• Guess What Happens When a Financial System Runs Out of Liquidity
    Posted by on August 10th, 2007 at 4:18 pm

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  • When Genius Failed 2.0
    Posted by on August 10th, 2007 at 2:28 pm

    From Bloomberg:

    James Simons’s $29 billion Renaissance Institutional Equities Fund, which uses computer models to pick stocks, has fallen 8.7 percent so far in August.
    The hedge fund, started two years ago, has declined 7.4 percent for the year.
    “We have been caught in what appears to be a large wave of de-leveraging on the part of quantitative long/short hedge funds,” Simons wrote in a note to investors yesterday.
    Simons has one of the best records in the hedge-fund industry. His Medallion fund, which manages money only for Simons and his employees, has climbed at an average annual rate of more than 30 percent since 1988. The East Setauket, New York- based firm manages a total of $36.8 billion.

  • Ashland
    Posted by on August 10th, 2007 at 10:25 am

    What’s the deal with Ashland (ASH)?
    On July 25, the company reported earnings and were decent–not amazing, but decent (20% ahead of expectations). The stock gapped up a bit but eventually closed lower by two cents a share.
    Now fast forward to this week. The 10-Q came out on Wednesday and the shares suddenly plunged 13% in two days. I’m not for or against this stock. I just find it interesting that a big sell-off comes, apparently, out of nowhere. Ashland even had to issue a press release after yesterday’s close saying they “know of no company-specific issues” causing the decline.
    I’ve gone through the 10-Q and nothing looks out of the ordinary. My guess is that some logarithm spotted some metric or ratio or whatever (no taxes?) and he told another logarithm to sell everything immediately.

  • Blankfein Endorses Hillary
    Posted by on August 10th, 2007 at 7:18 am

    I can’t imagine his endorsement will sway many people, but it will mean money:

    Goldman Sachs Group Inc. Chairman Lloyd Blankfein endorsed Democratic New York Senator Hillary Clinton’s presidential bid, a day after her opponents sought to portray her business support as more of a burden than a blessing.
    Blankfein’s backing follows an endorsement in April from Morgan Stanley CEO John Mack, who was one of President George W. Bush’s biggest fund-raisers. Clinton has increased her donations from Wall Street constituents during her time in the Senate, and took in at least $424,545 from the top 10 investment banks in the second quarter for her presidential campaign.

  • The Last Shall Be First and the First Last
    Posted by on August 9th, 2007 at 10:37 pm

    Here’s a simplified version of what’s been happening in the market. This is the sector returns of the S&P 500 for the last three weeks and the three weeks before that.
    Sector……………June 28 to July 19……….July 19 to August 9
    Energy…………………..8.79%……………………-9.49%
    Staples………………….1.61%……………………-1.34%
    Healthcare……………..0.46%……………………-4.32%
    Industrials………………6.41%……………………-6.59%
    Tech………………………5.74%……………………-6.13%
    Materials………………..7.58%……………………-9.98%
    Telecom…………………-0.24%……………………-3.59%
    Utilities…………………..5.02%……………………-4.72%
    Discretionary…………..1.60%……………………-8.85%
    Financials………………-0.81%……………………-7.43%
    Notice a pattern?

  • Wall Street Engulfed In Selling Panic!!!!
    Posted by on August 9th, 2007 at 5:25 pm

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  • The Great Bull Market
    Posted by on August 8th, 2007 at 2:07 pm

    This Monday is the 25th anniversary of one of the greatest moments in Wall Street history, the release of Fast Times at Ridgemont High. This movie created a cultural reference point for an entire generation of Wall Street traders. In earlier generations, things like the Bible and Shakespeare performed a similar role.
    This Sunday will also be important. It’s the 25th anniversary of the beginning of the Bull Market. On Thursday, August 12, 1982, the Dow bottomed out at 776.92.
    To add some perspective, the market’s P/E ratio was less than half of today’s P/E ratio. The dividend yield was about four times that of today’s yield.
    The following Tuesday, August 17, the market skyrocketed a phenomenal (get this) 38 points. That was the most points ever and percentage-wise, it was the second-best day since the Depression.
    Over the last 25 years, the S&P 500 has returned 2,700% (dividends and capital gains) while gold and inflation have both roughly doubled (sorry gold bugs).
    Here’s to the next 25 years!

  • Leucadia National
    Posted by on August 8th, 2007 at 12:48 pm

    Leucadia National (LUK) seems to be weathering the subprime crisis quite well. If you’ve never heard of Leucadia, well…that’s pretty much how the company wants it. They own a hodgepodge of businesses; some real estate here, some timber there. Nothing terribly exciting.

    The only interesting thing about Leucadia is that it’s about as close as you can get to owning a private company that just so happens to have a ticker symbol. The company might as well have “no comment” as its slogan. They have no earnings calls, no guidance, no investor conferences, no analyst coverage, nothing.

    Despite this, they somehow make money! In the last 25 years, shares of LUK are up 34,000%. That’s more than almost every other stock—Intel, Apple, GE, even Berkshire Hathaway—you name it and LUK probably beats it.

    But here’s the interesting part: Leucadia’s last 22% has come this week. I have no idea why. (More buyers than sellers?) Make no mistake; this is a rough market but there are still a lot of good stocks out there.

  • Brian Hunter Crying Foul
    Posted by on August 8th, 2007 at 10:29 am

    From today’s WSJ:

    Brian Hunter, whose bad bets triggered the collapse of hedge fund Amaranth Advisors LLC, says a federal investigation into his possible involvement in an alleged multibillion-dollar manipulation of the natural-gas markets is hurting the start-up of his new fund venture.
    Mr. Hunter said Solengo Capital Advisors has been pushed to “the brink of complete disintegration” by a probe by the Federal Energy Regulatory Commission and resulting civil charges against him and his previous employer, Amaranth. The statement was made in documents filed late last week in the federal District of Columbia court as part of a suit against FERC that Mr. Hunter filed in late July.

    I wonder if the fact that he lost $6 billion in one week is hurting him as well.

  • Graco Hits New High
    Posted by on August 7th, 2007 at 5:46 pm

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    I added Graco (GGG) to the Buy List at the start of this year. So far, it hasn’t been that impressive a stock. The earnings have been blah, and the stock has mostly been stuck in a trading range.
    Until today. The shares vaulted past $43 and nearly hit $45. I honestly have no idea what the catalyst was. The next earnings report won’t come for another two months.
    Sometimes on Wall Street, you just don’t know what moves a stock.