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Maybe he's a little camera shy after his previous remarks on the Gates arrest weren't well received. Either that he's prepping for another late night TV appearance. Conan? Letterman? Who will it be?
I don't think the issue is that young people/boomers are learning to save. I think the issue is that credit card companies/lenders are no longer willing to extend credit or do so at an affordable rate. I used to receive 12 month 0% APR promotional rate offers every month. No more.
My credit card companies have informed that they are dramatically increasing my APR on purchases/balances. This is a non-issue for me, but it's a HUGE issue for many people. If my rate increases are any indicator, people are getting hit for 8-12% rate increases. That's staggering for anyone carrying a large balance.
And as others have mentioned, banks are writing off bad debt which creates the illusion of increased savings rates. Anecdotally I'm hearing of people eating out less, shopping less, cutting back on vacation plans, etc. Whether it's fear of losing their jobs or just realizing that they don't need to spend money the second they get it, they're spending less.
I am not a fan of this decision. Exactly how buyside biased do market rules have to be in order for the SEC to feel comfortable?
What peers are you comparing BX to? FWIW, private equity is hurting BAD right now. Private equity were on fire a few years ago due to investor demand, cheap financing, robust IPO markets and insane valuations. The tide has turned and PE shops are buckling under the strain of depressed multiples, negative cash flows, horrible IPO markets and investor reluctance to fund more deals.
Did you see the WSJ article yesterday about pending losses in commercial real estate?
http://online.wsj.com/article/SB124804759792663783.html
In 2007, San Diego real-estate firm Equastone LLC paid $57 million for the office tower and took out a $51.9 million mortgage from Capmark Bank, a Utah-based unit of Capmark Financial Group Inc. in Horsham, Pa. Equastone planned to expand the tower and attract a tenant with pockets deep enough to rename the building.
Shortly after the purchase, the economic slump pushed vacancies higher and rents down. In April, Capmark Bank foreclosed on the building after Equastone defaulted on the debt.
In June, the Equitable Building was sold in a foreclosure auction for $29.5 million, 43% less than the original loan amount. And the buyer? It was 100 Peachtree Street Atlanta, a company formed by Capmark Bank for the purpose of acquiring the building. There were no other bidders.
He was referring to when the pullback would start, not the level it would pullback to.
I use ProShares inverse ETFs, but whether it's the "best" option depends on what you're trying to do. All of the inverse/leveraged ETFs have imbedded optionality and they all suffer from time decay. If you think you'll be holding a position for an extended period of time (particularly if you're opening the position during a high volatility period), then there are better ways to short the market.
I could list a lot of potential options, but it basically comes down to what you think is going to go down vs go up. For example, if you think the USD is going down but the rest of the world's economies will be OK then gold/oil is a great play. You could also go long the CAD/AUD since they're both stealth commodity plays. You could also buy US based companies which derive most of their income from international sales.
Let me know what sectors/asset classes you like vs what you think is ripe for decline and I'll suggest something more specific.
I guess I was right about 1, looks like I'm wrong about 2 and I'm still confident about 3. Santa Fe is on fire with his predictions. One thing that sticks out is how much gold has underperformed predictions so far.
See the following article on T Boone Pickens from Bloomberg. 1) His original fund lost 98% last year. Wow. 2) His Energy Equity Fund II lost 64% then gained 79% which means his investors are still down 36% after two years. Not exactly confidence inspiring. 3) He's looking for fresh investment after a massive bullish run in oil and when it looks like there's going to be a pullback. Something tells me his fund won't be up anywhere near 79% by the end of the year.
http://www.bloomberg.com/apps/news?pid=20601087&sid=avLfTYrrraPo
July 17 (Bloomberg) -- T. Boone Pickens, the billionaire energy investor hit by losses and client redemptions in 2008, is raising money after his hedge funds gained as much as 79 percent this year, according to two people familiar with the matter.
Pickens, 81, met with potential investors in New York over the past two weeks, said the people, who asked not to be identified because the information is private. BP Capital LLC, his Dallas-based firm, is seeking to expand its Energy Equity Fund II, which invests in stocks and futures, and Energy Fund II, which trades futures only, they said. These are follow-on versions of funds that Pickens closed to new investors.
BP Capital, which manages about $500 million, had more than $4 billion at the start of 2008 before the original Energy Fund fell 98 percent and first Energy Equity Fund lost 64 percent, according to the firm’s marketing documents. Oil fell 54 percent last year, tumbling from a record high of $147 a barrel. Pickens sold investments, and in October lifted restrictions on client withdrawals.
“Investors are much more cautious now and prefer to invest with the managers who have not made headline stories last year,” said Vidak Radonjic, managing partner at Jersey City, New Jersey-based Beryl Consulting Group LLC, which advises clients on investing in hedge funds.
Jay Rosser, a spokesman for BP Capital, declined to comment.
2009 Returns
Energy Fund II, opened in February, will follow the same strategy as its predecessor, which started in 1997 and gained 79 percent this year through June, according to the documents. The Energy Equity funds, which oversee about $400 million, are up 14 percent.
