The Light Entertainment at the End of the Tunnel. Ridin' that train... yes, that train...

Thursday, January 24, 2008

Projectile-vomiting drunks and clap-raddled junkies

My good friend and un-indicted co-conspirator Mr Zymurgy commented:
I don't think people have been investing for years but rather gambling, this looks like the casino at 1 hour before closing when fights break out and people throw up on the floor, probably a great time to do something but what?
Good question. Prior to these short funds, there was no good way to bet on the downside that I know of, except maybe put options. Even with nerves of steel and brains of sawdust, shorts are too rich for my blood. Unlimited downside risk: homey don't play that. But now we have risk-limited ways of betting down as well as up. Yes, Mr Zymurgy, we are in a smoke-filled room at 3am surrounded by drunken rich people with unmentionable predilections and bad breath, betting breathtaking sums on their 3rd ex-wife's mother's birthday. When the going gets weird, the weird turn to weird ETFs. Beyond that is left only options on weird ETFs, a dark and lonely road I may yet walk down, God have mercy on my soul. > I am afraid it will make some sort of rally. So true. And yet Asia is not terribly impressed. Nothing at this point, nearly 3am, is up 3%, and the Hang Seng (the important one for our purposes) is only up.. whu-whu-whu-wait-uh-minute, I was going to say up 1.5% like it was a half hour ago (3.6% earlier) but now it is *down* 0.65%. The curve is pretty steep. OK, now it is past 3am. Europe appears to be opening nearly 3% higher. I doubt they will close that high. Asia futures appear to be flat near as I can tell. NDX futures are up sharply, to 1817. Tomorrow I wil be looking for QID below 49, FXP below 90, and SKF below 100. I will definitely be looking for FXP at 85, but may take anything I can find below 90. Unless the Hang Seng picks up, it may not get there. But looking at the futures, QID should go down to maybe 48. SKF will be tempting (thanks for mentioning this) because it appears the financials are at the root of this rally, but they are clap-raddled whores selling smack in kindergarten playgrounds, to say it with polite euphemisms. I'll look real hard at SKF tomorrow. Any of these positions I take, I will be prepared to hold until next week if need be. I have True Faith in the recession, and will not be spooked into selling at a loss. I could have done that with my QID and FXP, and lost fairly big instead of won big. Your mileage, as always, may vary.

Sunday, January 20, 2008

Liquidity Tsunami after Bond-Insurer Earthquake

Well,I reckon I can't say it any better than The Street:
If the bond insurers fail, that raises the specter of a massive wave of wealth destruction in a global financial system that is flooded with illiquid and opaque derivative securities of which there is little understanding, except that their value is connected to credit ratings on structured finance securities.
"This is going to be worse than anybody thinks," says Marta. "What I heard from Ambac [on Friday] is that they're throwing back the lifeline and saying, 'We're not going to make it.' On a fixed income trading floor, that means the world truly is upside down
And here I was, thinking holding QID and FXP was risky. Hell, it's probably a safer bet than the cash in my wallet.

Friday, January 18, 2008

Undead Death's-Head Devil-Worshiping Legion of the Eternally Damned

So I was doing a little trading the other day just for old times sake, and decided to play QID for a while. Well pretty soon, I got a notice from the brokerage house about "Pattern Day Trading". I knew there had to be a catch in there somewhere.
Dear Mr Mundy,

You have been identified as a Pattern Day-Trader. This means you have joined the Undead Death's-Head Devil-Worshiping Legion of the Eternally Damned. Welcome. We have been expecting you.

Please contact your local branch office for local meeting times and places. These will of course invariably be on unhallowed ground between the hours of midnight and 4 am. Please bring to your first meeting $25,000 and the body of a Gentile infant of either sex, drained of all blood, not to exceed six (6) months of age.

Wine and cheese will be served, and there will be a PowerPoint presentation about holding long-term (more than six (6) minutes) positions and current real-estate price trends in Hell. Please be prepared to talk a little about yourself, such as how you discovered Pattern Day Trading and when you first knew that L. Ron Hubbard, (or "Satan" or "The Lord of Pain" if you prefer) was Dominus Animus Tuus Eternus, and if you are allergic to any foods or medicines and of course your blood-type.

In condemnatio et maledictus eternus tuus, Them (you know, "Those People")