Ok, that was just brutal. Sure the market looked like it it was just going to loiter around outside the 7-11, stinking up the air just outside the store begging investors for a few quarters, but then, out of nowhere, after hours without a complaint (except from that one asshole guy from New Jersey who is always in a bad mood) it teetered back and forth a few times, and crashed into the glass double doors, scattered glass shards everywhere before staggering into that flimsy Hostess display, knocking it into the candy aisle and starting a cascade of skittles and peanut M&M showers. For a brief second, it looked like it might regain its balance, but over-corrected, teetered the other way and, before groaning loudly, collapsed onto the cold and flu remedy shelves and into a Nyquil soaked heap just before pissing itself. Now, owing to the olfactory blend of chocolate, Nyquil, sour sweat and urine, the store is totally uninhabitable.
Who the hell is going to clean that up anyway? (Paulson, mop crew to aisle three).
After opening in the high 900s, the S&P 500 index floated around down between 2% and 3% before 1:00 pm or so, after the Beard was done taking questions and in the face of the god-awful Beige-Book numbers, when, excepting a brief blip, it just tanked into a -8% close. That takes care of the early week rally. Basically gone.
Wow. I hope you were short S&P 500 futures.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
Someone please put a bullet in me and put me out of my misery.
“Of the 36 times the S&P rallied 6% in a single day during the last 80 years, 32 occurred between 1929 and 1933″
Madonna’s words of wisdom:
It’s time for the good times
Forget about the bad times, oh yeah
One day to come together
To release the pressure
We need a holiday
You can turn this world around
And bring back all of those happy days
Put your troubles down
It’s time to celebrate
Let love shine
And we will find
A way to come together
And make things better
We need a holiday
Madonna can have A-Rod now. She doesn’t need a holiday.
That was damn funny
That is damn funny
If you went long after Monday’s suckers rally you were an idiot and deserve to lose everything in the coming year. We are in a recession, one that we haven’t seen since the 30s, and P/E ratios are still at rediculous levels.
Code Brown, Code Brown! Bernanke isle 5, Bernanke isle 5, Bernanke isle 5, Stat!!!!! Bring a shovel! Screw the mop!!!!!!!
Ice Cube said it was a good day right before the cops came thru,
Glad I went to all cash last Tuesday. Money’s still in transition to my new discount broker. Have to wait a few more days. I can practice my market prediction skills in the meantime.
The Guy from Delaware
If “Peanut M&M Showers” isn’t a euphemism for some really hideous sexual practice, IT DAMN WELL SHOULD BE.
@12 um what?
Oh fuck! That was too quick. I was expecting it to hover around Monday’s level like a drunk before the Nov wind sweep the drunk off its feet.
Chill out guys. It’s just the hedge funds liquidating. It’ll rebound tomorrow. Then we’ll kiss and make up before reality sets in again 2 weeks later and we hit the pits again.
11, Madonna already had A-Rod, silly.
She does not need a holiday, but we do!
wait till the real hedge fund blow ups start hitting…the best is yet to come.
11, Madonna already had A-Rod, silly.
She does not need a holiday, but we do!
11, Madonna already had A-Rod, silly.
She does not need a holiday, but we do!
…and yes, Mr Paulson, ould you also please take care of the broken steagall glass all over the floor?
We don’t need a holiday. Bank holidays, closing of markets, those are for Command Economies that want to dictate price levels and market direction like Russia, China…oops. Yeah, I guess a bank holiday would be the icing on the cake. USSA.
@#17,#15,#7…
TGFD #10 here. Any suggestions?
The Guy from Delaware
Loved the analogy. The only question is whether, because of the unbearable stench the rest of the neighborhood flees in a panic leaving behind an abandoned town.
11, Madonna already had A-Rod, silly.
She does not need a holiday, but we do!
“Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce.”
-MoneyGrip Wisdom
We don’t need a holiday. Bank holidays, closing of markets, those are for Command Economies that want to dictate price levels and market direction like Russia, China…oops. Yeah, I guess a bank holiday would be the icing on the cake. USSA.
One more time you impatient troglodyte…
Too long, didn’t read.
11, Madonna already had A-Rod, silly.
She does not need a holiday, but we do!
my apologies for the comments, I was receiving a db error message and hit F5 too many times.
WonderWoman- once more for the people who didn’t read it the 1st, 2nd, 3rd or 4th time?
EP: This is the best. market analysis. of all time. I am going to personally lobby Murdoch to hire you to write their “Heard on the Street” column.
how many days until Cramer is fired?
yo why does this bloggy have that refresher problem. it’s 2009 baby get with the program!
Beautiful analogy. The minute you referenced Cramer, the scene was set in the 7-11 in Springfield across from the Wine Library… I swear I’ve spotted Cramer there before buying a Slurpee…
TGFD,
7 here. I’ve been sitting in cash for two weeks. Doubtful I’ll go back in anytime soon. Fundamentally we have a lot lower to go, but the Government is making up rules left and right to prop up the market. Nothing wrong with earning 4% in cash.
If I had a bit more time at work I would just play a day trading strategy with deep out of money options.
Ratigan is PIIIIIIISSSSSED.
Guy Adami: Unflappable
Why don’t you sit on on S&P long and short ETFs?
“discount brokerage”?
“day trading”?
Who let these retail shlubs in?
Absolute dumbest news ever from Abu Dhabi :
http://archive.gulfnews.com/business/Markets/10252078.html
EquityPrivate…
Fabulous Lead-In analogous Imagery. I ‘saw’ every word.
