Using Veritas to Construct the "Per…

29-04-2017 Hits:85773 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:80003 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:79864 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:84342 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:80884 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:83130 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:54140 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:82264 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:82117 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:81985 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:88010 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:85884 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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From WSJ.com :

Investors were astonished at the speed of Bear's demise, which added to the jitters. On a conference call Friday, Bear executives said the firm's liquidity suddenly worsened over the past week. Bear's plight indicates how important it is to have enough ready cash on hand to replace liquidity that is withdrawn by creditors.

Sanford Bernstein analyst Brad Hintz explained the nightmare that can befall a broker in a liquidity squeeze. "As lenders demand their money, a broker has no choice but to sell assets and shrink its balance sheet. At some point the liquid assets are all gone and the firm cannot sell the illiquid ones," he said.

Brokerages amass large cash piles -- often called liquidity reserves in their financial statements -- that are meant to see them through rocky periods in the markets. Analysts are now trying to assess whether these liquidity reserves, which measure the amount of high-quality assets that brokerages could easily sell, are sufficient.

Compared with other brokerages, Bear's cash reserve gives it the least cushion for a cash crisis. This same analysis makes Lehman's cash cushion look slimmer than its peers', although on other measures it is just as strong.

Brokerages break out the size of this emergency cash in their financial filings with the Securities and Exchange Commission. To gauge its sufficiency, the reserve can be compared to the main type of debt that brokerages rely on to finance their operations. This debt is called collateralized borrowing, because to get the loans the brokerages have to pledge assets as security to the creditor. If these creditors pull back sharply, a brokerage is in deep trouble.

From public comments by Bear executives Friday, it appears much of the liquidity squeeze was caused by a pulling back by creditors that had extended loans based on collateral provided by Bear. These types of creditors "were no longer willing to provide financing," Samuel Molinaro, Bear's chief financial officer, said on the Friday call.

Bear would have been particularly exposed to this withdrawal, because its emergency cash pile was small compared to this debt. On Nov. 30, that cash reserve of $17 billion was only about 17% of the $102 billion owed through secured financings.

If the prices of assets Bear had pledged fell, the brokerage would have had to post a payment to the creditor called margin. One big purpose for the emergency funds is to have the cash to make margin payments during a credit-markets crisis. "My guess is that Bear did not adequately stress-test and didn't have enough liquidity to meet those margin payments," said Michael Peterson, director of research at Pzena Investment Management.

Like Bear, Lehman is a big bond player and also one of the smaller Wall Street firms. But it is on sturdier ground than Bear, many investors said. "I'm pretty comfortable with Lehman's liquidity," said Mr. Peterson, whose firm owns Lehman shares. "The lessons of 1998 were not at all lost on Lehman."

Aiming to make its balance sheet sturdier after 1998, Lehman became less reliant on short-term borrowing, which can dry up quickly. At the end of November, it had $28 billion in debt coming due in the following 12 months, well below the $34.9 billion in its liquidity reserve. "What gives me comfort right now is that Lehman has very little short-term debt," Mr. Peterson said.

The firm's emergency-cash pile was 19% of its $182 billion in secured financings, putting it below the numbers for Goldman Sachs, Morgan Stanley and Merrill Lynch. At those firms the emergency cash was 38%, 39% and 34%, respectively, of collateralized financings.

Yesterday, Lehman announced that it closed a new $2 billion unsecured credit line that was "substantially oversubscribed."

In a crunch, Lehman may be able to raise cash by selling another big pool of liquid assets, which is valued at more than $60 billion. Adding that to the liquidity cash reserve gives Lehman a potential $100 billion cash pile, equal to 54% of collateralized financing. That is ahead of some other brokers and far stronger than Bear's 31%.

In addition, the debt that comes from the collateralized financing typically is matched by a similar loan to another customer, which creates an asset. When offset against each other, the collateralized financing liability becomes much smaller. In Lehman's case, it is about $20 billion, which is only about 60% of its emergency cash.