rumour leading to yesterday's selloff

[gbos]

Quote from JamesVU2000:

No, there in them because they know they can get there money back.

What if 30 yr bond yields return to more "normal" levels?

http://finance.yahoo.com/q?s=^TYX

At 4.5% yield their bond will worth 80% of what they paid for.

At 6% .... 60% of what they paid for.

In a high inflation scenario case like the 1980's with yield's 9% and above their bonds will worth 40% of what they paid for.

So how exactly do they know they can get their money back?

 

[AlmostGotIt]

Quote from sumosam:

Apparently, yesterday was the last day that the hedge funds could liquidate stocks for this year...and have money for redemptions. It just seemed that the selloff was way overdone.

Is there a calendar or schedule available for things like this?

 

[Spaceman3]

Quote from richrf:

Fannie and Freddie default rates are actually very small compared to subprime. However, the problem was that F&F were leveraged over 120:1. Ridiculous. But this all happened under the auspices of a Republican Administration, Republican controlled legislature, and neutered government regulators who ideologically believed in the "free market" as opposed to the reality, which is the "thieving market". The AP reported how the Bush administration was warned about the F&F fiasco, but declined to intervene because they wanted the free market to handle it. Left to their own devices, the thieves will always figure out how to steal money - and get away with it.

Is it any surprise that the two greatest financial disasters during the last 100 years were orchestrated under Republican free market administrations? If thieves cannot be under lock in key, they must at least me watched at all times.

Who actually made money at the end? The top 1%, most of whom give generously to those who will let the free market play its own games on the unsuspecting.

I'm not sure this is worth responding to, but the seeds of the subprime crisis were not sown during the Bush administration. That was my point. The legitimization and proliferation of subprime loans happened during the Clinton administration. Banks that were not issuing subprime loans (read: lowering their lending standards) to people in certain neighborhoods were scrutinized, their "racist" lending records publicized, and they were threatened by regulators (read: the Clinton administration), who said they (the regulators) would shoot down any attempts to by the banks to expand their business through mergers/acquisitions. The Clinton administration mucked with lending standards. Its all out there for those willing to look into it. I’m sure I don’t need to explain the economics of what followed.

 

[richrf]

Quote from Spaceman3:

[BThe Clinton administration mucked with lending standards. Its all out there for those willing to look into it. I’m sure I don’t need to explain the economics of what followed. [/B]

It is true that Clinton and Democrats mucked with lending standards to advance agendas. However, what happened under Clinton was microscopic compared to the leveraging mayhem that followed under the Bush administration which completely dismantled and neutered every type of regulation there was and allowed the thieves to do whatever they wanted, when they wanted. The Head one, managed to find his way into the Secretary of Treasury office.

What Clinton did was negligent. What Bush did was scandalous and obscene. But I will cut him some slack. He never read a history book, doesn't read newspapers, and probably listens to Right Wing radio for his news. So lets just call him ignorant and naive. Maybe dumb. But I will leave criminal for all of the people who surrounded him and used him as their own pawn towards their obscene desire for great wealth - even at the cost of our whole economy and people's life savings. And, BTW, I include Limbaugh, the mouthpiece for these scoundrels, in this mix.

 

[richrf]

Quote from AlmostGotIt:

Is there a calendar or schedule available for things like this?

It is well known that most hedge funds require a 45 day redemption notice. However, some less and some more. In anticipation of these redemptions, hedge began to sell heavily in October, and it continued with renewed velocity in November. There is no one set schedule. It varies with individual funds, depending upon the limited partnership agreements. Most hedge funds also have, as part of their agreement, the ability to halt redemptions, if it would cause adverse affects on their portfolio. This to, can always be negotiated.

 

[Wallace]

via wilburbear: 'investors have asked to withdraw 36 percent of the assets' :
http://www.reuters.com/article/innovationNews/idUSTRE4B14MU20081202
http://www.elitetrader.com/vb/showthread.php?s=&threadid=146636

 

[blackjack007]

Quote from MKTrader:


This year we're extremely oversold by any historical standard or benchmark.

we're not oversold by every benchmark.

how about the benchmarks that say the economy is buried 10 feet under right now? a rapidly contracting world economy, accelerating unemployment, falling corporate earnings, falling personal net worth, consumer outlook at multi-decade lows?

 

[Landis82]

Quote from richrf:

Hedge fund leveraging has certainly hurt the market and the country as a whole.

Do you even know what you are talking about when it comes to the use of LEVERAGE in the equity market?

Please feel free to let us know how an equity based hedge-fund would be able to LEVERAGE their equity positions > 2:1?

 

[Landis82]

Quote from blackjack007:

we're not oversold by every benchmark.

how about the benchmarks that say the economy is buried 10 feet under right now? a rapidly contracting world economy, accelerating unemployment, falling corporate earnings, falling personal net worth, consumer outlook at multi-decade lows?

How about this for a benchmark . . .

The yield on the Dow Jones Industrial Average is now greater than the yield on the 10-year Treasury ( 2.72 ) for the first time in 50 years.

Meanwhile, we had just about the worst economic news that you can think of ( ISM at 37.3, Beige Book, 250,000 in layoffs for November, FCX drops dividend, SLB cuts outlook, air traffic declined last month, etc ) and the market was able to "shrug" off the bad news and rally.

As a trader, you have to respect that kind of price action.

 

[richrf]

Quote from Landis82:

Do you even know what you are talking about when it comes to the use of LEVERAGE in the equity market?

Please feel free to let us know how an equity based hedge-fund would be able to LEVERAGE their equity positions > 2:1?

Who said equity based hedge funds? Hedge funds use all kinds of leveraging techniques. However, for the gross numbers:

"The amount of gross leverage used by hedge funds fell to 142% of assets from 175% in 2006 and 2007, Bloomberg News reported. Hedge funds have raised their cash holdings to an average of 31% of assets now, up substantially from the average of 7% in the previous two years, according to the survey."

Hedge Fund Leveraging

The only good that hedge funds have done, is provide me and others like me, with lots of cash, to buy up great companies and extraordinarily low prices. I bought more today on the dip. However, in the process, they helped ruin the lives of millions of people. I wonder if making that extra hundred million is worth it? No karma points for hedge funds.