User 169218

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    • Tue Jul 15th 22:10 PM | Rating: 0 0
      Commented on:
      The SEC Panics
      fellow seekers: Did anyone watch the hearing today? When asked about shorting's kissing cousin, the uptick rule, Cox said it was perhaps the most studied issue in his tenure as Chairman. Cox defended the uptick rule; interesting...All that work on the uptick rule yet naked shorting, which has been controversial since the dot.com era, is just now hitting the radar screeen? Where were these great thinkers when Fannie and Freddie were trading at 50, 40, 30, 20 and 10? Don't get me wrong, I think its a silly move and should not have been announced. (There have also been reports it will be postponed till at least monday as well.) But if you're going to do it, why wait? Maybe the SEC follows the brokerage house rule of waiting for huge drops in value before removing buy ratings...

      As for the wisdom of the shorts. Consider that Fannie and Freddie never had to maintain the same cap levels of their competition, but heck that provision was in their congressional mandate.

      Once the overall real estate market started dropping how could Fannie and Freddie escape the same harsh realities faced by other lenders?

      I can't take credit for this, but Joe Batapaglia, who was once one of the worst shills on the Street, has recently become far more objective. I still don't agree with everything he says, but he characterized Fannie and Freddie as an example of federal government SIV's. I thought that was pretty shrewd. How many SIV's are in similar shape?

      Unless and until housing values stop dropping the entire financial services sector will remain problematic, and will hold the economy and market in check. Rather than a micro discussion of Fannie and Freddie, we need a macro discussion of what monetary and fiscal policies are needed to first stop the home value bleeding and slowly repair equity.
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    • Fri May 16th 11:16 AM | Rating: 0 0
      Commented on:
      Learning From Bill Miller's Recent Underperformance
      I was a broker at Legg Mason in 1985. At its inception, the Value Trust was run by Ernie Kiehne. Ernie used to quote his cats on institutional research calls. To say he was eclectic understates the definition of the word. Ernie was a one of a kind manager and we loved him. He told me once he calculated the value of his fund every day on the way home on the bus and would get within a few points of where the computers pegged the fund. (yes he rode the bus.) Ernie was responsible for the early out-performance of the fund, because the brokers at Legg believed in him. Bill Miller initially ran what used to be called the Legg Mason Special Situation Fund. The Special Situation fund reflects what Miller has done with Value Trust since he took it over in 1990. Kiehne had a far more tradtional view of what a "value" stock was. Miller's value calculations were always more progressive shall we say; more relative value. Miller has also run the Value Trust in a more concentrated manner; perhaps taking a page from Buffet who has in the past said, (I'm paraphrasing,) that while a manager may have many stocks in a given portfolio, out-perfromance is a function of having a core and concentrated position in the right stocks. It is difficult for any manager to out-perform over time. The issue for Miller and the Value Trust is did Miller's concentrated positions and progressive definition of "value" finally catch up with him. What may be different now is that Legg Mason is not the firm it was when Miller made his run. For years, Legg Mason was a tightly focused brokerage with a solid group of asset gatherers who fed the firm's asset managers a steady stream of new money. Miller now faces a different dynamic. He's got a big fund with a performance issue but now lacks that dedicated support from brokers who felt a strong connection to the fund. Who is going to hold all that money in place now?
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    • Mon Mar 31st 19:19 PM | Rating: 0 0
      Commented on:
      Don't Regulate, Rationalize
      Dear Alpha Seekers. To solve this "global" problem we need a lot of sunshine. It's clear that only a small percentage of even smart market pros fully understood the complexities of both the underlying asset, mortgage securities in many permutations, and how these securities were leveraged and hedged...think derivatives. On the other side of the equation, the regulatory side, once again even fewer key regulators understood this "trade" lets call it. Therefore what must be changed is the information and analysis. Why do we pay such high prices for real time data in financial markets? We're told we live in an information age, why has the cost for real time financial data remained so high? In addition, if the derivatives market is as large as its said to be...$500Trillion in notional value, why do global regulators allow these contrtacts to trade "over the counter," (or under the table as we've discovered.) Sunshine, and lots of it. The internet should have made price data for securities free. After all, if US taxpayers are going to absorb this loss, its not right for them to not be able to see what's going on.

      That should prompt a response from someone...
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    • Thu Mar 27th 21:02 PM | Rating: 0 0
      Commented on:
      Jim Grant on Fed Monetary Policy
      to my fellow seekers. while its true that grant has been around for years, and has often been wrong in some of his conclusions, he generally defines an issue accurately. Even when he's wrong, there is some truth in what he says. What seems different to me, and I've listened to him since the mid 80's, is he's talking purely credit markets. Factually, much of what he is saying about the Fed, its balance sheet, its lending practices is accurate. The question we all have is whether the validity of what he knows can be used to form conclusions in the future. There can be no doubt as to the risk the Fed has assumed with its aggressive approach to the problem. I haven't seen anything out of the White House. The assumption is that Paulson agrees with what the Fed has done. And Congress can't even understand the elements of basic structured finance let alone its complex permutations. Who else is out there? I'm hearing a lot of echos right now in the form of lower bids for the US Dollar. I find the US Dollar to be in agreement with Grant and that's why this time he may be right. Although, personally, I'm hoping he'll be proven wrong again.
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