NakedPuts Wrote: ------------------------------------------------------- > People wondering if you should short stuff after > it’s fallen 75%? Yes, I’m well aware it can > always fall another 100%, but it seems the > risk/reward is way out of whack to be shorting at > this point. That’s just nuts. The best time to short is usually things that have gotten clobbered.
i agree. i’m thinking about longer dated calls, knowing full well i could loose it all. it’s sort of binary here. the stock could go to zero, but if it survives somewhat intact they are set up for significant earnings power given the market share and pricing power they’ve gained in the last nine months. as one analyst said today they’re selling flood insurance in the middle of a once-in-a-century flood. And the margins they’ve been putting on in their spread business are the best they’ve seen in years. The driver will be how liquidity holds up in the agency debt market. It’s getting a bit tigher here, but the widely quoted treasury spread print that tobias mentioned (although I though that was on the 2-year benchmark deal they brought, not the bills) is a bit misleading as these guys fund off LIBOR. Yesteday’s print was an all-time wide to treasuries, but inside the wides to swaps and the deal was oversubscribed.
Except they’re selling flood insurance in a neighborhood that has a typhoon on the way and they are already insolvent. And, yeah, anybody can survive indefinitely if people will just keep lending them money. Not happening and the liquidity dries up as things get worse. Edit: grammar
JoeyDVivre Wrote: ------------------------------------------------------- > NakedPuts Wrote: > -------------------------------------------------- > ----- > > People wondering if you should short stuff > after > > it’s fallen 75%? Yes, I’m well aware it can > > always fall another 100%, but it seems the > > risk/reward is way out of whack to be shorting > at > > this point. > > > That’s just nuts. The best time to short is > usually things that have gotten clobbered. Ah yes, the time honored investment strategy of sell low buy lower. There’s blood in the streets, short em! That said, I’ve shorted stuff hitting 52 week lows in this market. Didn’t feel good about it, although the trades have worked so far.
Ahhh yes, now I remember, Big Nodge was the guy who told me I was going to get “owned” by shorting Countrywide at 20. The fact that he’s bullish on FNM here is reason enough for me to short to 0.
Doesnt sound very bullish to me
from the testimony today: “In today’s world I don’t think it is helpful to discuss any financial institutions and whether they pose systemic risk,” Mr. Paulson said. Nor would they answer a question about whether Congress needs to give the regulators more tools to deal with the possible insolvency at either company. “I don’t think we should be speculating about what if’s with Fannie and Freddie,” Mr. Paulson said, as Mr. Bernanke sat silently at his side. if there ever was eloquence in silence…
Typical Bush Administration nonsense. Congress asks the treasury secretary about whether the Bush administration is prepared to deal with major instability and the administration says “bite me - none of your business”. “Mr Paulson, whether or not you think the question asks for speculation or you think it is helpful, I suggest you answer it. Need I remind you of Congressional options in dealing with executive stonewalling?”
point is - they cannot lie during testimony, so what they refuse to say often says a lot
I know - but there are three choices and I wish they would go with “tell the truth”
FWIW, I wrote my congressman a 4 page handwritten letter. I told him to let the bastardz fry. There will be buyers when the price is right (and that’s a long way away).
Nobody will get this, but I see the reason why insider trading is illegal. Honestly, very few people outside of a company have much understanding of that company, especially when they are hyper complex.
greenspan will go down in history as the greatest economist twit ever. i feel sorry for him though. bugger was being fed positive reinforcement by everyone.
JoeyDVivre Wrote: ------------------------------------------------------- > Typical Bush Administration nonsense. Congress > asks the treasury secretary about whether the Bush > administration is prepared to deal with major > instability and the administration says “bite me - > none of your business”. “Mr Paulson, whether or > not you think the question asks for speculation or > you think it is helpful, I suggest you answer it. > Need I remind you of Congressional options in > dealing with executive stonewalling?” Yeah, it’s going to be strange in the next administration, whether Obama or McCain. It’s just too easy to assume that the Bush administration is clueless and will just start talking big and tough while doing mostly nothing (BSC excepted). Not that Obama or McCain can be expected to be immune from stretching and spinning things, but probably neither of them are going to say “Mission Accomplished” on the economy when the sh*t is still hitting the fan.
Interesting excerpt from an article that came out a few minutes ago. Pay attention to the last sentence. Further proof that if Big Nodge isn’t a contrarian indicator I don’t know who is: July 11, 2008 U.S. Considers Takeover of Two Mortgage Giants By STEPHEN LABATON and STEVEN R. WEISMAN WASHINGTON Alarmed by the growing financial stress at the nation’s two largest mortgage finance companies, senior Bush administration officials are considering a plan to have the government take over one or both of the companies and place them in a conservatorship if their problems worsen, people briefed about the plan said on Thursday. The companies, Fannie Mae and Freddie Mac, have been hit hard by the mortgage foreclosure crisis. Their shares are plummeting and their borrowing costs are rising as investors worry that the companies will suffer losses far larger than the $11 billion they have already lost in recent months. Now, as housing prices decline further and foreclosures grow, the markets are worried that Fannie and Freddie themselves may default on their debt. Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing.
If the government nationalizes Fannie & Freddie, all the shareholders will be wiped out.
I think that’s what “the shares of Fannie and Freddie would be worth little to nothing” means.
Shareholders deserve to get wiped out. The bondholders deserve a 30% haircut in the form of some complex restructuring deal… so they can’t easily figure out that they’re actually taking a 30% haircut. If they’ve been holding through this mess they won’t know or care.
Oh boy…how soon does the CFA LOS reflect current trends?
The government needs to have an organization that performs the functions of Fanny and Fresdie, so the government will not let the firms go completely under. However, a bailout would probably involve some kind of deal where the organizations are more or less taken private/nationalized and debt is backed up from taxpayer sources. There would be little or no incentive to bail out equity holders, and at some point down the line when Freddie and Fannie look more stable, the government might float the companies publicly again. Legally, it might not be necessary to take the companies private; you might be able to accomplish the same result by bailing out the company with lending and the appropriate set of bond covenants, but the equity portion would be wiped out for some time.