@#32…WTF? Don’t lobby Murdoch. We don’t want to lose EP, do we?
The Guy from Delaware
Marketwatch reporting that Citadel CDS trading at obscene levels.
Maybe there was something to that rumor after all. That, or someone is taking a shot at Citadel.
Absolute dumbest news of the day comes from Abu Dhabi :
http://archive.gulfnews.com/business/Markets/10252078.html
SPZ8 is now -11% …
DJZ8 is now -950 or -10% on the bid…
~SEG
I have my own business and am going to take the rest of the day off.
It’s cooler now and with less light in October in Texas I only had to mow three lawns today instead of the usual six.
@2
if you are still hanging around, please stop posting such statistics. you might scare away some of the pigeons, i mean investors.
Look, people can talk about cultural respect and tradition and faith all they want. And you can do whatever you want, for all of me.
But anybody who takes financial advice from somebody who hasn’t got the stones to say, “We’re not out there riding camels in the desert, we have air-conditioned Mercedes-Benzes, and I am not going to wear this fucking diaper on my head any more,” deserves whatever happens to them.
39, please go back to hunting for a job. I’m tired of paying your unemployment.
@#42…
Rumors don’t just start in a total vacuum. That sissy candyass Griffin spilled the f’n beans when he wrote that ‘show-of-strength’ confidence letter to his clients a few weeks ago. He should have kept quiet. Maybe someone in his 30′s like that pussy Griffin hasn’t been around long enough to know how people react to unexpected, confusing information. Another genius financial engineer who’s lacking in common sense. Be good to see Citadel blow up.
The Guy from Delaware
HA!!!! Loved the visuals of the first paragraph. still laughing!!
Number 23. HAHAHA!! Also funny!!!
HAHAHAHWHAH!!!!
@45 -
LMAO!!! “That’s gold, Jerry!”
so…the govt has used all of its bullets and the markets are still tanking…
now what?
@22
Direct invest (from your checking or savings account) the same amount every month through the transfer agent. At least a 5 year time frame. Quality companies preferably with a good dividend. Its not timing the market but time in the market.
IBM
XOM
INTC
CPB
CLX
PFE
K
BAC
Not all companies let you invest directly through the transfer agent and be aware of the possible cost basis nightmare of having 60 different purchases with 60 different purchase prices and 20 different dividend reinvestment prices, and that is for one stock.
The money you took out of the market last week, divided it by 24,36, or 48 and invest that amount each month into Vanguards S&P 500 fund, only 18 beeps. When the S&P falls more than 20 percent from current levels, 8500, invest anywhere from 10 to 15 percent of your remaining balance. Then recalculate your new monthly investment amount. Remaining funds divided by your new denominator, time remaining in your original denominator, and adjust your monthly investment accordingly.
Most importantly come up with a game plan that is logical so as to reduce the chances of impulsive decisions.
SPODE
@46, that was me, I’m sorry, I didn’t mean to disturb ya.
I will try to hide reality better, it just keeps leaking through is the problem…
~SEG
Dow now trading around 8,384 and the SPX is now around 888.1, something is breaking badly someplace…
citadel CDS = vindication for DB.
…CDS spreads on Citadel traded between 27% and 33% upfront on Wednesday, according to Phoenix Partners Group. That’s up from 12% upfront on Sept. 30, according to Phoenix…
…Upfront spreads on CDS of 27% mean that investors seeking protection on $100 million of debt would need to pay $27 million upfront and $5 million a year.
http://www.marketwatch.com/news/story/citadel-cds-spreads-trade-more/story.aspx?guid={3E70B6BF-405C-4F80-A975-232F0D75AF3D}&dist=msr_1
@7, I completely agree with you. If you actually thought things were turning around after Monday’s rally, then you are out of touch. @37 ya ratigan is completely losing his shit.
@54 thanks for explaining dollar cost averaging to us. Do you think we are all complete newbs to free market capitalism and the markets? But, I do greatly appreciate the SPODE. Also at 37, yeah Adami worked at Drexel-Burnham and then that firm collapsed. Seems like this stuff does not affect him.
SPODE.
-that guy from Goldman Sachs
Couldn’t you kind of see this drop coming?
Sounds like hedgies running for the exits again. Two days in a row, lets see if they are done by tomorrow. Nahh!
Old pirates, yes, they rob I;
SEG – futures are only off like 1 or 2% after hours. Doesn’t seem that dramatic given what went on during regular hours.
@60 go smoke some more weed, in fact smoke an entire hedge.
@61
Isn’t it a little too early to pay attention to that?
@2 & 55
No problem, just don’t see any reason to start confusing ‘inwestors’ with historical perspective ….anyway, isn’t it unpatriotic to do anything other than ‘buy and hold’?
suckas
@62
If you don’t like my fire, then don’t come around,
’cause I’m gonna burn one down.
Yes, I’m gonna burn one down.
Just keep buying those SPY and USO puts…it almost feels like stealing
SPODE@#54…
Thank you for the suggestions.
My recently-fired, full-service broker of 24 yrs often told me about that “time in the market” thing, and I always believed him.
The past 10 yrs in the S&P 500 have been for shit, though…negative return, I believe. If I were in my 30′s or even in my mid-40′s, I’d probably still believe him.
