Wednesday, May 30, 2007

China Girl

Thanks for all of your commentary to my patriotism. I enjoyed the quote "the only time I feel red, white and blue is when I do laundry". Still holding back the tears from that. Well its back to business.

Woke up this morning, and the idiots on TV blaring the "Shanghi Swoon" alert. If a market goes up 30%, then down 10%, then up 40% in 6 months, do you really think it can't be down 6% in a day? The fact that it is the largest Socialist country on earth doesn't surprise you that they can get more tax dollars by raising fees on stock transactions? Doesn't anyone remember 1999? Beuller?

While I am on a rant, last night I read an article in one of these wealth advisors magazines. The supposed "financial writer" who contributed to this article on OTC derivs really blew my mind with his ignorance. He compared a bond fund that sells the CDS on its holdings is equivalent to covered call writing in equities. When in real life, we all know that the fund manager is simply doubling his bets. It is actually the equivalent of selling puts, not calls on his bonds. But that really doesn't matter, does it?

One item flying low on the radar is the amount of spin-off activity. While not as sexy as private equity cash deals, spin-offs allow you to trade like an arbitrageur with a hell of a lot less risk.

2 comments:

muckdog said...

The word "patriotism" starts fights these days.

The "uh oh" factor in China is the 300,000 new brokerage accounts in a day. And maids, pensioners, and 21-yr old kids throwing everything they have at the market.

Keith Berger said...

Glad I could make you cry. Feel free to wipe you tears, or anything else, on the nearest flag. ;-)