I am going to introduce a paradigm shift in the content that I introduce to the blog. As reporters and institutional investors who have contacted me can attest, I have been very secretive and stand-offish in terms of what I do for a living. The reason is that I was in the process of launching a hedge fund, and my lawyers were quite explicit in telling me that I am in no way to promote the fund through the blog. You see, I think I'm pretty good at this investment stuff, and I needed access to more capital to fully exploit the next step in my investment thesis. So, what better route than to open a fund up to investors who can appreciate my investment style, and take advantage of that 20:1 leverage offered so freely. Well, one of the reasons I have had such a strong investment record is that I am able to smell bubbles. Unfortunately, I smelled this fund bubble coming but I thought I could sidestep it. I seem to have been wrong, but didn't realize it until after I spent an upper middle income family's salary on fund formation. With a raft of adverse legislation, tightening operating environment and increased regulation, this bubblicious industry just ain't what it used to be.

The consumer has officially capitulated when it comes to credit and spending. From the latest Federal Reserve release: "Consumer credit decreased at an annual rate of 3-3/4 percent in August. Revolving credit decreased at an annual rate of 3/4 percent, and nonrevolving credit decreased at an annual rate of 5-1/2 percent."

I was chided as a "journalist" who didn't have a clue in a comment from an armchair investor over on Seeking Alpha. That got me to thinking that either the populace does not expect the acumen of those that blog, or they overestimate the name brands whose moniker resides beside the term hedge fund. On that note, here is an article from Bloomberg:

Hedge Funds Fell 4.68% in September, Biggest Drop in 10 Years Oct. ... Hedge funds worldwide in September recorded their biggest drop since August 1998, hurt by losses in commodities and fixed-income convertible arbitrage securities.

The HFRI Weighted Composite Index fell 4.68 percent in September, marking the fourth consecutive monthly decline and extending the loss this year to 9.41 percent, according to Chicago-based Hedge Fund Research Inc. The worst monthly performance since the firm began tracking the industry in 1990 was an 8.7 percent decline in August 1998.

``In 1998, there was the liquidation of Long Term Capital Management, which created a systemic financial situation that resulted in steep declines at a lot of funds,'' said Ken Heinz, president of Hedge Fund Research, in a telephone interview. ``There are a lot of similarities and parallels during that period of time and this one.''

Reggie Middleton's BoomBustBlog research outperforms, by a wide margin!

Let's contrast the worst year in recorded hedge fund history to the past year and year to day of the a model portfolio built upon the BoomBustBlog.com research and opinion. BTW, the article is correct in that although funds charge a lot of money, their performance has beaten the broad averages of late, and the better ones outperform the broad market in general. But!!!! There's always a but, isn't it? There are better ways to skin a cat. Let's take a look-see.

I would like to take the time to quantify the value of strong, hardcore fundamental research and dispel some myths at the same time. This is not a short post, but I feel it is an important one. If you don't have the patience to read through the whole article, hit next and/or scroll down to the big pretty pictures. Now, let's take a look at what some of the big institutions have been doing lately, but before we do that I would like all to revisit a post I made in February... "Are you hooked on name brands?" It was quite true then and actually quite prescient now as we look back upon the course of events.

My warnings on Goldman Sachs, Morgan Stanley, and CDS have born fruit, by the bushels, for those who have heeded it. The Doo Doo 32 and commercial real estate shorts will be revisited soon, for they are in for a round of hell after this malaise. My industrial shorts will follow, as well as my lesser known real estate and finance services positions and research.

Goldman is down over $50 per share (from about $185 to $134) since I issued my warnings and forensic analysis. Many thought they were too connected to fall with the crowd. That is not a scientific approach to these markets. It's simple math, they are at extreme risk and trade at a significant premium. For those who are hesitant to subscribe to my proprietary research, this trade (off of a relatively small commitment) would have paid the professional subscription for several years, with plenty left over. We have been hitting on all cylinders with the investment banks. I expect the Goldman trade to be more profitable than the Bear Stearns trade where the research came out at about $105 or so and eventually warned that a long would make sense at $3 and it was bought at $10 (see More on the accuracy of this blog's research and Performance of This Site for historical details of much of the research performance). The market is starting to see Morgan Stanley as the bastion of risk that I see it as, and it is paying off. I'll assume that there is no need to comment on how we did with the Lehman research and forewarning.

Reference the Moody's and S&P downgrades of AIG to see how my multiple warnings of the risks the CDS markets will pose come to pass. Bloomberg - AIG's Ratings Lowered by S&P, Moody's, Threatening Efforts to Raise Funds:

I'm back from my short weekend hiatus, and will be posting plenty of content to the blog this upcoming week - starting today. I have also instituted a few changes to the blog, namely faster downloading pages, improved layout and navigation, a fix to the archiving system that allows for unfettered access to the older content and subscription system that allows one to purchase direct access to my opinion and research.

I will put more on the next step of my financial thesis over the next 2 to 4 days, in full detail. I am focusing strictly on banruptcy candidates that are less likely to be rescued by the PPT!