As many of you know, though, I’ll be 60 in late Dec, and I probably don’t have too many 10-year intervals left. Fully invested in Buy and Hold “quality” loaded mutual funds is mostly what I’ve been doing. The 21st Century has not exactly been kind to my portfolio. My youthful good looks, muscular physique, full head of hair (not gray), and chicks of all ages coming on to me, not withstanding. None of that shit has helped, though. I’m still down 31% since last October.
I will possibly try some ETF trading with a small portion of my holdings. The rest will be in MM funds, cash, Fixed income, some dividend stocks (thanks for your list), and maybe some gold funds. I do want to avoid those “impulsive decisions”, as you say.
I’ll keep reading DB too. Thanks again.
The Guy from Delaware
Looks like Eddie Lampert is about to lose his last nickel. SHLD CDS is through the roof.
Him and Kenny need to merge in oder to survive.
ShortOil@#66…
You talked about “buying those SPY and USO puts” the other day. I looked up the 2 ETFs. Please tell me again how your tactic works.
The Guy from Delaware
#45
Are you mowing the lawns? Did all the immigrants go home like birds flying from an impending storm?
@66
Can’t steal from Citadel if they (and the exchange) are bankrupt
Can someone post the link from Mad Money on Sept 8th ….I am fairly sure Cramer said to buy Leh 2 days before the implosion. Can someone post it? also can DB post a story on Cramer pushing WB, LEH and Bear all before their implosion? Also, please post his “this is the bottom call from the high this summer” and a copy of him walking around with a Caution sign at the absolute low in March? Bev, how long until CNBC fires him bc he is such a liability?
Bess-
Sine there are “some”smart people who read this site, can we do a poll? Dow 5000, 7200 or up?
Bess-
Sine there are “some”smart people who read this site, can we do a poll? Dow 5000, 7200 or up?
Bess-
Sine there are “some”smart people who read this site, can we do a poll? Dow 5000, 7200 or up?
Anyone know how much Millenium Emerging Credit is down in Oct ?
Sorry for the mutiple post. I guess I am not one of the smart people
@54 – good advice. Here’s one way to avoid the cost basis nightmare:
Sharebuilder lets you make those automatic investments at $4/trade. Dividends and capital gains can be reinvested with no transaction cost. For the long-term retail investor, this is probably the best way to buy common stocks or ETFs.
Real wealth is not generated on the STREET, it is made elsewhere in the country, in factories, university labs, thru inovation, hard work, increases in productivity, new technologies, better jobs, etc. from people who have VISION, and drive. Wall street should be a conduit for that wealth, and facilitate its creation. We have fooled ourselves into thinking the money is made there, but the reality is far different, as will be made plain, when the country’s money pipeline to the street starts to run dry. After the dust settles, keep an eye on overall trading volume numbers for each exchange. The numbers will be down, way down and the 401k market will turn to shit. Wall street fucked over millions of peoples retirment nest eggs.
#72, there is a site called “seeking alpha” who I believe are building a pretty good case against the guy.
My friend the other day was saying that she was thinking that a lot of the talking heads have had lovely little conversation with the feds as they seem to be totally schizophrenic these days.
#72, there is a site called “seeking alpha” who I believe are building a pretty good case against the guy.
My friend the other day was saying that she was thinking that a lot of the talking heads have had lovely little conversation with the feds as they seem to be totally schizophrenic these days.
@72:
I love cramer. the thing you’ve got to understand about cramer is he reverses his positions constantly, but he has already factored that into is advice. People love to say what an idiot his buy and sell calls are, but they ignore the most important thing he says. Which is this:
Rather than putting in a stop loss, sell an equal portion of your position to the % it has increased so that if you are up 100% you should be have taken profits equal to the size of your original investment so you are as Cramer says “playing with the houses’ money” your maximum gain is is still unlimited your maximum loss is zero. better still if you take 1% that gain and buy ATM puts.
The problem with cramer on TV is half of his hedge funds strategy was short selling and put buying which he never recommends on TV.
@78 There isn’t a charge when going through the transfer agent, maybe a one time $10 set up fee and dividend reinvestment is free, versus $4 per transaction at Sharebuilder. Sharebuilder might be a good option for those companies that don’t offer direct invest through their transfer agent or if you want to house everything under one roof for simplicity. The cost basis nightmare, capital gains calculation for 1040, can only be avoided if you’re investing in a retirement account.
# 82. Nor should put buying, short selling, ultra-short/long ETF’s, currencies, emerging markets and other incendiary stuff be on TV.
Most people aren’t even competent stock pickers, let alone market players. Putting another level of stuff on top of that will just get the TV watcher slaughtered.
The worst show is Fast Money. I want to know how many millions of dollars were lost on that “play industrials and raw materials” idea that was kicked around yesterday.
@84
Its precisely because most people are not competent stock pickers that they should be buying puts and short selling. Otherwise they can be predicted to buy whatever has gone up and sell whatever goes down, which is sub optimal, to say the least.
-72
85 is idiotic. Your typical retail – who actually gets trade ideas from Cramer and Fast Money – can’t do risk management, cannot manage leverage, and therefore will be murdered if he tries to play shorts.
Shorts can be risk management, but you know damn well that people don’t use them that way. Just go over to Yahoo.
Wait… you can SHORT S&P futures?!
Everyone on this board is retail when it comes to their own money.
TGFD – this is simple daily trading that gets you started and then you add in option trading. IMHO this gets you started by watching the way the index moves. Here are 2 ETF’s – 2x beta up and down on the S&P 500. So, if the index is up or down 5% these stocks are up or down 10%.
SDS – is the ultra short S&P 500.
SSO – is the ultra S&P 500.