Futures are contracts for delivery of a security at a specified time at an agreed price.
Hedge funds are private, lightly regulated pools of capital whose managers can buy or sell any assets, bet on falling and rising asset prices and participate in profits from money invested.
Pickens started his firm in 1997 with $36 million after running Mesa Petroleum Co., one of the world’s largest independent oil and gas producers at the time. He began trading energy contracts in 1986 while at Mesa, according to the documents.
Pickens typically holds his investments between three months and two years, according to the documents. He is the biggest investor in his funds, owning about 20 percent.
To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net;
No, I haven't seen the latest stats on foreclosures. Could you post a link to the story? We will be VERY fortunate to see the recession end anytime this year. Even in the most optimistic scenario I don't see unemployment ending the year lower than it is now.
Mortimer Zuckerman wrote an opinion piece in yesterday's WSJ where he outlined all the reasons the current recession is worse than we think: BLS underreporting of unemployment due to changing assumptions/people who stopped looking for jobs/those working part-time who would normally be working full-time/average work week declining to 33.5 hrs/week, net savings rate shifting from 0% to 7% and climbing, etc. What I find interesting is that none of this is news, it's just finally getting significant coverage. Sentiment is shifting.
It's going to be interesting to see what happens when/if CIT implodes. WSJ and CNBC commentary suggests this could be devestating to small business, especially those in the garment industry. Given the precarious nature of retailing this could easily deal a deathblow to many struggling clothing manufacturers, middlemen and retailers.
If so, VIVA LA VOLITIDAD!
No worries. I'm used to it. Besides, it's hard for me to imagine this summer being kind to financials especially when each week brings more news of failed banks, cash strapped financial firms and doubts of previous "green shoots" sightings.
The only train leaving the station is the one running me over at the moment.
I'll take the under on Dow +300. But then I'm dangerously close to being labeled a permabear.
Interesting. Yesterday GS comes out with blow out earnings and the stock trades flat. Today INTC comes out with blowout earnings and GS rallies 3%. Apparently INTC's results are more predictive of GS's future prospects than GS's own results.
Thanks, Eric. I've actually thought about starting my own business and ran a very small reseller business while I was in my MBA program. And I've got quite a few stories that are way more interesting than my GE/GS trades. I'm currently working my way through one of them. If it has a happy ending, I'll PM you the details.
I miss October's volatility and February's market beatdown. I'm probably one of the few people that remembers either month fondly.
Seriously, I REALLY miss October. It was the juiciest market I've ever traded. Spine tingling rallies, blood curdling declines, ferocious reversals and violent whip saw trading. The best part was you didn't even need to be right about direction to make money. You just had to wait 5 minutes. Remember the day when the Dow traded in a 10% intraday range?!!!!!
If I live to be 100, I will still tell stories of clipping 20% 1 day gains in Goldman Sachs and General Electric with ease.
I don't believe in Bradley or Gann. I just know that others follow it and it becomes a self fulfilling prophecy. It's like how the magnitude of price movements in "momentum plays" increases after they're published in momentum investing newsletters.
Am I the only one who is disappointed with the lack of volatility today? Where is the Bradley turn we were all promised? While I understand that it was predicted for July 14-15, it's the f'n 14th and I WANT MY VOL!!!!!!!!!!!
When the came for the billionaires, I said nothing because I wasn't a billionaire. When they came for the millionaires, I said nothing because I wasn't a millionaire. When they came for people making over $500k, I said nothing because I didn't make over $500k. And when they came for me, there was no one left to speak.
Added to SKF @ 43.
I've been rather silent on UNG for a while, but I'll toss out my two cents today. What concerns me most about the fund currently isn't the direction of natural gas but the mechanics of the fund. As many of you know UNG was briefly halted last week when UNG failed to get approval to issue 1 billion more shares to balance the fund. While that could cause UNG to trade more like the closed end fund (with significant discount/premium currently at an all time high of +3.5%) that's not what bothers me.
What bothers me is that it's a $4.8B fund that strictly invests in the prompt month futures and rolls its position like clockwork over 4 days starting on the 15th. I just don't see how a fund that large can roll its entire position over 4 days without getting killed on the bid/ask spread. Having said that it's not like I hate UNG. I just think it's becoming a victim of its own popularity. Kind of like how Fidelity's Megellan Fund had problems entering/exiting positions after several years of stellar performance/good press.
GS should have a blow out quarter. The irony is that the financial implosion in Q4 last year set up a windfall profit trade for GS this year. Basically GS was $13B in the money on their CDS short positions where AIG was the counterparty. GS is afraid that AIG is going to default so they short AIG stock in enormous size as a hedge. Then the government comes in and effectively dilutes AIG stock holders into oblivion, GS gets paid on the CDS' and makes a killing on their AIG short sales. Win/win for GS.
I got out for psychological reasons. I had an important meeting on Wednesday and didn't need the stress of carrying that position going into the meeting. It annoyed the hell out of me to see SKF rally last week. Looks like I'll be adding it back today at 43.
I put in a limit buy for SKF @ 43. I regretted selling last week and clearly left a lot of money on the table. If I pick up a dollar improvement, i'll be happy.
