WILL THE LATEST ROUND OF ECONOMIC CHAOS IMPACT YOU?

[FFB]

To blame short sellers on this whole shebang (and by proxy the SEC for not limiting short sellers) is intellectually dishonest.

 

The flip side of this is to blame long buyers for propping up the market for far too long. Should long buyers be blamed everytime the market goes up? And if you bring up the idea that the shorts need to actually have the shares to borrow, then you get into semantics a bit because eventually they do have to pony up the shares and they are risking a short squeeze. Plus you can always sell a call or buy a put which is basically a naked short or sorts anyway.

 

It's sad that even the big boys and CNBC squawkers are complaining about it, as it's such a canard.

 

Why did you reply to my post? I wasn't blaming short sellers. I'm the one carrying the sandwich board that reads, "The end is NIGH!"

 

[JvR11]

To blame short sellers on this whole shebang (and by proxy the SEC for not limiting short sellers) is intellectually dishonest.

 

The flip side of this is to blame long buyers for propping up the market for far too long. Should long buyers be blamed everytime the market goes up? And if you bring up the idea that the shorts need to actually have the shares to borrow, then you get into semantics a bit because eventually they do have to pony up the shares and they are risking a short squeeze. Plus you can always sell a call or buy a put which is basically a naked short or sorts anyway.

 

It's sad that even the big boys and CNBC squawkers are complaining about it, as it's such a canard.

 

Would you want someone selling "your shares" behind your back to bring the price of stock down? I know I would object to this. This should not be allowed. It should only be allowed if the person who owns them agrees to this practice.

[tth2]

To blame short sellers on this whole shebang (and by proxy the SEC for not limiting short sellers) is intellectually dishonest.

 

The flip side of this is to blame long buyers for propping up the market for far too long. Should long buyers be blamed everytime the market goes up? And if you bring up the idea that the shorts need to actually have the shares to borrow, then you get into semantics a bit because eventually they do have to pony up the shares and they are risking a short squeeze. Plus you can always sell a call or buy a put which is basically a naked short or sorts anyway.

 

It's sad that even the big boys and CNBC squawkers are complaining about it, as it's such a canard.

(thumbs u

 

It was also unbelievable to now read about John Mack criticizing short selling. As if Morgan Stanley didn't do any proprietary short selling or faciliate short selling by its hedge fund clients.

 

There's nothing wrong with short selling. Investors are entitled to make money going down just like they are going up, and there is a lot of risk in short selling because in theory your risk is unlimited. Naked short selling SHOULD be illegal, because investors are then no longer constrained by physical supply. Wait a minute, it's ALREADY illegal, even before the SEC declared it illegal all over again! I can't understand why they don't just enforce the damn rules that are already on the books.

[tth2]

Would you want someone selling "your shares" behind your back to bring the price of stock down? I know I would object to this. This should not be allowed. It should only be allowed if the person who owns them agrees to this practice.

You know that you can tell your broker not to allow your shares to be lent out, right? When you signed your brokerage agreement, you probably agreed to allow your shares to be lent (i.e., to be shorted by a third party).

[JvR11]

Would you want someone selling "your shares" behind your back to bring the price of stock down? I know I would object to this. This should not be allowed. It should only be allowed if the person who owns them agrees to this practice.

You know that you can tell your broker not to allow your shares to be lent out, right? When you signed your brokerage agreement, you probably agreed to allow your shares to be lent (i.e., to be shorted by a third party).

 

I'm thinking the largest impact is from pension funds and mutual funds. I wonder if this is disclosed to the individual to elect. I'm thinking not.

[Issa]

I'm scared.

[ft88]

To blame short sellers on this whole shebang (and by proxy the SEC for not limiting short sellers) is intellectually dishonest.

 

The flip side of this is to blame long buyers for propping up the market for far too long. Should long buyers be blamed everytime the market goes up? And if you bring up the idea that the shorts need to actually have the shares to borrow, then you get into semantics a bit because eventually they do have to pony up the shares and they are risking a short squeeze. Plus you can always sell a call or buy a put which is basically a naked short or sorts anyway.

 

It's sad that even the big boys and CNBC squawkers are complaining about it, as it's such a canard.

 

Ed,

While I certainly do not blame short selling on the entire mess, to not think that it has had devastating effects to the current crisis would be a bit naive. Banning naked short selling should have been enforced years ago. One has to understand that the current power (as compared to 15+ years ago) of the investment masses to literally "move" a stock or sector has radically changed. Watching the carrion eaters jumping from BSC to FRE to LEH to AIG and now to GS has been downright disgusting. Not that most of these firms didn't deserve their fates, but some could have been saved if they had had time to unload some of their assets. Time that the short sellers took out from underneath them. This kind of destruction is anti-American, and needed to be reined in. Again, I'm not against short selling, but unchecked in the greedy hands of the folks that rule Wall St it can lead to ruins. And we all know how many morals the gang on the street have.... They'd whore out their own mother for a buck.

 

Great, so now that short selling is dia-allowed you can't hedge against a position.

 

VT - you contradict yourself a little bit and I disagree with how you portray some of those selling short the brokerage I/B firms. Carrion eaters? I'd like to call them learned wise men who understand that banking is a trust business and these firms you mentioned betrayed that trust. If "these firms deserve their fate" as you describe then why are those that see this in advance considered bad greedy people? It is not un-American, what's un-American is being unable to buy and sell what we see fit. I want to sell shares that a brokerage house has agreed to lend me, and you want to buy them for an agreed upon price. Yesterday we could conduct that transaction, today we can not.

