Posts filed under “Short Selling”

Waiting for the Next Inflection Point

What are the pros doing?

I’ve been speaking with various institutional investors, and I can tell you there is little in the way of uniformity of thought. Here we are, up 70% or so from the lows of over a year ago, and there is no consensus — which is probably a good thing.

What are they thinking about? The health care bill, financial reform, the federal deficit, tax policy, a bubble in china, hyper-inflation, structural unemployment, another lost decade, and even demographics, their concerns are many and varied.

Their investment postures are even more varied. I can oversimplify them into one of five buckets

1) All In: They caught the bottom, or jumped in not much after it. They have been long and strong the whole run. They see no end in sight. Some are leveraged, some used options.  My estimate: About 10% of pros fall into this camp.

2) Not-Too-Late: They joined the party later in the rally, and are still carrying some cash (10-20%) but not excessive amounts. They are not sure why we have been going higher, but feel they must participate. (About 20% of pros)

3) Reluctantly, Partially Invested: The group that originally fought the rally, but honored their stop loss discipline to flip from short to long around June of last year (after the pullback reversed). They are a combination of Global Macro traders and Long/Short funds who hate this environment, along with Trend followers who don’t want to fight the tape. They are carrying too much cash — from  20% to as much as 50%. Many are looking for the next opportunity to get short. (About 30%)

4) Bought It, Sold It, Waiting for Clarity: This group had a very good 2009, but did not want to overstay their welcome. They hit the bid near year end, and took huge performance fees. They moved aggressively to cash –  50%+ — and have dabbled on the short side. They are waiting for the next inflection point to redeploy capital in either direction. (~20%)

5) Missed it Totally, Waiting for Vindication:  The “structural economic problems” and “Unconscionable Federal Reserve actions” have kept this group out of the markets. They are awaiting the next leg down, a retest of the lows, and then a break even lower. They are well stocked with Puts, bottled water, and MREs. This was a bigger cohort, but investor pressure and stress have reduced their numbers.  (Down to less than 5% of hedge funds)

That’s about 85%, as there are others who simply don’t fall neatly into one of these buckets.

Category: Markets, Psychology, Short Selling, Trading

60 Minutes: Michael Lewis’ The Big Short

Michael Lewis’ new book “The Big Short: Inside the Doomsday Machine” looks at the financial meltdown.

Part I

Watch CBS News Videos Online

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Part II

Watch CBS News Videos Online

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There are numerous web extras here:

Web Extra: Is Wall Street Overpaid?
Web Extra: Bailout Blues
Web Extra: The $8.4 Billion Bet
Web Extra: Wall Street Misfit
Web Extra: “The Blind Side”

Source:
Wall Street: Inside the Collapse
Author Tells “60 Minutes” What Led to Wall Street Collapse and Who Predicted It

http://www.cbsnews.com/stories/2010/03/12/60minutes/main6292458.shtml

Category: Bailouts, Short Selling, Video

Lehman News Round Up

“Dick Fuld is going to be bankrupted and he’s going to spend the rest of his life in court fighting legal battles. There maybe others forced to do the same.” -Dick Bove of Rochedale Securities. Bove had  all nine volumes of the examiner’s report printed and bound. (Barrons) > As it turned out, Lehman Brothers…Read More

Category: Bailouts, Legal, Regulation, Short Selling

Chanos Reduces Bets Against Health-Care Stocks

click for video

Category: Short Selling, Video

Justin Mamis On New Short Selling Rules

Here is my quote of the day: “Those so-called adults who fuss about short sales are really silly. What competent grown-up would short a stock after – that’s after – it has fallen 10%. Don’t these people understand how the stock market works? Selling short on an uptick is sound, to say nothing of having…Read More

Category: Regulation, Short Selling

SEC Short Ban: “Regulation By Placebo”

And speaking about not understanding what caused the bear market, we have this recent SEC action: “The Securities and Exchange Commission narrowly approved curbs on short selling, addressing what some consider a cause of the 2008 financial crisis despite criticism that there was no evidence to support the move. The commission voted 3-2 on party…Read More

Category: Regulation, Short Selling

James Chanos on Earnings, Shorting, China, Greece

Famed short-seller James Chanos, president of Kynikos Associates, shares his market insight.


Airtime: Thurs. Feb. 4 2010 | 7:05 AM ET

Part 2

Airtime: Thurs. Feb. 4 2010 | 7:35 AM ET

Part 3

Airtime: Thurs. Feb. 4 2010 | 8:20 AM ET


Part 4


Category: Short Selling, Video

What Type of Bear Are You ?

Funny, despite having flipped bullish earlier this year, I still get all manner of Bear email sent to me. I guess any bullishness from me is perceived as a trading call only (heh heh) . Anyway, this hit my inbox, via FallStreet — I guess I am a Cub — and I found it amusing:…Read More

Category: Psychology, Short Selling

Boycott Overstock.com

Whatever little patience I had with Patrick Byrne, and his overzealous friends at DeepCapture.com, has now become officially exhausted. As I noted last week (DeepCapture.com Scraping Facebook Friends), this group found the Facebook friends and relatives of any journalist, critic, fund manager or blogger who dared to  criticize Overstock (or Deep Capture), and then published…Read More

Category: Financial Press, Retail, Short Selling, Web/Tech

Bloomberg on Phantom Shares, Naked Shorting

I somehow missed this: > click for video

Category: Legal, Short Selling