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I hope you guys really read the Asset Securitization series and the Doo Doo 32 list. The former laid the ground work for the investment thesis, and the latter gave some concrete examples, many of which are down near 40% or more from the time of the post.

My content management system is relatively aggressive in archiving documents, so if you click a link and it is no longer active, that simply means it was put in the archives. The archives are organized by month midway down the page in the left column. I strongly recommend that anyone who follows my work closely and actually thinks I may know what I am talking about review the archives thoroughly, at least once if not more. There are now over 450 articles there, dating back to September 01 of last year and this whole debacle was laid  (bear) bare way back then. There are really no surprises occuring, and things are moving along pretty much as anticipated.

I'd like to reiterate the fact that I do not give investment advice, and if I did give investment advice I would probably charge for it. Thus if you find yourself emailing me (and ignoring the "Please don't ask for investment advice notice" on the email form), you really should not be expecting a reply. I can get in trouble offereing investment advice to the public, and you can get in trouble taking investment advice from someone who you don't know and did not pay for the service. In addition, if you email me without asking for advice and I don't get back to you in a timely manner, it is definitely nothing personal. I have been quite busy as of late, and I do appreciate you patronizing my blog!

For anyone who is confused about what it is that I do offer, let me explain. I am a private investor that shares his opinion, analysis, experiences and insight through a public blog. That's just about it. I apologize to all whom which this is unnecessary, but I felt it had to be said again.

Now, back to the Doo Doo 32, I actually got stopped out of a position (and I had the stop waaaay out of the moeny), MTB dropped $11.45 today, down from $97 a month or two ago - Whoa!!! PNC down $5.32 (about 10%) today, which was about $72 when I first put the position on and released some of my opinion. STI has been taking a constant beating since I published my opinions and positions, down $2.66 today and down roughly $20 from the time I made viewpoints clear. AGO is not doing well, which goes to show (again) how following name brands in lieu of performing your on true fundamental analysis can lead you awry. I can go on, but I feel I've got the message across. 

I will have a few more US financial positions to take, then I will be moving on to other affected sectors and truly start going global - all the while preparing the underpinnings for my descent into the long side of the market. I will publish what I feel is appropriate on the blog.

Now, this short seller which hunt thing has been recieving a lot of press lately. I believe it to be a waste of government resources, but then again, McArthy wasted a lot of resources as well and that didn't stop his efforts. I believe that those who unlawfully manipulate the system should not get away with it, but if one were to truly go after those who do so, there are many, many, many more targets on the long side than on the short. In addition, what constitutes an untrue, rumor designed to sink a stock for the gain of the rumor mongerer? I can think of how the inverse can be interpreted on the long side. Hmmm, let's see...

  1. An investment bank CEO gets up on international media proclaiming his company has more than enough liquidity to weather any potential storm, then is forced out of business 3 days later.
  2. A bank CFO refutes the claims of short selling investros as just "talking his book" when she claims that her companies earnings are solid and above the street's expectations and there are no undisclosed issues that have arisen from the valuation and marking to market of the firms assets when in reality there are extreme problems that easily justify said short seller's claims
  3. An investment bank CEO and CFO who claim there is no need for liquidity since their firm has AMPLE liquidity, as they hit the liquidity well 4 times in as many months to raise over $9 billion, a very substantial portion of the very capitalization of said company.
  4. A certain treasurer and Fed head who assures the global financial community that there will be no cronyism, and that moral hazard will be checked by this administration. They stated, repeated several times to the international financial community that they want to dispel the notion that there is any US financial institution that is too big to fail. But hold up, wait a minute... Fast forward less than a week into the future and they want to dispel that notion AFTER they bail out Bear Stearns, Freddie Mac, and Fannie Mae. After all, they are too big to fail... 
  5. Many a banking and homebuilding CEO have publicly stated to mom and pop investors, CNBC junkies, the goldilocks crew, and anyone else who doesn't know any better - that the worst is behind us. That is downright irresponsible, probably even more so than being downright wrong. I don't even believe the worst is directly in front of us. This is a long and aggressive unwind that took at least 6 or 7 years to build. I wouldn't expect it to wind down any faster than it would up. Hey, are these guys spreading actionable rumors to move stocks and markets? Lord knows it can very easily be seen that way. I can go on, but hopefully I've communicated my point. If there are vicious rumor mills forming, found amongst the pump and dump crowd is not only a member but the rumor mill's president, C-suite executive crew, and entire supporting staff.