As an example you bot the SSO on friday (preferable morning). Sold it on Monday afternoon and bot the SDS yesterday afternoon or this morning and you still own the SDS.
You put stops on all your buys but not really tight because of the current volitality.
If you trade these you really have to pay attention to the market and the way it moves, all day long.
Right now (again in my very humble opinion) keep it simple and keep it quick.
Decide in advance how much you want to risk – say $50,000 and start with very small positions until you get comfrontable with the trade and the way it works.
I agree with SPODE, if you have a ten year time line starting in 2010.
The next 6 months are going to be a shit show. And the 9 months after that are going to be a time where the market tries to regain its balance. The market will be unsure and stumble but new leaders will emerge and so will new oppurtunities.
The problem with most brokers is that they don’t watch the markets on a daily basis, they are paid to bring in assets. In addition they are not nimble in terms of coming up with new strategies which are necessary as the market changes.
@#88…
I think you are correct, and you put it so succinctly, but then WTF do I know anyway.
The Guy from Delaware
@86
This problem is not restricted to retail, but rather is the nature of the human animal. The problem is that people think about their maximum gain and not their maximum loss, but the maximum loss is the only thing that matters, just ask Joe Gregory.
@ 86 – because the pro’s have been so good at managing risk/leverage?
ever since he had malaria chris matthews hasn’t really been the same.
Guest@#89…
Thank you for the advice on the SDS & SSO tactic.
Please advise what is IMHO? No SPY & USO puts? I guess we’ll try options later. Does the USO have an inverse ETF partner? $50K is the number I had in mind.
I’ll save and print your post, and keep it handy. Thanks again.
The Guy from Delaware
@TGFD
not much of tactic…
close your eyes, pick a strike, buy a put, and watch your PnL shoot up
@TGFD,
to answer your question, DUG is an ETF which should be roughly double short USO
@Short oil:
Don’t be an idiot. buy straddles on USO and Airlines.
@97,
I’m planning on riding the oil train all the way to the bottom…analyst reports today saying we’re about to have something like 2.5 million barrel surplus every week
CA$H MONEY
@short oiil
great then your gain on airlines will offset the cost of the oil calls.
Yeah, that was clearly a hedge fund unwind today. Look at the stocks that got killed the most: all hedge fund darlings in the energy sector.
Come on there must be something leaking out about this by now. Who could it be?
It’s going to be brutal if we go down by 10% every time a hedge fund liquidates…
not in the mood of offsetting, oil’s going down down down
@ yeah like i said, you’re an idiot. same profit profile, less risk. but whatever, keep up your idiocy. it’ll keep working…. until it doesn’t.
Am I to understand that hedge funds have sekret money stashes out of the country to buoy their current situations and to make sure they can always have redemption?
You want to talk about being an idiot?
how does up 237% for the past 2 months sound?
Short oil:
sounds like lower returns than my own, while taking more risk. thanks for the trade idea though, i can use it. only difference is i’ll make more money than you and do it whether oil goes up or down.
denis miller is saying the VP had a heart attack today?
@ tgfd
IMHO = In my humble opinion.
Hedge fund issue – CNBC said that Highland Capital with AUM of $15B, was liquidating positions. Although, Highland Capital did not return CNBC’s phone call to confirm this.
Posted by guest, Oct 15, 2008 8:03PM
Citadel Investment Group, one of the world’s most successful and influential hedge funds, has been having a miserable year with returns that have dropped 26% to 30%.
But rumors that its performance was far worse were so rife that they helped drag down the stock market on Wednesday, and prompted Citadel to take steps to set the record straight.
The rumors swirled for days and gained momentum on Tuesday morning when they were published on a financial Web site. After a complaint from Citadel, the site pulled down the item within an hour. Still, by Wednesday afternoon, the rumors were buzzing all over Wall Street — and around the globe.
Kenneth Griffin
On Wednesday, Kenneth Griffin, head of Citadel, sent a letter to investors.
September, he wrote, was the “single worst month, by far, in the history of Citadel. Our performance reflected extraordinary market conditions that I did not fully anticipate, combined with regulatory changes driven more by populism than policy.”
In coming weeks, Mr. Griffin wrote, the firm’s earnings will continue to be volatile, “as the world manages the unfolding crisis.”
Citadel has told clients that, contrary to the rumors, it has not seen its borrowing lines cut or the terms of its borrowings altered. Standard & Poor’s last week affirmed its long- and short-term counterparty credit ratings at BBB-/A-2, a reasonably strong rating. The firm also has assured clients that it is on solid footing. It has $6 billion in cash.
Also, Citadel doesn’t rely on prime brokers like many hedge funds. It floated its own debt. S&P lowered the outlook for Citadel debt to “negative” from “stable.”
The Citadel chatter comes at a time when financial firms need confidence more than ever just to stay in the game, and as investors are increasingly worried that hedge funds’ woes could further destabilize the broader markets.
“The system is very fragile,” said Cambiz Alikhani, partner at London-based asset manager Iveagh Ltd. “Any form of bad news isn’t what it needs.”
The fact that some large hedge funds are under stress could provide a window for governments to step up their regulation of hedge funds, as many have long wanted to do, Mr. Alikhani said. Since Mr. Griffin, 40 years old, founded Citadel about 20 years ago, it has been one of the world’s most lucrative places to invest. Its returns, on an annualized basis, have been 18% to 20%. The firm manages about $17 billion now — down from about $20 billion at the beginning of the year.