For those who haven't seen the subscription info, it can be at the registration/my subscription links in the main/user menus (contingent on your status as a registered user). I have included the from the link below, and wil be posting some background info on my bankruptcy picks later on in the day.

Professional Subscription
$5000.00 Annually - This subscription plan is intended for professional and/or advanced investors on an annual basis. It allows approximately 360 days of unrestricted access to Reggie Middleton's Boom Bust Blog Research (see professional_gs_report_sample 350.12 Kb as an example), as well as limited access to Reggie Middleton macro opinions in person during his blog sponsored events (ex. The BoomBustBlog Boat Ride). It is not intended for use by institutions (institutions must use our institutional plan), and the purchase of this plan acknowledges full acceptance of out Terms of Service, Disclaimers, and Conditions of Use. For those not familiar with my Reggie Middleton's work, see "More on the accuracy of this blog's research".

This is a previous post that has been completed, thus I decided to
repost it under a new title. I welcome everyone to peruse the various
companies that I have release research for, and to compare the dates
referenced in the blog post with the current date and the accompanying
charts. Today I will start testing the payment system for the blog. All
feedback is welcome.

I had decided to put a
pictorial together of the various drill downs and forensic analyses
released to the blog. I started building off of shaunsnoll's
spreadsheet, which was a modification of one of my earlier works. This
new compilation will not include all of the companies mentioned in his
sheet, but will include all companies that I either took the time to
perform a full analysis on or companies that I have taken a decidedly
bearish stance on via drill down. This will exclude a lot of companies
that I may have warned readers to be wary of, but never published a
formal analysis.

Now, the newer
visitors to the site can see what I am about. Each graphic has a set of
links to my opinion and the date the opinion was originally issued as
well as a comparison to the broad market index (S&P 500) to see if
any true alpha could have been generated on the short side. To date, we
have covered several industries and sectors, including (in
chronological order): residential real estate (homebuilders), mortgage
banking (Countrywide and WaMu), monoline insurance (Ambac and MBIA),
commercial real estate (GGP and REITS), investment banking (damn near
all of the big boys), commercial banking (the Doo Doo 32 regional bank
list), and the latest in the line up is manufacturing and industrial
(Navistar). For anyone who wants to get a glimpse at what I feel are my
best ideas, well,,, I like all of the ones that made me money. Thus far
(knock on wood) practically all of them have done so thus far, with a
few notable home runs (ex. MBIA, Ambac, Bear Stearns, GGP, LEH, etc.)

I had decided to put a pictorial together of the various drill downs and forensic analyses released to the blog. I started building off of
shaunsnoll's spreadsheet, which was a modificationb of one of my earlier works. This new compilation will not include all of the companies mentioned in his sheet, but will include all companies that I either took the time to perform a full analysis on or companies that I have taken a decidedly bearish stance on via drill down. This will exclude a lot of companies that I may have warned readers to be wary of, but never published a formal analysis.

Now, the newer visitors to the site can see what I am about. Each graphic has a set of links to my opinion and the date the opinion was orignally issued as well as a comparison to the broad market index (S&P 500) to see if any true alpha could have been generated on the short side. To date, we have covered several industries and sectors, including (in chronological order): residential real estate (homebuilders), mortgage banking (Countrywide and WaMu), monoline insurance (Ambac and MBIA), commercial real estate (GGP and REITS), investment banking (damn near all of the big boys), commercial banking (the Doo Doo 32 regional bank list), and the latest in the line up is manufacturing and industrial (Navistar). For anyone who wants to get a glimpse at what I feel are my best ideas, well,,, I like all of the ones that made me money. Thus far (knock on wood) practically all of them have done so thus far, with a few notable home runs (ex. MBIA, Ambac, Bear Stearns, GGP, LEH, etc.)

The next few posts will be a quick tutorial on risk adjusted returns, to show my readers that there is a difference between raw returns and real risk adjusted returns (risk is the price for reward, and many of us overpay), and then I will get into the meat of the next phase of my investment thesis with a couple more forensics and a Doo Doo list, or three reaching all the way to the UK, Asia and the Middle East.

Since I don't get paid to do this it can be a bit laborious at times, but the uplifiting emails that I get (most of them, anyway) make it all worth the while. Some of you guys and gals have some pretty positive things to say. I just want to say thank you for the support. Here is a smattering of comments that I gathered while cleaning out my inbox:

regg, i have been a member since january 2008, i just want to thank you for all that u do, may the LORD continue to bless you and your family

Hi Reggie,

We have been working towards securing our financial future for 25 years. With no pensions we must plan carefully and do lots of homework. Over those years NOTHING in the financial press can compare to what we have found on your blog-nothing! The honesty, in-depth research along with a touch of good humor has been an eye opener after all these years and many thousands of hours spent pouring over what we now recognize was often very marginal work. We now see the Street has often not been straight with us. Many, many thanks Reggie, for what you have done here for those of outside the loop now looking in much more clearly....

Best regards,