I don't think anyone should be able to get away with gossiping a company into the toilet, but truly strong companies cannot be gossiped into the toilet - just like truly weak companies cannot be gossiped into powerful international conglomerates. It really is as simple as that. The reason why the market is skittish about weak companies is just that, because they are weak - that combined with the fact that management has been less than fully forthcoming about their financial condition. Any financial company that has not laid bare, in full and explicit detail, their financial holdings on and off balance sheet probably has something to hide. Why else would you not make this uncontravertable move to come investors in a time of nervousness and excitement? 

Speaking of short bashing, the most absured idea I have heard in a while was posted in the Deal Jounal Blog :

But, since many people seem to agree that too many rumors are flooding the markets because of short-sellers, can or should you take away their means and opportunity?

Our question was prompted by a research report from David Trone, brokerage analyst at Fox-Pitt Kelton Cochran Caronia Walker, who suggested today that Lehman Brothers Holdings’ best hope of survival is to avoid the public markets completely. Trone endorses blocking short-sellers from brokerage sales completely: “We still believe that an emergency prohibition of short-selling in brokerage shares is imperative.”

Trone made his case thusly: Until the current crisis passes, short-sellers wouldn’t be allowed to borrow and sell stock in the brokerage sector, including Lehman Brothers, Merrill Lynch and Morgan Stanley. These companies, unlike regular banks, have “the unique vulnerability of a type of company that doesn’t have hard assets–it’s built on confidence,” he said to Deal Journal in an interview. Rumors “create an artificial impairment of the business” because the same people and firms that react to the rumors are the ones that are doing business with Lehman. Trone envisions the restriction lasting as long as, say, the Federal Reserve discount window is open to the investment banks. When the crisis passes, the window closes and short-sellers can roam free once more.

Now, this has to be the tallest pile of raw bullsh1t I've heard in quite some time. Let me be clear on this. I am not a short seller. I am an investor that deals with the market that he is given. I was leveraged up long all the way up the most recent real asset and credit market bubble. That did not make me a "long", it simply made me an investor that rode the macro economic boom bust cycles. Well, now the cycle has turned downward, and predictably so, and I am simply following the bouncing ball. I don't take advantage of companies on the way down anymore so than I took advantage of riding them on the way up. Now, back to this article. How in the world would block short sellers from one particular industry? Does that include blocking the industry participants themselves from shorting? If so, Lehman, Goldman, and Morgan are in deep doo doo since those alleged hedges would be dismantled. How about the market makers who provide liquidity in said stocks? No ability to go short and long, not liquidity. How about anyone who was assigned a put? Damn, what would CBOE do? Has anyone noticed how much more thoroughly credible short research is done than publicly available long research from the investment houses? I'm not going to say these guys are pump and dumpers, but compare my research on GGP or the Doo Doo 32 through the asset securitization crisis analysis, or Ackman's seminal work on the monolines, or Einhorn's work on Lehman, to whatever you guys get from the sell side on the street. From where I stand, there is a pretty big difference. I am also willing to stand behind both my research and my results - through good times and through bad. Right now are the good times, but I make mistakes and things don't always come out as planned. The difference is that I don't sell research, I don't get paid for my opinions that I disseminate, I don't have to implictly market my trading desk positions or investment banking business - I simply invest, plain and simple. I eat my own dogfood. If my research is stale or inaccurate, I pay for it with inferior returns. Can the same be said for those who preach that the worst is behind us when they really know better and probably act accordingly with their own personal affairs. Can the same be said for those who allege that their company is fine and business will go on as usual - then less than a week later all blows up as those assertions APPEARED to be patentaly false?

As an outgoing statement, I would like to reiterate that I don't believe a witch hunt is in anyone's best interest, but if you are going to start hunting witches, I would strongly suggest you start with those wearing thos long pointy black hats riding in on brooms...