• Bush: “Anyone engaging in illegal financial transactions will be caught and persecuted.”
    Posted by on September 19th, 2008 at 12:10 pm

    Here’s President Bush this morning (source White House website).

    The Securities and Exchange Commission has issued new rules temporarily suspending the practice of short selling on the stocks of financial institutions. This is intended to prevent investors from intentionally driving down particular stocks for their own personal gain. The SEC is also requiring certain investors to disclose their short selling, and has launched rigorous enforcement actions to detect fraud and manipulation in the market. Anyone engaging in illegal financial transactions will be caught and persecuted [sic].


    No we’re talking! Let’s make the shorts use separate water fountains.

  • New Rule
    Posted by on September 19th, 2008 at 11:02 am

    Don’t invade Russia in the winter, and don’t conduct a short raid on Goldman Sachs when the former CEO is the Treasury Secretary.

  • The Short Selling Ban
    Posted by on September 19th, 2008 at 10:56 am

    From the WSJ:

    The Securities and Exchange Commission on Friday launched an aggressive assault against short-sellers, saying it would temporarily prevent investors from making bets on stock declines in an attempt to stem some of the worst stock-market slides in years.
    The SEC, which had convened a late-night commission meeting Thursday to consider several items, said in a statement early Friday morning it is halting short selling on 799 financial stocks. The ban, which is effective immediately, is set to last for 10 days, but could be extended for up to 30 days.
    “The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets,” SEC Chairman Christopher Cox said. “The emergency order temporarily banning short selling of financial stocks will restore equilibrium to markets. This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress.”
    The SEC announced other temporary measures, including a requirement for large institutional money managers to report short positions in certain stocks. It also eased restrictions on corporate stock buy backs, saying that will give companies greater flexibility to buy their own shares and help restore liquidity at a time “of unusual and extraordinary market volatility.”
    In short selling, traders borrow shares of stock and sell them, hoping the price of the shares declines and they can profit by buying them back at a lower price. Short sellers have become scapegoats for the big declines in the share prices of weakened companies including Lehman Brothers Holdings Inc. and American International Group Inc., though it is unclear whether they were the cause of the declines.

    The cause of the decline? So it’s just a coincidence that shorts ganged up on lousy stocks. Funny how they’re not shorting Donaldson (DCI).

  • Just a Reminder
    Posted by on September 19th, 2008 at 10:05 am

    I know today is a busy day for everyone, but If I need to remind you: Arrrgh!

  • Short the SEC
    Posted by on September 18th, 2008 at 10:12 pm

    This is simply outrageous. The WSJ article isn’t clear on what will happen. It appears that the SEC is merely considering a ban of shorting, but it’s far from a done deal.
    This is so ridiculous, so delusional, that I can’t believe it has a prayer of really happening. Banning short-selling? Are they kidding me? The backlash would be overwhelming. At least, I hope it would be. The SEC would be denounced by every major financial organization on the planet.
    Short-selling is the free speech of Wall Street.
    Half the computer models on Wall Street would explode! Consider this:

    About a third of U.S. equities trading is already being done using algorithmic trading, with that figure expected to soar to more than 50 percent by 2010, said Brad Bailey, a senior analyst at the Boston-based researcher Aite Group. “I’m even afraid I’m underestimating that number,” Bailey said.

  • Oopsie!
    Posted by on September 18th, 2008 at 4:36 pm

    From the NY Times:

    Editors’ Note: September 18, 2008
    An earlier version of this article cited two sources who were said to have been briefed on a conversation in which John J. Mack, chief executive of Morgan Stanley, had told Vikram S. Pandit, Citigroup’s chief executive, that “we need a merger partner or we’re not going to make it.” On Thursday, Morgan Stanley vigorously denied that Mr. Mack had made the comment, as did Citigroup, which had declined to comment on Wednesday.
    The Times’s two sources have since clarified their comments, saying that because they were not present during the discussions, they could not confirm that Mr. Mack had in fact made the statement. The Times should have asked Morgan Stanley for comment and should not have used the quotation without doing more to verify the sources’ version of events.

    (Via Ribstein via CalculatedRisk)

  • Morgan Stanley
    Posted by on September 18th, 2008 at 2:59 pm

    Shares of Morgan are now going for about four times earnings. I think the shorts are trying to break this bank and it won’t work.
    I bought some shares for my personal account just before the close. I don’t expect to hold this position very long.

  • In the Last Six Weeks
    Posted by on September 18th, 2008 at 2:25 pm

    Jos. A Bank Clothiers (JOSB) is up 62%. It’s now the big gainer YTD on my Buy List.

  • Seven Possible Shorts
    Posted by on September 18th, 2008 at 2:00 pm

    Short sellers are a pretty happy bunch this week. In fact, the Brits just banned short selling for the next three months. Every likes to blame shorts for things that go wrong, but shorting is really the free speech of Wall Street.
    I don’t do a lot of short selling, but here’s a list of potential shorts from one of my favorite bloggers, Timmy Sykes.
    American Dairy (ADY)
    EPIQ Systems (EPIQ)
    Tanzanian Royalty Exploration (TRE)
    Converted Organics (COIN) and the warrants (COINW)
    Valence Technology (VLNC)
    A-Power Energy Generation Systems (APWR)
    Just glancing over these stocks, they appear to be truly awful. I’m not exactly holding my breath for Converted Organics to make that big jump to the NYSE. Tim’s strategy is basically to look at crappy penny stocks and get ready to pounce when the charts look good, meaning bad.
    Short sellers have one big advantage over the rest of us: When things go wrong, they go really, REALLY wrong. There are far more crappy stocks that plunge 50% in a single day than there are good stocks that double in one day. To be a good short, you need to be very patience. Also, not having a soul helps.
    I should try more shorting. I look through gobs of balance sheets everyday and I’m amazed by how much garbage is out there.
    You can sign up to Tim’s Alert service here.

  • The Vix Soars
    Posted by on September 18th, 2008 at 12:30 pm

    This is getting out of a hand.
    vix091808.png