Joey Buttafueco Jr Posted March 12, 2008 Share Posted March 12, 2008 Much of this stuff is trading at 50% or less of what is genuinely fair valur. It's a steal, but if you are a real money fund manager very hard to justify to to you clients why you bought something at 50 in the middle of all this if tomorrow its at 30... Prices need to stop falling... How do you define fair value? Quote Link to comment Share on other sites More sharing options...
Joey Buttafueco Jr Posted March 12, 2008 Share Posted March 12, 2008 This may surprise you, but very few people in the financial markets really understand what is going on. This is particularly true of the stock market. The reason for this is partly because the minutae of the rules governing banks and of the mechanics of the money market are found full by most people, partly because there is a tendency in the stock markets to sneer at other asset classes (I have no idea why, but it is a very prevalent attitude) and partly because they believe the fed will save the day so they don't have to work out what is going on. It is for this last reason that there has not been a large scale capitulation in the stock market yet (there will be). It is worth noting that the fed has always announced these measures or cut rates when the market has just fallen a lot, so the shorts (of which there are always more when the market has just fallen) need to cover. Of course, I believe there will be a day quite soon when the fed cuts rates or announces another useless measure and the market keeps falling. Watch this space.... "partly because there is a tendency in the stock markets to sneer at other asset classes (I have no idea why, but it is a very prevalent attitude)" Surely it is the other way round - at least according to Liar's Poker "It is for this last reason that there has not been a large scale capitulation in the stock market yet (there will be). " Should we now be measuring the stock market against currency or gold (huge M3/M4)? Quote Link to comment Share on other sites More sharing options...
Joey Buttafueco Jr Posted March 12, 2008 Share Posted March 12, 2008 I came in tonight at about 8, read the forum and about the Fed's activity today and thought this smells of outright panic. This is dressed up as a general move "for the markets", but will in reality be a rescue aimed at a specific institution, very large, which is about to collapse and implode the system.So, I went to Tesco and bought up enough pasta andd tinned food to last for two months, as and insurance policy. "PROTECT YOURSELVES-NOW!" While loading the car, I thought "this move stinks-why allow banks to swap junk for t notes?"... then I came back and read this thread I think Denninger is right... Things are now highly unstable and one or more large US institution is about to collapse. There is fear in the dealing rooms on Wall Street. Margin calls are going to blow up the system: they almost did last week. Stock up on food and fuel. It'll cost less as an insurance policy than you spend on your car in a year. If I'm wrong-you can still eat the stuff-so you have lost nothing.If Citibank goes under, everything could grind to a halt within a few days. HPCers have been watching the beginning of a huge international crisis in banking. Cgnao is/was 100% correct. Gauranteed. Remember we are still at the start of this mess. Corporate debt problems etc. CDS problems are still to unwind. Act now. Posting on the web (here) and being correct about house prices won't feed you if everything stops for a while. "Cgnao is/was 100% correct. Gauranteed." He is posting from articles that have a number of innaccuracies so I would dispute the 100% figure "Corporate debt problems etc." Can you clarify please "CDS problems are still to unwind." Do you mean CDO/CPDO? Quote Link to comment Share on other sites More sharing options...
MarkG Posted March 12, 2008 Share Posted March 12, 2008 Or maybe I'm just being a commie b*astard The commies created this problem by pushing for central banks. A free market has no need of one, and works much better without it. But when the taxpayers who didn't get multi-million pound bonuses for blowing billions lending money to people who would never pay it back realise that they're going to end up paying for it, the results may be... interesting. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted March 13, 2008 Author Share Posted March 13, 2008 one of your best posts EDM(among many fine ones admittedly)I am a long time equities man.I have to agree that the learnign curve for many over the last few months re money markets in general has been exponential.There has always been a feeling that the central banks 'look after that kind of stuff' and they'd never allow anything to jeopardise the banking system.Unfortunately for me,Nortehrn Rock was a massive wake up call,I got caught long in some bank stocks.I knew there were problems but had no idea how bad.Even now,I think many are still looking for reasons to be optimistic rather than reasons to be pragmatic. My personal view is that there will be another sell off going into the trough.Take away the outperformance of the miners and really the ftse 100 is nowhere over 5/10 years.However,soem of the mega caps offer solid value(pharmas/oils) and have underperformed the more leveraged and risky stuff in the 250 for too long.If bond yields keep going/stay down,then I believe there is a fair chance of some equities doing well thereafter,if not in a positive way,then at least at the expnse of the 250's private equity charged bubble.A flight to safety if you will Apologies, I have only just seen this post. it's a very good point you make about the FTSE, and one I hadn't considered. There is definitely another leg down to this - it just becomes a question of how and when the US government announces another RTC-style resolution to the problem. They will because they have to because the alternative does not bear thinking about. Quote Link to comment Share on other sites More sharing options...
Benedict Posted March 13, 2008 Share Posted March 13, 2008 Superb thread EDM, you're one of the few people who ever manages to look like they genuinely have a grasp on what's happening, always an enlightening read Shame nobody at the central banks has cottoned on to the idea that their measures just aren't addressing the problem properly at all. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted March 14, 2008 Author Share Posted March 14, 2008 And...http://uk.reuters.com/article/stocksAndSha...A42826220080314 Yes, actually I'm beginning to get a little worried there are too many sepculative quity shorts out there right now... Quote Link to comment Share on other sites More sharing options...
Methinkshe Posted March 14, 2008 Share Posted March 14, 2008 Seems to be very much the House View now EDM.http://ftalphaville.ft.com/blog/2008/03/14...-not-liquidity/ Interesting quote from one of the comments on this article: “Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works.” - John Stuart Mill This is my main bone of contention - and instead of the bankers having to pay for their misallocation of capital, it looks as though the taxpayer will end up paying. We will be the ones who end up footing the bill for all those massive bonuses. Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted March 14, 2008 Author Share Posted March 14, 2008 Interesting quote from one of the comments on this article:“Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works.” - John Stuart Mill This is my main bone of contention - and instead of the bankers having to pay for their misallocation of capital, it looks as though the taxpayer will end up paying. We will be the ones who end up footing the bill for all those massive bonuses. No, any proper resolution will not cost much if anything (after all it would involve buying assets at the market price), and may even mean that the public makes money from it. I think what is more serious is the moral hazard with regard to Banks and their balance sheets... Quote Link to comment Share on other sites More sharing options...
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