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Eye on Free Market Capitalism...

PRESS ADVISORY
AYN RAND CENTER FOR INDIVIDUAL RIGHTS
555 12th Street NW, Suite 620 N, Washington, DC 20004

October 9, 2008

Capitalism Without Guilt: The Moral Case for Freedom

Who: Yaron Brook, executive director of the Ayn Rand Center for Individual Rights

What: A talk defending the profit motive and presenting the moral case for laissez-faire capitalism. A Q&A will follow.

Where: National Press Club, 529 14th Street NW, Washington, D.C.

When: Wednesday, October 22, 2008, at 6:30 PM

The public and media are invited. Admission is FREE.

Morgan Stanley (MS) confirms their clients have a say...

In our 9/17/08 note (Morgan Stanley (MS): "Rumors and Fear"), we called out the obvious that John Mack's blaming of the short sellers for his stock price decline was ridiculous and alarmist all at once. Prime Brokerage clients (hedge funds) don't like to be blamed for being the customer, nor do they appreciate having the CEO of MS engineer a short selling ban alongside his cronies at the SEC.

The result of his reactive behavior? Here's what MS disclosed on this front in their 10Q this week: "Subsequent to August 31, 2008, the company’s prime brokerage business experienced significant outflows as clients withdrew some of their cash balances and reallocated positions. These outflows will negatively impact prime brokerage’s operating results in Q4 of fiscal 2008."
  • Our price target for MS moved down a penny from Thursday. We're now at $9.02/share.
    KM
(Chart courtesy of stockcharts.com)

GE's CFO on Goldman and Morgan Stanley...

(Reuters) - "If Goldman and Morgan Stanley became bank holding companies, certainly you'd expect us to at least evaluate what would that mean for us as a backup alternative to whatever we're doing."

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Goldman (GS): Let's Have A Town Hall Debate...

Goldman conveniently waited until after 5PM on a Friday of the worst week in the US stock market since the early 1930's to file a mixed shelf registration of "indeterminate amount". Marcus Goldman must be rolling in his grave.

Investors, including Warren Buffett, and clients alike must watch what GS and MS do, not what they say. Never mind this ridiculous notion that it’s the evil doer short sellers at fault. That is both alarmist and un-American. Bear, Lehman, Merrill, Morgan, and Goldman all said they didn't need capital, remember? Earlier this week, Lehman’s Dick Fuld appeared in front of the American people. He still couldn’t find it within him to take on 100% of the accountability for Lehman’s demise. If you guys are going to get paid to wear the ‘C’ on your jerseys, let’s get real.

Research Edge is built on 3 core principles: Transparency, Accountability, and Trust. I am issuing an open challenge to the CEO's of these two companies, Goldman Sachs and Morgan Stanley, to come to New Haven, CT, and have a Yale student organized town hall meeting on those three items and how they see them fitting into their current business model. CNBC can televise it, instead of wasting people’s money and time with “Fast Money”. We can start at 6PM, promptly.

Times are changing. Americans are tired of hearing about a Japanese bank taking a stake in Morgan Stanley. How many press releases were issued this week on that front? Too many.

I am sure Americans would appreciate these highly paid CEO's to take a stake in American principles. Crisis creates opportunity, here’s yours guys. Give us a call at , and we’ll set up the debate.

Respectfully,
Keith McCullough

(chart courtesy of StockCharts.com)

Eye On Leadership: Chesapeake's CEO Gets The Ultimate Margin Call

This is the largest natural gas company in the world. Not unlike the Russian Oligarchs, he was forced to basically blow out of his entire position... he was buying his own stock on margin.

"I am very disappointed to have been required to sell substantially all of my shares of Chesapeake," McClendon said... "These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis."

Daryl Jones
Research Edge LLC
  • Chesapeake Energy CEO Aubrey McClendon sells bulk of his stock to meet margin calls
    OKLAHOMA CITY (AP) -- Aubrey K. McClendon, chief executive of Chesapeake Energy Corp., has sold the bulk of his stock in the company over the past three days in order to meet margin loan calls, the company said Friday.
chart courtesy of stockcharts.com

SP500 Levels Into The Close...

I'm like a broken record here now, but we're a buyer here on the worst week for the US stock market since 1933.

BUY stocks level for the SP500 = 848.74

SELL the "Trade" = 1041.89

By my math, there's 23% upside and 3% downside from that 848 line.

Have a great weekend,
KM

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