“If you don’t have time to do it right, when will you have time to do it over?”
Hurry up offenses and hail Mary passes, here we come – those who did not proactively prepare for this crisis of confidence in the US Financial system are going to pay the inevitable price again this morning.
I say again, because this is not new. At every turn, Wall Street didn’t get it this year. “Buy the dip… “… “the Bear Stearns bottom is in”… “this is a buying opportunity”… You will certainly hear those all too familiar ring tones of the perpetually bullish this morning, but since less of them will be employed, you’ll at least hear more muted volumes of their reckless rhetoric in the months ahead.
Lehman has filed for bankruptcy, and John Thain has thrown Singapore under the bus, selling out to Bank of America well below the Government of Singapore’s “strategic investment” price – at least he got paid! The 94 year old Merrill Lynch charging Bull logo is sold to the only bidder. I said it last week, and I’ll say it again this morning – in times of liquidity crisis, reactive management teams sell what they can, not what they should. What they are left with is called illiquidity, and in some cases, bankruptcy.
I could go on and on about the proverbial puck that everyone is staring at in the corner this morning, but I will save that exercise for CNBC’s revisionist historian savants. The goal of this game is to go to where the puck is going next, and that’s what we have been proactively preparing for here at Research Edge since I left Wall Street at the end of October of 2007.
I am moving my immediate downside target for the S&P 500 to 1196.86. We have an 84% cash position, and we are hiring. That’s it. That’s my morning call. Please forward all resumes to our President and Director of Research, Brian McGough, at
We are proactively prepared to service our clients with the best research platform, people, and process in the industry. We have zero counterparty exposure, and we are looking to help you wherever we possibly can. Our main phone# in New Haven, CT is . Please let us know where we can help.
I am getting on a train to New York City right now to meet with those interested in seizing this opportunity to re-build the trust that Wall Street has lost.
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On one hand this second scenario makes some sense: people don’t sell what they SHOULD during a crisis – they SELL WHAT THEY CAN. Unwinding exposures in the oil market could potentially allow banks that are long commodities to raise quick cash to offset other exposures.
At this point it remains nothing but idle speculation on my part. There appears to be unusual volume in the early trading session.
PS -the title of this post comes from the second sentence of the ISDA Lehman Effectiveness Protocol
Keith has obviously been negative on Lehman and Merrill for months now. Note that he remains short Goldman (GS) in the Hedgeye Portfolio. He thinks that if the stock breaks down to his immediate target price of $147.43, the $100/share line comes into play. We are fully aware that few agree with our positioning here – that’s why the short interest in GS remains shockingly low at 3.5% of the float. Complacency is not an investment process, however.
(chart courtesy of StockCharts.com)
Week Ended 9/12/08:
DowJones +1.8%, SP500 +0.8%, Nasdaq +0.2%, Russell2000 +0.2%
September 08’ to date:
DowJones (1.1%), SP500 (2.4%), Nasdaq (4.5%), Russell2000 (2.6%)
Q308 To Date:
DowJones +0.6%, SP500 (2.2%), Nasdaq (1.4%), Russell2000 +4.4%
2008 Year To Date:
DowJones (13.9%), SP500 (14.8%), Nasdaq (14.7%), Russell2000 (6.0%)
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