 

We now live in France.

 

And BTW, the gov'ment just backstopped all Money Market funds. Great. Now put yourself in the shoes of a MMKT fund manager who competes with other MMKT managers. You can't break the buck and nor can your competitors. What should you buy, highly conservative but low yielding debt or high risk, high yield debt? You'd have to say the latter. So, lets all load up on risky debt again.

 

Rant over - what to do. If you can find it, buy short term junk bonds. Buy risky banks who will be able to unload bad debt, WaMu, WB, CIT etc. Buy TIPS and buy metals. Set yourself up to buy real estate in the next 12 months. There's still room to fall there but RE is a pretty decent place to be in a high inflation environment.

[Ringfinger]

It is killing my protfolio, but no effect on my comics. They just sit in their boxes unaffected.

[Sharkey]

Everyone is going to get impacted to a certain extent, but I'm curious how things play out for people here, not that it's any of my business.

weather the storm.

 

 

I'm not really feeling the heat in a tangible way. I work in the nonprofit sector, and although my organization is seeing a downturn in certain areas, we fortunately still have plenty of opportunities for growth. My family members all work in pretty much recession-proof business sectors, so there's no worries there. My wife's parents just retired and they're the ones I worry the most about as prices are rising but their income is fixed. But we'll give 'em a hand if they need it, so they'll be ok.

 

My wife and I have worked hard to eliminate debt over the past several years, so we really don't have anything we're paying on except our mortgage. In the past we had a LIBOR based ARM so that the interest would be minimal and then I could choose the amount of principle I wanted to pay, and with that method we socked away a decent amount of equity in the house. Then two years ago we got out of the LIBOR (good thing too, because it's doubled this week). We are in an ARM right now, so I'll need to keep an eye on that and see how the base rate goes. If I have to refi, I am confident that with my credit score and history I'll be in a position of strength to do so. If not, I'll just pay it off early. What I will not do is pay an outrageous interest rate on it.

 

Earlier this year I just had a feeling (my Spidey sense!) and cashed out my stock holdings, so I sold a number of stocks while they were in strong positions. Right now I'm monitoring the market looking for a good time to buy back in, and identify some opportunistic things to buy in low at. I'm patient, and am happy to wait until the right time to do so.

 

My 401k is probably the worst hit by the current downturn. I contribute very aggressively toward it and have historically maxed out my company's match. I encourage anyone who has a 401k to do that, getting a match from your employer is getting free money. However, I have 20+ years until retirement so I'm pretty content to let it sit and eventually regain its lost momentum. I'll probably tweak my allocations a little and try to minimize the risk in the short term, but I want to be in the right positions when the market does come back.

 

Fortunately I liquidated all my cash holdings on coke and strippers, so I don't have to worry about pulling that out of the failing banking system, and when my grandmother died she left me lots of mason jars that I can fill with money and bury in the back yard. Of course, I've invested in comics and art, so we know those are sound long-term strategies...

 

Our economy has been artificially propped up for years, people have been racking up debt like it's nothing, purchasing tons of crapola they don't really need, indulging on everything from gigantic houses to gigantic gas-guzzling SUVs, and basically completely over-extending themselves so they can live lifestyles they really have no business living. Our society has shown a lack of financial restraint and the policymakers in Washington have done everything in their power to keep that mirage going so they could continue to be voted into office, and now they, our economy, and unfortunately our citizens are going to pay or it. A correction has been bound to happen, and this will be a reality check for a lot of people. They're going to find out the hard way that they should have been saving money instead of buying SUVs, ginormous houses, Xbox360s for every kid, designer clothes, boats, ATVs, etc.

 

Now it'll be time to suck it up and start living a lifestyle that reflects your income. Because I tell you what, too many people in this country have NOT been doing that. For many it will be a bitter, difficult lesson to learn, but we are a resilient society and have always pulled together when necessary.

 

[the blob]

My cousin who owned a big subprime mortgage broker co and his son who worked there might be moving into my attic, however. Not really, but they must be taking a beating.

 

 

.....I will arm wrestle them for dibs on the attic

***********************

 

well, apparently, unknown to me he sold out his share of the company like 3-4 months ago. his son is still running one of the offices for the owners, he might even own a piece too. i don't think either will starve.

[the blob]

I don't know why so many people blame the government. This seems like common sense to me. It baffles me how the government and/or lenders have been portrayed as being at fault here.

 

If you are only making $12,000 per year, don't take out a $750,000 home loan to get a 7 bedroom 5 bath mansion. It is not the government's responsibility to look over the shoulder of everyone. It is the responsiblity of the people to make sensible decisions.

***********************

 

How did this evolve into a discussion of all the poor chumps who overborrowed and are likely to lose their homes? That discussion is so 3-6 months ago. That issue was already decided, the gov. is going to lean on banks to take it easy on the people who are on the edge and who might be able to dig themselves out (e.g., they could pay a 6-8% loan, not a 12% loan, etc.), but the $25K a year earner who is in a $750K home is going to lose that home. period.

 

Now we're worried about the finance/banking industry going under because of all the chumps running those places who own all of this bad debt. The government wasn't thinking about ponying up $500 billion+ when it was just Joe Homeowner in trouble, but when we're talking about 3 out of the top 5 investment banks going under and some of the biggest regular commercial banks (WaMu), then the government gets worried.

 

Yeah, those chumps who were taking home seven and eight figure compensation. I guess they weren't such chumps.