Last year, Mr. Griffin wrote in his letter, “was the most successful year in the history of our firm.” Its core strategy has long been convertible-bond arbitrage, which allows investors to profit from differences in the movements of convertible bonds and other securities.
This summer, Citadel increased investments in that area. “Regretfully, I did not foresee the financial disaster that was to unfold in September,” he wrote in the letter.
The financial crisis dramatically raised the cost of borrowing and reduced availability of credit, he wrote, reducing the value of cash assets as compared to the value of derivative instruments. At the same time, the decision of regulators around the world to temporarily ban the short selling of equities “created material dislocations across many of our portfolios and disrupted our ability to assume and manage risk.”
Other hedge fund firms that focus on convertible-bond arbitrage have also been hurt. CQS LLP saw its flagship CQS Convertible and Quantitative Strategies Fund down about 14.5% in September, leaving it down roughly 17% for the year and with about $3.5 billion in assets. The fund has had annualized returns of about 12.3% since inception in 2000.
GLG Partners LP, another large London hedge fund with about $20 billion of assets, has seen its roughly $1.4 billion GLG Market Neutral fund decline about 25% for the year. The fund has had annualized returns of about 12% over the past decade.
The Citadel rumors gained momentum as the Web site Dealbreaker published some of them.
The item was posted for about an hour on the site, but was taken down after a Citadel executive called. “We removed the Citadel post after it was brought to our attention that it was a baseless rumor, and was irresponsible to repeat,” Dealbreaker wrote on its site. The site had labeled it the item an “unfounded” rumor.
One of the rumors had to do with the amount of money the firm borrows. Citadel, in reality, borrows about $4 for each dollar it has of equity, which is heavy leverage for a hedge fund. But the figure is down from $7 of leverage earlier this year.
Still, some investors were worried Wednesday, as evidenced in the movement of the price of protection on Citadel’s debt. Now, it costs $2.5 million up front plus a fee of $500,000 annually to protect against default on $10 million of the hedge fund’s debt for five years, according to one junk-bond fund manager. That’s up from a price in early September of about $350,000 annually for five years.
The hedge fund’s $500 million in bonds were privately placed in December 2006 and are rarely traded.
Citadel Hedge Fund Falls 30% in 2008 on Convertible-Bond Losses
By Katherine Burton
Oct. 16 (Bloomberg) — Citadel Investment Group Inc.’s biggest hedge fund fell as much as 30 percent this year, primarily because of losses on convertible bonds, said two people familiar with the Chicago-based firm.
Kenneth Griffin, who founded Citadel in 1990, said in a letter to investors this week that returns for the $10 billion Kensington Global Strategies Fund may swing wildly as markets are battered by the global credit crunch. Griffin holds 30 percent of the firm’s $18 billion of assets in cash, according to an Oct. 8 report by Standard & Poor’s.
“In the weeks to come, I expect we will continue to see significant volatility in our earnings as the world manages through the unfolding crisis,” wrote Griffin, 40. “It is incumbent upon us to navigate through this period and to create value for our stakeholders over the years to come.”
Kensington’s loss, more than double the decline of the Credit Suisse/Tremont Hedge Fund Index, may dent Griffin’s reputation as a consummate risk manager with no patience for traders who can’t make money. Kensington’s only annual loss was a 4 percent drop in 1994.
Katie Spring, a Citadel spokeswoman, declined to comment.
Citadel may have difficulty selling convertible bonds because there is little demand. The market tumbled 13 percent in October, according to a Merrill Lynch & Co. index. The benchmark is down 21.5 percent since the end of August.
“It’s very hard to get out of positions,” said Tom Sowanick, chief investment officer at Clearbrook Financial LLC in Princeton, New Jersey, which manages $22 billion.
Not Pessimistic Enough
Convertible bonds are debt securities that can be converted into stock. They usually gain most when the difference between yields on corporate bonds and U.S. Treasuries is narrowing and the stock market is rallying. That hasn’t been the case most of the year. By the end of September, Kensington was down 22.5 percent year-to-date.
Griffin told investors his main mistake was not being pessimistic enough about the extent of the financial crisis, which began in 2007, a year he described in his letter as “the most successful in the history of the firm.” Last year, Kensington climbed about 30 percent.
“Regretfully, I did not foresee the financial disaster that was to unfold in September,” Griffin wrote in the letter, a copy of which was obtained by Bloomberg News.
September was the worst month for convertible bonds since 2001. The market fell as hedge funds found it hard to borrow in the wake of the Lehman Brothers Holdings Inc. bankruptcy and the U.S. Securities and Exchange Commission temporarily banned short selling of more than 900 stocks.
Stock Losses
In a short sale, a trader borrows stock and sells it in the hopes it can be bought back later at a cheaper price. The restriction, which was lifted Oct. 8, prevented investors from hedging the risk that convertible bonds would fall in value.
About a quarter of Citadel’s losses in September came from stocks, as industrial, technology, communications, media and entertainment shares all tumbled, according to the letter. The fund also lost money on energy, reinsurance and mortgages, it said. The fund’s bets on macroeconomic trends using stock indexes, bonds, currencies and commodities was the only strategy that made money in the month.
Citadel executives have been outspoken about their expectations for traders to make big returns even in difficult markets.
No Apologies
“When the markets change, we don’t accept lower returns,” said Mike Pyles, Citadel’s head of human resources in a 2005 interview. “We aren’t that kind of firm. We expect the manager to go figure out how to make money in the new markets. We make no apology for it.”