Sounds like it. I love the WSJ article on CIT this morning. Basically they held an emergency meeting to form a strategy to keep customers from withdrawing deposits/drawing down credit lines after the weekend annoucement that they were retaining bankruptcy consultants. Good luck!
I'm hoping financials rally so I can reestablish my the portion of SKF I sold a couple weeks ago. It's interesting to note that the widely anticipated Bradley turn would be to the upside based on recent market direction. I have no idea why the market would rally now.
Spot on!
It's sometimes referred to as salami slicing. It was done in the 70s by computer programmers and was featured in Superman 3. IT departments screen code for these types of sub routines as well as various backdoors/triggers. Another popular one was the inclusion of code that created random expenses and then deposited cash in a bank account when a user entered a certain password.
I hadn't heard this one, but it's been done before. You would be surprised how many programmers have access to proprietary trading code. You can try to compartmentalize portions of the code but part of the value of an algorithm is the speed at which is optimizes multiple components. Programmers have a legitimate need to see all parts of the code in order to optimize sub routines.
BTW, this guy's defense that he was only copying the "open source" portion of the code is laughable. I doubt GS uses 32MB (1600 pages of text) of open source code. He's 100% full of shit.
Also, if the spelling in this post is atrocious it's because I've been sick for three days and I'm barely lucid right now.
Because he's just THAT generous, Nick. What the "$33,000 into $7 million after 2 years" quote really means is that he sunk $33,000 into initial software and marketing expenses and has reaped $7 million in sales after 2 years.
Sold my latest SKF position at 44.12 (+10.25% after 55 days). I'm thoroughly disappointed with this trade. I could have made twice that amount in the first week if I had covered. Will probably put it back on if the market rallies.
Federal prisoners have no internet access.
Club Fed doesn't really exist anymore. Facilities like Nellis Federal Prison Camp near Las Vegas were shut down in 2005 because of budget cutbacks. Facilities are ranked in terms of security: minimal, low, medium, maximum and super max. It's hard to say where Madoff will go. Marth went to Alderson Federal Prison Camp in West Virginia (aka "Camp Cupcake") while Kozlowski went to Mid-State Correctional facility in Upstate New York (medium security).
The length of his sentence means it's unlikely he'll get minimal security (flight risk) so he'll probably get low/medium security. Supposedly FCI Fairton in NJ (medium security prison with adjacent minimal security facility) is his best option.
I think you've been misled about sentence reductions at the federal level. The federal system isn't nearly as lax as the state system. In Fedland, you can get the following reductions:
1. 15% reduction for good behavior. The Bureau of Prisons uses "expected sentence" instead of actual sentence when calculating good time. This results in substantially less than a 15% reduction even under optimal circumstances. Regardless, a prisoner's best hope is 1 year reduction for every 7 years sentenced.
2. Maximum 1 year for completing residential drug abuse program.
3. Maximum 6 months of sentence to be served in a halfway house.
4. Time served reductions. This really isn't that big of a consideration unless someone has a very short sentence or spent a significant amount of time in custody prior to sentencing.
Let's assume that Madoff was sentenced to 15 years. He would have gotten (at best) a 2 year reduction for good behavior, 1 year reduction for drug treatment (unlikely he would be eligible but with good attorneys anything is possible), 6 months half way house, and maybe 4 months time served. He'd serve somewhere around 11 years and 2 months (about 74% of his sentence). I wouldn't call that a huge reduction.
NEW YORK -- Bernard Madoff was sentenced to 150 years in prison Monday, meaning he will likely spend the rest of his life behind bars after admitting in March to running one of the largest and longest financial frauds in recent memory.
http://online.wsj.com/article/SB124604151653862301.html
LIKELY? Is the author of that article a moron or is he under the impression that Madoff could live 221 years? Is Madoff related to Methuselah? While he was bilking Florida retirees out of their life savings, did he stumble upon the fountain of youth? Inquiring minds want to know. How the hell does he have ANY chance of NOT spending the rest of his life in prison?
And your point is what? I could have undue influence on the price of penny stocks if I threw everything I had into one stock. Actively trading any security makes it more liquid. Deleveraging will most affect niche securities and small company equities since they won't merit analyst coverage or speculative capital allocation. That's the way it works in almost any industry. Look at the plight of niche/specialty retailers. When consumers cut back, the fringe players suffer most.
I would argue that the correlation is due to influence of large multi-strategy funds. When equities moved down last year it triggered steep declines in fixed income, commodities and timber assets. The reason was that firms had to sell non-equity positions to fund equity margin calls. I've said for years that assets are far more correlated than most financial models assume.
If you're referring to the average consumer, you won't. It's an exceptionally regressive tax from a liberal administration. For people like me who work for an energy trading company, it has the potential to be profitable although we're not actively looking at trading the credits yet. Without boring people with the history of CO2 credits in Europe, the short version is that businesses radically overestimated their current CO2 production in order to get credits and the market was traded fairly actively for a year before the market discovered this and the credits lost 1/2 their value in a week.