been lost.â

makloda · Oct 29, 2008

Biggs makes one important point: All this "hedge fund redemption" talk is so overblown. What billion dollar equity hedge funds are leveraged 3x long? 10x long? That would have an effect on the markets. But those don't exist. That's talk from the realm of fairy tales.

A typical equity hedge fund would be e.g. 1.5x long, 1.2x short. 2.7x gross leverage, 0.3x net long. As Biggs pointed out hedge fund net long exposure is probably already at record lows. Redemptions here have a very small net effect on where the SP500 is trading as they have to close both long and short positions at the same time in order to meet redemptions.

zdreg · Oct 29, 2008

overblown?

hedge fund industry will have a great track record in forthcoming years. 25%+ of hedge funds will disappear and will be excluded from the industry's performance.
http://www.reuters.com/article/hedgeFundsNews/idUSLNE49N02620081024

watch for my new thread on this subject.

makloda · Oct 29, 2008

Overblow = I meant the effects of hedge fund redemptions as a scapegoat for the SP500 going down. Didn't make that clear.

JamesVU2000 · Oct 29, 2008

Quote from makloda:

Biggs makes one important point: All this "hedge fund redemption" talk is so overblown. What billion dollar equity hedge funds are leveraged 3x long? 10x long? That would have an effect on the markets. But those don't exist. That's talk from the realm of fairy tales.

A typical equity hedge fund would be e.g. 1.5x long, 1.2x short. 2.7x gross leverage, 0.3x net long. As Biggs pointed out hedge fund net long exposure is probably already at record lows. Redemptions here have a very small net effect on where the SP500 is trading as they have to close both long and short positions at the same time in order to meet redemptions.

Yeah and thats more than enough leverage to get crushed in this market. Doug Kass said BP was down 65 percent and citadel down 40. I agree that markets could panic on the way up, but HF have gotten murdered.