Even with the losses, Griffin continues to take steps to turn Citadel into a diversified financial firm. He is close to hiring a senior executive for his capital-markets business, according to a person familiar with the matter. At the beginning of the year, Citadel separated that business, which includes an options market-making group and a service that handles administrative chores for hedge funds, from its money-management operations.
Citadel also plans to start single-strategy hedge funds, including a fixed-income fund, a macro fund and a convertible- bond fund. These funds will charge investors 2 percent of assets and 20 percent on any investment gains. Citadel’s current funds also get 20 percent of any gains, and instead of paying a management fee, clients cover the fund’s expenses.
@106, @TGFD
It wasn’t a heart attack, it was an atrial fibrillation issue, this has to do with how the electrical impulses in the heart effect blood flow. It is rarely fatal.
That being said, TGDF: I fully understand that your math skills are exquisite, given your chosen profession/degree. You don’t need to day trade. You don’t need to “trade” period. Buy on fundamentals, and hold for profit. Should anyone on this board push you in another direction, it’s out of stupidity and sophomoric enthusiasm.
The market has an amazing ability to cover and swallow those people that think they are above the natural laws of the dynamics involved. The only inherent constant in trading is greed, and becoming part of that necessarily means you can not profit from its existence.
EOF.
“The Citadel rumors gained momentum as the Web site Dealbreaker published some of them.
The item was posted for about an hour on the site, but was taken down after a Citadel executive called. “We removed the Citadel post after it was brought to our attention that it was a baseless rumor, and was irresponsible to repeat,” Dealbreaker wrote on its site. The site had labeled it the item an “unfounded” rumor.”
WSJ
http://www.wsj.com/article/SB122411338781038443.html
DB this Citadel stuff is showing you guys have some major clout…use that to your advantage.
this is interesting, they are finally putting this up. Wow, after watching the show I would not have thought this bunch was invested:
“Trader disclosure: On Oct.15, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (AAPL), (MER), (MSFT); Seygem Asset Management Owns (RIO); Seygem Asset Management Is Short (PBR); Najarian Owns (AAPL) And (AAPL) Puts; Najarian Owns (C) Put Spread; Najarian Owns (GS), Is Short (GS) Calls, Owns (GS) Put Spread; Najarian Owns (MS) And (MS) Puts And Is Short (MS) Calls; Najarian Owns (NOK), Is Short (NOK) Calls, Owns (NOK) Puts; Najarian Owns (RIMM) Call Spread; Terranova Owns (AAPL), (EXM), (FCX), (FTO), (MA), (NOV), (POT), (X), (VLO); Terranova Owns December Dollar Index Futures;
Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO; Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (CNW), (OFC), (DLM), (DRH), (DLR), (EPR), (EXR), (FL), (SLB), (LNET), (MAC), (DBC), (DBV), (SKT), (UA), (BLV), (VV), (CLB), (GWX), (IGE), (FSMXX); Virtus Investment Partners Owns Seagate Tax Refund Rights; Virtus Investment Partners Owns Seagate Technology Tax Refund Rights; Virtus Investment Partners Owns More Than 1% Of Shares Of Incitec Pivot Ltd.; Virtus Investment Partners Owns More Than 1% Of Shares Of Essex Property Trust Inc”
http://www.cnbc.com/id/27204930
You guys nailed it. totally nailed it. and you found out that, besides us, the big boys and girls are reading and posting too….
@diablo
Good call. Thanks.
wtf, now it is less than $200 grand? What happened to $250 grand?
@phobos
you piece of shit, i put it that shit first.
diablo can eat it.
put it= posted.
112 – CNBC has been doing a running flash disclosure of Fast Money ever since Najarian was almost jailed by the SEC over the E*Trade fiasco (trashing the company on-air while being short without disclosure).
E*Trade is the ultimate lulz of the whole mess. Everyone on the Street thought that one was so funny.
-
SDS and SSO kick ass, but they require attention and tightly controlled trades.
@114
Apologies, when I saw what appeared to be the majority of war and peace, I fucking skipped it.
Good call though.
Guest@#97…
I think I understand that if USO goes down, Airlines (ETF?) goes up. What exactly are “straddles”, though? Thanks.
ShortOil@#96…
Thanks for the “DUG” info.
@#107…
Thanks for “IMHO” translation.
@#108…
BTW, sissy candyass Ken Griffin is more scared shitless now than he was when he wrote his first “Citadel is Strong” letter. That financial engineer genius is just too young and immature to realize that people generally don’t react positively to unexpected, confusing information, especially when it comes to their money. His first letter spilled the f’n beans and should not have been written. Welcome to ShittsVille, Kenny. Ken’s going to blow up Citadel all by himself and save Uncle Sam the trouble.
The Guy from Delaware
Oh, and if you have real enormous balls, EEV. That’s the double short emerging market ETF. 52 week range of 52-200. More recently, it doubled and was cut in half again inside of a week.
Fun product that should come with a biohazard symbol.
Since Ken Griffin is reading, I just thought I’d let him know Mordecai is still looking for a job
@121
nice this EEV is the shit. Options on this thing are so fucking mis priced, Ray Charles must be making the market…. er maybe Citadel.
Anyone notice that?
O’Bama was the first to align himself with O cubed and Volcker (the father of EMO glass rims)…
Why does Obama always take the best ideas from his opponent and make them his own? Can’t he please come up with something new and different?
How is he going to enforce rules against Communist China? Come on, is he for real?
Ugh I like him but he is showing his inexperience.
