Bring on the bears!

[One_more_turn]

Originally posted by Saras
Market Neutral funds FTW

They are mostly terrible. They rip you off by charging exorbitant fees and didn't protect you when things go bad.

Market neutral can usually be done in 2 ways:
1. Long some thing and short some thing at same time. But when market really sours, their long positions go down and their short positions go up. Several market neutral funds were killed in this fashion during summer 2007.

2. Buy insurances for their long positions, usually in form of long term index put options. Unfortunately, put options always carry premiums, and very expensive ones determined by the seller. Warren Buffett has recently sold a bunch of these puts, so in a sense, market neutral funds are betting against him.

There is no free lunch in the market.

[One_more_turn]

Fannie Mae, Freddie Mac, and Lehman Brothers are close to failing.

[DanS]

There for a while, it sort of seemed like Lehman Bros was out of the woods. But it can only stand a few more days of this. They could do a Bear Stearns at any minute.

Fannie and Freddie are too big to fail, but that doesn't mean that the common stockholders will end up with anything after it's all said and done.

[One_more_turn]

Bailing out Fannie and Freddie would mean pumping billions and billions more to stimulate inflation and Dollar decline.

Gold is the only thing I see worth buying at moment.

[Japher]

Gold or any precious metal (look at alcoa), potato futures (are there potato futures?), and pizza... because pizza is always worth buying

[One_more_turn]

Originally posted by Japher
Gold or any precious metal (look at alcoa), potato futures (are there potato futures?), and pizza... because pizza is always worth buying

Alcoa makes aluminum, not gold. I would not buy any gold miners either because they are exposed to movement of stock market indexes and operational risks. GLD is the best gold play imho.

There is no potato futures unfortunately, but you may want to consider DBA: http://finance.yahoo.com/q/pr?s=DBA

If you like pizzas, Kraft (KFT) or Yum Brands (YUM) may be the way to go. Buffett bought $4 billion worth of KFT last year.

[Saras]

Originally posted by One_more_turn


They are mostly terrible. They rip you off by charging exorbitant fees and didn't protect you when things go bad.

Market neutral can usually be done in 2 ways:
1. Long some thing and short some thing at same time. But when market really sours, their long positions go down and their short positions go up. Several market neutral funds were killed in this fashion during summer 2007.

2. Buy insurances for their long positions, usually in form of long term index put options. Unfortunately, put options always carry premiums, and very expensive ones determined by the seller. Warren Buffett has recently sold a bunch of these puts, so in a sense, market neutral funds are betting against him.

There is no free lunch in the market.

Unless it's really small, and doesn't do those things you say but rather assrapes all equity, fixed income, credit and whatnot arbitrage opportunities out there.

[Theben]

Da Bears

[Japher]

Da Beers

BUD up 8% on sell out news...

[DanS]

I guess this is one of the first of the smaller banks to go under...

IndyMac Seized by U.S. Regulators Amid Cash Crunch
By Ari Levy and David Mildenberg

July 11 (Bloomberg) -- IndyMac Bancorp Inc. became the second-biggest federally insured financial company to be seized by U.S. regulators after a run by depositors left the California mortgage lender short on cash.

The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank, starting next week, the Office of Thrift Supervision said in an e-mailed statement today. Customers will have access to funds this weekend via automated teller machines. Regulators intend to eventually sell the company.

The Pasadena, California-based lender specialized in so- called Alt-A mortgages, which didn't require borrowers to provide documentation on their incomes. IndyMac's home state, where Countrywide Financial Corp. was also located before it was bought last week, has been among the hardest hit by foreclosures.

``Given their focus on Alt-A and a heavy concentration in California, they would have suffered meaningful losses in almost any scenario,'' Brian Horey, president of Aurelian Management LLC in New York, said before the seizure was announced. Aurelian is short-selling IndyMac shares to gain from declines.

http://www.bloomberg.com/apps/news?pid=20601087&sid=atyF3ydPUlk8&refer=home

[DanS]

A good day for bears in the banking sector. Looks like people are expecting these banks to fail. These are fairly sizable banks.

http://www.ft.com/cms/s/0/c3c2ae04-51a0-11dd-a97c-000077b07658.html?nclick_check=1

Goldman Sachs added Zions Bancorp to its “conviction sell” list and predicted that a number of other regional banks might cut their dividends.

M&T Bank said its second-quarter profit fell 25 per cent due to credit losses related to residential real estate.

Zions fell 22.5 per cent to $19.91, M&T Bank dropped 19.1 per cent to $56.42 while trading in National City shares was temporarily halted. The shares were down 22.4 per cent to $3.43.

Washington Mutual was the biggest faller, dropping 29.5 per cent to $3.49 but the larger banks and brokerages also came under fire. Citigroup fell 4.4 per cent to $15.48, JPMorgan lost 3.2 per cent to $32.10 and Bank of America dropped 5.1 per cent to $20.56.

Lehman Brothers, the whipping boy in the current round of the credit crisis, came under renewed attack in spite of a cautiously positive report from Bernstein Research analysts that argued that thanks to Fed support and deleveraging “the firm should be able to survive any confidence crisis ahead”.

Investors were less sure and shares in Lehman Brothers retreated 4.3 per cent to $13.81.

[Julian Delphiki]

Finnish economic site had a story yesterday that as many as 150 US banks could go down during the next year and a half.

[Space05us]

[DanS]

Originally posted by Julian Delphiki
Finnish economic site had a story yesterday that as many as 150 US banks could go down during the next year and a half.

The US is a big country. We have lots of banks.

[Julian Delphiki]

Yes - 7500 according to story. The effect will of course depend on the size on those banks that could go down.

Indymac was second or third biggest bank crash in US ever, and the same story tells that 5 banks have gone down so far this year which is nothing compared to 1000 banks that went down in end of 1980's/beginning of 1990's.