Slog News & Arts

Line Out

Music & Nightlife

« Another Piece of Recombinant A... | Let It Ride »

Wednesday, October 10, 2007

The Next Stage: Exploiting Investors

posted by on October 10 at 10:04 AM

Capitalism unlimited:

After the single biggest wave of credit-related write-downs in Wall Street history, more than $20 billion and growing, it’s investors who are holding the risk. For example, Merrill Lynch & Co. on Friday announced a $5.5 billion charge, the Street’s biggest, and immediately investors sent the stock up 2.5%.

Merrill simply followed the path laid down by Citigroup Inc., which wrote off $3.3 billion and Deutsche Bank AG, $940 million. All saw their stock rise after dropping the write-down bomb.

The bet is that the bigger the write-down now, the less these institutions will have to write down in the future. This is like a baseball team that celebrates after losing by nine runs, because the odds seem somehow greater that it will lose the next game by a big margin. This logic has Richard Bove, an analyst at Punk Ziegal & Co., flabbergasted.

“These companies are not going to see their markets jump back immediately,” he wrote in a note to clients. “Their earnings power has been lowered. This is a reason to sell not buy. The theory that if the company writes off $2 billion it should see its stock price up $1 and if it writes off $6 billion the stock should jump $3 is not one I can embrace.”

The words of Lenin: “Sell them enough rope and capitalists will hang themselves…”

RSS icon Comments

1

hah! I didn't have to go further than the title to find a typo in this post. It's so big!

Posted by anners | October 10, 2007 10:25 AM
2

I'd like to send you 'enough' rope. Sensitively, Mr. Poe.

Posted by Mr. Poe | October 10, 2007 10:32 AM
3

Sell me enough rope and I'll rescue the black people you threw in the well you Stalinist racetards!

Posted by MC Confused | October 10, 2007 10:50 AM
4

Actually, the REIT fund in TIAA-CREF did a lot better in the last quarter than all the other mutual funds.

Just sayin.

Fear causes us to do strange things.

Don't live in fear.

Posted by Will in Seattle | October 10, 2007 11:02 AM
5

Lenin's just pissed because he's too bronzed in Fremont to get anything other than Taco Del Mar.

Posted by matthew fisher wilder | October 10, 2007 11:04 AM
6

The reason their stock went up is because a significant chunk of uncertainty has been removed. Investors don't like uncertainty, so the prices went up a bit.

Posted by Brad | October 10, 2007 11:05 AM
7

We SHOULD be in fear. The dollar is its weakest in years and Bernanke is perfectly content driving it in to the ground with more rate cuts. inflation is happening. capital flight is happening. The mainstream media doesn't care because the Dow keeps going up.

The party is over and everyone is ready to pass out but Bernanke and his buddies keep scoring more blow. When the energy finally runs out, things are going to crash HARD. The hangover from this little bender will be felt for YEARS.

Karl at Market Ticker has a good handle on what's happening. He's a good read.

Posted by can you say debasement | October 10, 2007 11:24 AM
8

Click here to get a free XBox360 for ever and ever and ever.

Posted by James Hetfield | October 10, 2007 11:34 AM
9

Charles, You're brilliant! If only the prediction holds...

Posted by Jimmy | October 10, 2007 11:36 AM
10

If only you could hold it for him, fag.

Posted by Jimmy's Conscience | October 10, 2007 12:12 PM
11

Hmmm.
You know what? I'll bet the government could fix this.

Posted by torrentprime | October 10, 2007 12:33 PM
12

The only thing the government can fix is elections.

Posted by Congresspants | October 10, 2007 12:43 PM
13

if this is bullshit why arent you shorting the stocks, or buying long puts or short call options?

the investor isnt being duped unless the investor was already a dope.

Posted by Bellevue Ave | October 10, 2007 12:58 PM
14

Yeah fuckers. And when your wife is screwing someone else it's nobody's fault but you and your tuna can of a dick!

Posted by Reverend Careface | October 10, 2007 1:19 PM
15

Suddenly I realized that 100 years from now, the world's last 2 scholars will be trying to understand mhen and why people started following rules.

That's when I the word "Pleasurecraft" on a piece of paper and buried it under the WAMU tower.

Posted by Zen Koan For Cheapskates | October 10, 2007 1:26 PM
16

This is like the comments thread from another planet.

Posted by JessB | October 10, 2007 2:17 PM
17

The investor has many ways to act and digest information, and honestly only an idiot would look at rising stock prices and thing "I NEED TO GET IN ON THAT ACTION" without looking at SMA, EMA, Fast Stochastics, Bollinger Bands, and the underlying business, both fundamentally and in the news.

Posted by Bellevue Ave | October 11, 2007 9:17 AM

Comments Closed

In order to combat spam, we are no longer accepting comments on this post (or any post more than 14 days old).