@125
It’s the law of strength. Take your opponents strength and make it your own.
Columbia? Kidding me?
Brazil (met with the Ambassador three months ago..) is in a much better position to mandate international trade in South America. You can’t just start trading with a country because they can trade cheaper shit.
@125:
I believe that is called “learning”. I suppose he could come up with something different, but why would you reinvent the wheel just for the sake of being different?
What totally frightens me about the remarks about China and trade is that they show a complete lack of knowledge about our economy and why the Chinese have so much clout.
@129
Agreed.
Fly-over country, however, feels that the issue with the economy is based off of a lack in manufacturing. They would love to see the dependence on China go.
Well, I think since I’m undecided what I want to see is does he have the ability to think out of the box, cause what the next president will be facing with everything is monumental and that next president is going to have to pull some rabbits out of the hat.
@tgfd – you want some etf juice? try the skf or the uyg (depending on the day) – ultra short/long financials…then sell options (vol is at all time highs). if you’re going to sit and watch this board all day, you can sit and watch your trading screen and make some money while you’re at it…
@cluzo
Don’t do that man, don’t incite someone lacking fundamental knowledge in market dynamics to trade ad-hoc.
Not that I don’t have love for you.. but wow. He needs to read-up first.
This is a man who taught Constitutional Law? Did his students pass the bar?
Has anybody totalled up the amount of money both candidates have given away so far? I mean, yeah, it’s just a few 100 billion here and there, but still…
@phob – my bad, this board is like home schooling: you have the kindergartners sitting in the same room as the high school kids.
@tgfd – I’m not a registered rep (just a lowly, non gs banker) and past performance is no guarantee of future OR projected results. please consult SEG or another professional before investing…
are there any ETFs that mimic triple or quadruple the performance of a benchmark?
@cluzo
HA!
Some of the kindergarten kids are worse than others. We have to face it, this board is now a centerpiece of media, which means attraction to those that are less intelligent, and ultimately less knowledgeable about the subject matter.
Logically, there are two options here:
1) Hope the dumbasses keep quiet, ask good questions, and just watch and learn.
2) Flame them.
I think that the latter of the two show less responsibility than the former, but I don’t work at GS either. So fuck it.
(everyone take note that i’m biting my anger for the moment.)
I don’t like militant michelle but then again, I don’t trust GS so I’m not sure I can vote for him when I can’t stand the kind of first lady she will be. The closeted her like they closeted bill in the primary, cause she is plainly pissing off other women, which isn’t good, makes you wonder why?
i wonder how many of you high school kids are just posing like you know what you’re talking about
@129:
what scares me so much is that your comments show no knowledge of how our economy works and why the Chinese have no clout. Their dependence on exports to the US makes them price takers of US dollars and allows us to print treasuries ad infinitum.
#137, margin 2-1 whichever way you want on an ultra.
Congrats, you’re now almost as leveraged to moves as Citadel.
@137
http://www.marketwatch.com/news/story/proposed-etfs-would-magnify-stock/story.aspx?guid={3D68AF7C-CCBF-494A-84BC-9E367BFA8134}
don’t think they’d allow it…
#135, I’m sure the amount of money is a total disgrace. Just as bad as the infamous $00 haircut.
Hell, they could have taken the money and poured it into the economy or the schools.
@137:
If you can’t come up with a way to do that, without using an ETF then you shouldn’t be doing it.
I want a copy of this for my trading pit… make it a wall mural or something. Its a great comment about the over use of leverage…
http://i264.photobucket.com/albums/ii196/Lothyisawesome/youku.jpg
Details on the Citi ER Layoffs:
George Shapiro – aerospace & defense
John Hill – metals
Chip Dillon – paper & forest products
Shannon Cowherd – Canadian banks
Paul Mansky – computer networking devices
Tony Wible – radio & media
Leone Young – environmental services
Paul Heldman – healthcare policy
Joshua Attie – hotels & casinos
Bradley Ball – asset mgmt
David Rasso – machinery
@seg – damn, that’s some sadistic $hit (just in time for halloween)! ouch, my eyes hurt.
Cluzo, ok here is a slightly nicer version… same message… http://bigpicture.typepad.com/photos/uncategorized/2008/10/15/damned_crisis.gif
peace,
~SEG
or the Simpsons version…
http://www.youtube.com/watch?v=T3imSKAvgmY&feature=email
@SEG
trading pit? it’s going to be the wall hanging at my wedding (never happening.)
@SEG:
http://www.cartoonbank.com/product_details.asp?mscssid=7H4JNCCLV8158LLT42EGPXLEMRCP66MB&sitetype=1&sid=125725&did=4
I believe they can wall paper your bedroom, as well.
Jesus christ do i love this market and watching everyone I hate blow up. I’m crushing it so far this week…. two days to expiration…. looking to see VIX 100+
@ Phobos, we have a stuffed fish currently on display, no sharks at our location…
I think a big copy of this would help keep the analyst’s attention… ie you want to grow that position to what size in my portfolio’s? look at the wall, now tell me again how large of a position in the fund do you really your idea?
Actually, I have to be honest, while I am the final arbitrator of my funds composition, my boys have out performed me during this storm. I just swing a larger bat then they do inside of the pit is all.
~SEG
@142 that would require the investor to be leveraged, not the ETF
@145 does that even make sense?
Please tell me that the CNBC TV version of dow futures pointing down 858 points is an error.
@155 Nikkei is down about that much. Prepare the Vaseline and ice.
