rumour leading to yesterday's selloff

[Landis82]

Quote from richrf:

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.

Feel free to look up the "Commodity Futures Modernization Act of 2000" which came from a group of Republican reps and senators ( Ewing, Bliley, Combest, Leach, Lugar, Fitzgerald, Gramm, Hagel, etc. )

It allowed for the likes of Enron to trade power contracts un-regulated with no accounting, no oversight, no nothing. It also allowed for WTI crude contracts to trade overseas electronically in Dubai and London with ZERO regulation whatsoever, zero position limits, etc. - - - This legislation also allowed for the use of Credit Default Swaps with ZERO regulation or SEC oversight.

Quote from richrf:

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

I would suggest to you that 2:1 leverage of equities by hedge-funds did not ruin the "market" or this country . . . But the 30:1 leverage of CDS with a value of $35 trillion that was OTC and not regulated by anyone certainly comes to mind as a big negative. But you didn't have to be a hedge-fund to get involved in buying/selling CDS. You could be ANYONE.

To simply blame "hedge-funds" for what has happened to the equity market is a bit naive, I would say.

 

[richrf]

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?

I don't think it is wise to draw a straight line down based upon old data. Going forward, we have to consider macro trends that will reverse these historical trends, e.g.

1) Gasoline is now selling for less than half of what it was selling a few months ago. I heard an estimate that each dollar saved, translates roughly into 1,000,000 new or saved jobs.

2) Government spending of $1 trillion, will boost employment by probably around 1.5 - 2 million jobs.

All of these jobs will either go to saving foreclosures or purchasing new homes, which will help stop the bleeding on home prices and equity. (Today's new mortgage claims reports help propel the market).

3) Mortgage rates are near historical lows and new Treasury plans may send rates even lower.

Hopefully, these new low rates does not translate into a new no-money down boom. If the money goes to credit worthy individuals, then this will further buttress home prices and may even begin to turn around the home industry. The housing sector index has been performing very well over the last few weeks, which may presage the turnaround.

While it is very early still, I would say that the macro elements strongly favor a fairly significant rally. However, I do not want to dissuade any shorting. I was able to purchase index ETFs at very favorable prices today and I appreciate the person/organization who sold it to me. Thank you.

 

[Spaceman3]

Quote from richrf:

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.

That's not a lot of leverage. Certainly not enough to "help ruin the lives of millions." I think you may be overstating things a bit. Whose lives did they ruin?

Thankfully they didn't ruin yours, as you seem to be doing just dandy!

 

[richrf]

Quote from Landis82:

It allowed for the likes of Enron to trade power contracts un-regulated with no accounting, no oversight, no nothing. It also allowed for WTI crude contracts to trade overseas electronically in Dubai and London with ZERO regulation whatsoever, zero position limits, etc. - - - This legislation also allowed for the use of Credit Default Swaps with ZERO regulation or SEC oversight.

Yes, I agree. Governmental deregulation certainly allowed the wolves to go wild. Interesting, the wolves got away with it, as the top 1% of our population owned a greater percentage of wealth than anytime in our history - surpassing even the period before the Great Depression and the 1929 crash. Their money, undoubtedly is in Swiss Banks. Now, we all will have to pay for it.

To simply blame "hedge-funds" for what has happened to the equity market is a bit naive, I would say.

I couldn't possible blame the hedge funds for everything, but they were certainly a big part of it, as they created all kinds of conditions and rumors to spread panic and cause mass selling. It is really so disgusting, that people love money that much that they are willing to destroy people's lives. Hopefully, they will be regulated and subsequently discredited. They are not making money in a decent way. They are simply trying to grab it in any manner they can. I get this really sick distaste in my mouth just thinking about these very avarice human beings. Unfortunately, I have to share my air with them.

 

[richrf]

Quote from Spaceman3:

That's not a lot of leverage. Certainly not enough to "help ruin the lives of millions." I think you may be overstating things a bit. Whose lives did they ruin?

Thankfully they didn't ruin yours, as you seem to be doing just dandy!

Yes, I am doing fine, since I know about these scoundrels and how they love to prey on people who are just trying to earn an honest living, and have some money in their 401Ks so that they can enjoy a relatively peaceful retirement.

 

[Landis82]

Quote from richrf:

I couldn't possible blame the hedge funds for everything, but they were certainly a big part of it, as they created all kinds of conditions and rumors to spread panic and cause mass selling. It is really so disgusting, that people love money that much that they are willing to destroy people's lives. Hopefully, they will be regulated and subsequently discredited. They are not making money in a decent way. They are simply trying to grab it in any manner they can. I get this really sick distaste in my mouth just thinking about these very avarice human beings. Unfortunately, I have to share my air with them.

Just what kinds of conditions and rumors did the hedge-funds create to cause panic and mass selling?

Please be specific.

 

[richrf]

Quote from Landis82:

Just what kinds of conditions and rumors did the hedge-funds create to cause panic and mass selling?

Please be specific.

Sort of like this thread. People who follow the industry knew that the hedgies were selling in October, and November. But, why is this news coming out now, in the mass media? Well, the hedgies just get one of their ilk to let the news out now, hoping to scare up some panic selling, so they can buy cheap. An old game. However, at these prices, I am sort of piggy backing on their own game.

These guys are really quite oily. Dropping little gems here and there to their mouthpieces in the media. Everyone makes money, except the ordinary folks who are scared stiff by these kind of self-serving rumors. BTW, there are exceptions. I think Doug Kass is pretty level with the public.

 

[Spaceman3]

Quote from richrf:

Sort of like this thread. People who follow the industry knew that the hedgies were selling in October, and November. But, why is this news coming out now, in the mass media? Well, the hedgies just get one of their ilk to let the news out now, hoping to scare up some panic selling, so they can buy cheap. An old game. These guys are really quite oily. Dropping little gems here and there to their mouthpieces in the media. Everyone makes money, except the ordinary folks who are scared stiff by these kind of self-serving rumors. BTW, there are exceptions. I think Doug Kass is pretty level with the public.

You need to drop the conspiracy theories. The everyone-is-out-to-get-the-poor-hardworking-decent-folk stance is tiring. If you're buying cheap stocks, great!

It is also very self aggrandizing to put yourself in the honest hardworking folk category while simultaneously claiming you are able to see through all the dishonesty and make money.

 

[richrf]

Quote from Spaceman3:

You need to drop the conspiracy theories. The everyone-is-out-to-get-the-poor-hardworking-decent-folk stance is tiring. If you're buying cheap stocks, great!

It is also very self aggrandizing to put yourself in the honest hardworking folk category while simultaneously claiming you are able to see through all the dishonesty and make money.

Yep, the whole investing community is squeaky clean. Actually, reminds me of online poker. No conspiracy at all. All above board and squeaky clean. lol.


I told all of my friends that they were sheep being led to slaughter. No one listened. That was before they lost 50% of their life savings. Now they have no cash, so they are sunk. Luckily, my ex, who also ignored me, still has lots of cash, so she has a good chance of recovering. In the online Poker forums, they call people, such as my wife, Fish. You know, they provide food for the sharks.