Tuesday, August 3, 2010

A series of short positions against some of Europe’s largest financial institutions.

Banking system on verge of new crisis, hedge fund Noster Capital warns

London-based fund Noster Capital is betting against five major European banks, including Barclays (LSE: BARC.L - news) in the UK, Spain's BBVA (Madrid: BBVA.MC - news) , and Switzerland's UBS (Virt-X: UBSN.VX - news) .

Posted by mark @ 08:08 AM (1845 views)
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22 thoughts on “A series of short positions against some of Europe’s largest financial institutions.

  • I still don’t see why this isn’t made illegal – someone who stands to make a small fortune if bank shares fall is allowed to shout from the rooftops what a dodgy state the banks are in. If you ask me, we should go back to the good old days when you invested in something you thought was going to do well, and then did whatever you could to make it a success, rather than shorting something you think is going to do badly, and then doing your best to ensure it fails – it’s hardly constructive is it?

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  • Timmy,
    Good call – it should be made illegal! As should, apparently, credit default swaps, since they enable you effectively to take out insurance on other people’s property or trading positions. like me betting that your house is going to catch fire. now, where did I put those matches..?
    Any other candidates for filling the prisons with traders and bankers? Liar loans? Mortgage backed securities?
    Nick

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  • “like me betting that your house is going to catch fire”

    There is a difference between saying someones house might catch fire and going and lighting the fire itself.

    If there is nothing wrong with the banks then the shareholders have nothing to fear from short selling. It is very hard to affect an entity’s cashflow by buying/selling shares on the secondary market.

    Now, bank are able to cause defaults (by calling in loans can causing cashflow problems) and by a CDS in those same companies.

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  • [sorry, forgot to finish]

    Now, bank are able to cause defaults (by calling in loans can causing cashflow problems) and buy a CDS in those same companies. So in those situations you may have a point.

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  • Absolute rubbish. If you short something and its not right to do so (assuming that its large enough cap) then you are going to get yr fingers burnt. Do you really think someone shouting stuff can move the market?

    The market moves because of ebb and flow.

    Ok say someone expresses an opinion that the banks are in good shape and everyone should buy so they can liquidate THEIR positions at a favourable price and thats ok? But in the reverse it isnt? Isnt that what everyone was having a go at GS about?

    The question should be is there anything that backs up what they are saying. Not because they think banks are overvalued and are shorting… so what? If they are and the market perceives either their direction or their timing wrong they will be spanked.

    Timmy if you want go on the rooftops and shout what a wonderful state they are in….. Remember if someone shorts someone else goes long – thats called a market! We have had a few gap up opens in the market over the last few weeks as the shorts get squeezed. Fair enough. But if we have a position where the market goes down we have circuit breaks and the PPT – is that really fair?

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  • “Ok say someone expresses an opinion that the banks are in good shape and everyone should buy so they can liquidate THEIR positions at a favourable price and thats ok? But in the reverse it isnt? Isnt that what everyone was having a go at GS about?”
    No – I’d say that’s self-serving market manipulation too. I think stocks should go up because they are profitable businesses and go down because they aren’t. Sound companies and strong economies are in everyone’s interests, whereas attempts to affect a stock price to line your own pocket should be outlawed.
    I don’t expect us to agree on this Techie, but if you ask me, Ladbrokes is the best place to go if you want to bet – at least there you will only lose your own money.

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  • 1. timmy t

    Naked shorting started the big ball rolling as I’m sure you know with the Gold Sharks v Lemon Bros rumour has it.

    source- Rolling Stones report.

    Proof can be very stubborn at certain times.

    Only the big players like Soros and the likes of can have the collective funds to really move markets. No ban? No brainer!

    ‘The skies will fall.’ do you remember that one, pre bail out.

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  • 5. techieman said…’Absolute rubbish. If you short something and its not right to do so (assuming that its large enough cap) then you are going to get yr fingers burnt. Do you really think someone shouting stuff can move the market?

    The market moves because of ebb and flow.’

    Err, Big cash positions also help. ‘Painting the tape’ was old school, times change.

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  • so timmy isnt us wanting house prices to go down self serving? Arent people that STR going short?

    “I think stocks should go up because they are profitable businesses and go down because they aren’t.” But thats the point isnt it …. if they are profitable and continue to be then anyone that wants to sell their shares will see them snapped up. If they arent then they will adjust down to give a P/E ratio thats consistent with that. Although admittedly you can have some demand/ supply short term swings.

    Now if you want to argue against stock markets thats an altogether different argument.

    I think your argument is naive at best. Its a free market!

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  • mark wadsworth says:

    I second what Refusetobuy and Techie say.

    There is nothing inherently wrong with shorting. Are there not plenty of people on this site who have taken an interest in the house prices futures index and considered shorting it? By selling a future, would you depress the price of houses? In the grander scheme, nope. So what’s the harm?

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  • Im with Timmy on this one. Its a free market that doesnt do the real economy the slightest bit of good.

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  • so invisible earnings arent part of the real economy? People in the financial sector dont get paid real money that they dont go out and spend? What exactly is the “real economy” anyway?

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  • in the meantime while i wait for barclays share price to drop I have just bought a load of unilever shares.

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  • mark…. thats fine …. just never sell them! ;-).

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  • Techie – is us wanting house prices to go down self-serving? Possibly, for some. I am in favour because it’s in the best interests of most of the population, and I don’t want to have to support my kids forever while they scramble to buy a house. I think it’s better to have reasonably priced houses and lots of disposable income, rather than what we have now.
    Re my argument being naive – I wouldn’t call it that; I guess it depends on what value you put on money and where you draw the line. I expect many people think shorting is OK whereas getting the wife to go on the game or selling drugs would be a step too far. I think shorting is over the line – I don’t think that’s naivety, it’s just a difference of opinion.

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  • techie why not?

    I am in it for the profit, pure greed..

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  • now there is an idea, wife on the game, why didnt i think of that, lets see £150 an hour 6 hours a night, sorted advert in loot.

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  • Techie – agreed we disagree – don’t worry, your comments are always well-informed and interesting but even you can’t expect to be right all the time!
    Recap – il referenda – perhaps we should vote on it!!

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  • Timmy “I am in favour because it’s in the best interests of most of the population,” thats opinion (which i am inclined to agree with incidentially) and those homeownerists that Mark W talks about will give you an argument as to why they think thats wrong.

    If you have time, take a look at the link i just posted – only because it differentiates real estate and also MBS etc from the stock market.

    Talking of morals, ReC = flacid Rooney [honest! – now thats a bit much!]

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  • Timmy – no offence taken, i think the market tells me when i am wrong (as i often am by the way!)

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  • 19. tetchieman said…

    Timmy – no offence taken, i think the market tells me when i am wrong (as i often am by the way!)

    I think the crux of TT’s argument is that too many trades are smoke and mirrors, and there is a real connection in peoples minds with CDO’s CDS’s and other such keech – no one says you’re ‘bad’ for making a living doing this, it clearly needs applied malum, and native wit….but,.the system stinks, is in it’s death throes, and needs reform

    rectified proceedings

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