@155:
I’m not watching CNBC, but that’s gotta be an error…S&P futures are at 897.50 right now
@152:
You really think VIX 100+ is possible? I mean we had 1,000 point swings and the VIX was at like 75 if I remember correctly…what kind of volatility is that implying?
@152 TY…
@155 that is where futures are as of the start of Wednesday. You want to pay attention to the actual number… which is the 8,4440 part… we closed at 8,577 so the market is only down another 137 points since close.
It hit a low of 8,354 earlier, so we have bounced back 90 points or so far. At least it has stopped dropped for now.
I am net short and even I am starting to want to see this thing slow down… its like its building up speed for something really crazy…
Lets hope we as a nation can regain control of our own finances, right now a market this self destructive is not good… even for bears… I am reminded of the pigs and hogs comment… I don’t want to be slaughtered when this ride slows down…
~SEG
S&P Warns on $351.7 Billion of Alt-A RMBS
October 15, 2008
Standard & Poor’s Ratings Services said Wednesday that it had placed ratings on 5,536 classes from 456 U.S. RBMS transactions backed by Alt-A mortgage collateral issued in 2006 and 2007 on review for likely downgrades.
Perhaps most telling is that the mortgages involved aren’t short-term resets: S&P said that most of the Alt-A transactions now under review are collateralized by fixed and long-reset hybrids (meaning rates are fixed for five or more years from origination dates). In aggregate, the affected classes represent an original par amount of approximately $351.7 billion; that total is $280.1 billion in current balance.
Driving the likely downgrades is yet another update to loss severity projections by the rating agency, which said it now expects average loss severity on affected mortgage deals to be at 40 percent rather than the previous threshold of 25 percent.
>500
Hopefully this will turn the market around.
http://www.youtube.com/watch?v=eONhto0x_nI
SPODE
155, it’s more like 85. Someone fucked up the decimal point and caused a few dozen people to shoot themselves.
We’re hitting the lows again, no doubt about that. If you stretch this chart out to a 1 year and compare it to other historic declines, what does Monday look like to you?
Fortunately a lot of people I hate went big long on Monday, so this has been somewhat satisfying.
ridiculous…
SPY 70 puts selling for 1.50…who thinks we’re going down another 2,000 points in a month?
@160
Probably won’t… but this certainly will
http://www.youtube.com/watch?v=oHg5SJYRHA0
does anyone else think Dylan Ratigan might’ve lost a lot of money from the banks? He’s been going nuts lately.
Ratigan is out for blood
I am a dumbass that can’t keep my mouth shut. Was is this flaming thing we are talking about?
@164:
I thought he could only own GE?
Love hearing Haines talk about GE going in the shitter, you just know he’s got a bunch of shares
Shortoil, I don’t think so. I think they’re allowed to own stocks as long as they have a brief disclosure. I think other anchors like Bartiromo, etc. They had a disclosure mess a little while ago
@163 You’re going to make me cry. I’m going long first thing in morning. All SSO including all margin available. I never knew love could be this strong.
SPODE
SPODE@#169…
TGFD isn’t very knowledgeable yet, but I wonder if that “strong love” of yours might be a bit misguided. Maybe you’re kidding? I hope.
BTW, I saw on Bloomberg TV a little while ago:
“Citadel Hedge Fund Declines 30%; Griffin Expects ‘Significant’ Volatility.”
C’mon Kenny, tell it like it is:
“Significant Volatility” = Significant Losses = Significant BlowUp.
The Guy from Delaware
I am seeing lots of stories popping up about letters of credit not being accepted due to no one accepting the counter party credits.
This is the worlds export economy in stall mode…
Europe is set for an ugly open…
Be careful out there… Our turn is coming up in a couple of hours…
~SEG
get long UUP and short the rest of the world
I have been long the market for over twenty years. Everything is still sitting there. I am actually afraid to open my statement. When everyone on TV was saying get out, I didn’t believe them becasue I would be losing a lot of money, so I stayed. I think, in all honesty, I could never have imagined that a situation such as this would occur. Maybe I have too much faith in people, I think they are too much like me. Maybe people changed and I am just a dinosaur thinking Character and honesty and love and fairness and caring and compassion and patriotism are things that count.
@173 : You will be fine. Just stick around. Make sure you have enough cash for you to run thru daily chores.
@173:
no you were right, people are idiots, just like you. The problem is you didn’t account for your own idiocy, when you made your assumptions I always hedge my exposure to my own potential idiocy.
If you assume you know what you’re doing then you can convince yourself to do anything. Might I suggest you buy some SPY straddles, I believe they receive special tax treatment as a hedging instrument.
SPY on my SSO pussy, you DUG haters
Inverse ETF Proshares discussion on DB …..best indication of being close to short term bottom that I have seen so far.
Now if we we only knew the moment TGFD put on his first put.
@125 Obama has Rubin, Buffett, and Volker assisting him. Who does McCain have? Oh yea, that joke known as Phil Gramm. But, I heard that Steve Forbes is advising McCain so I think that is good for McCain. But overall, Obama has an amazing team and McCain’s is mediocre.
you idiots still think this is a free market? don’t you know the “insiders” manipulate it. get the new money all flushed out and start accumulating at lower levels. bottom is here because “they” say so.
lol! funny. We’re consolidating, so expect some serious whipsaw.
http://weeklyta.blogspot.com
What chaos?? This is the same link! There are shows!
http://tubedirects.net/index.php?q=Afternoon-Officer?
GYFlGf I value the blog.Much thanks again. Great.