With potential demise of Morgan Stanley and Goldman Sachs (let me remind you that Hank Paulson used to work in Goldman), finally regulators have woken up and banned "naked" short selling and potential may ban short selling altogether in few financial stocks. With concerted efforts to prevent short selling making wall-street into casinos, the steps taken by pension funds, FHA and SEC (finally - what was Cox doing when Lehman and AIG were going down), shorts are going to lose big-time if they don't cover their bets.
Poor Lehman, AIG shareholders and employees - the actions came late for them. BKPIX which is mutual funds concentrated in banks (and which I recommended in my previous posts) shot up by 22% in one day. Too much volatility to call it as mutual fund.
So where does markets go from here ? I have been too quick to call bottom for this extremely volatile markets. So I hesitate to call this as bottom, I would say we are very close to it. We may see another round of panic selling before another bull run starts or this week's volatility may be the one everyone was expecting. As they always say, when leaders like MS and GS start falling apart, we can consider as bottom. So did we reach bottom today afternoon. Considering MS was selling at less than 12 and GS was selling at less than 85, it is probably a bottom. My prediction is that some of these stocks may be up for 50% run from their bottom reached today by year end.
Now that government is considering putting RTC type of plan, banks can take one big-bath, get rid of their bad assets and get a fresh start. Hopefully this weekend, Paulson/Bernanke won't wipe out shareholders like they did for LEH, FRE, FNM, Bear Sterns and AIG.
Shorts - watch out your backs.
/Shyam
Poor Lehman, AIG shareholders and employees - the actions came late for them. BKPIX which is mutual funds concentrated in banks (and which I recommended in my previous posts) shot up by 22% in one day. Too much volatility to call it as mutual fund.
So where does markets go from here ? I have been too quick to call bottom for this extremely volatile markets. So I hesitate to call this as bottom, I would say we are very close to it. We may see another round of panic selling before another bull run starts or this week's volatility may be the one everyone was expecting. As they always say, when leaders like MS and GS start falling apart, we can consider as bottom. So did we reach bottom today afternoon. Considering MS was selling at less than 12 and GS was selling at less than 85, it is probably a bottom. My prediction is that some of these stocks may be up for 50% run from their bottom reached today by year end.
Now that government is considering putting RTC type of plan, banks can take one big-bath, get rid of their bad assets and get a fresh start. Hopefully this weekend, Paulson/Bernanke won't wipe out shareholders like they did for LEH, FRE, FNM, Bear Sterns and AIG.
Shorts - watch out your backs.
/Shyam
Comments
are you joking??? is this a threat???
:)...can we have a macro discussion??? How does this change a damn thing...are you familiar with the Karachi Exchange...perhaps you should google that if you really like this rule and if you think it changes ANYTHING in the macro economy
here is chart...they banned shorts on july 17th...oops no worky
http://new.quote.com/global/stocks/chart.action?s=%24KSE-IDX&chartUi.period=D&chartUi.bardensity=LOW&chartUi.bartype=LINE&chartUi.size=620x300&chartUi.minutes=
here is article to educate but as you can see equities are economic discounting mechanism...THEY ARE NOT RISK FREE...and if economy sucks the returns will suck worse
http://www.bloomberg.com/apps/news?pid=20601087&sid=a111C0hsxBic&refer=home
PS actually shorted COF around 55 bought april 09 35 puts on WFC right at open and bot to open SPY and IWM nov puts all today at open
I aint scared if your not...in fact it was like XMAS for me...and options market maker does the shorting for me...gonna move in on the BACster soon...but dont tell hank