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Friday, August 10. 2007

Markets

The wacky markets are losing a lot of money for some of the hedgies, and making a lot of money for others. It isn't the quant funds per se, it's the funds that do a lot of leveraged stat arb that are suffering from the market divergences. Some quant funds are doing great right now.

But when a fund is down 15% in five days, people take their money out, and the overall market dips. Watch 2-3 big hedge funds shut their doors. I would be an equity buyer now, if I had some loose pennies, and I would shed no tears for the hedgies on the losing side of all of this: they (properly but unluckily) had a high risk strategery (aka gambling), which is what they are paid to have.

Posted by Bird Dog in Hot News & Misc. Short Subjects at 09:10 | Comments (5) | Trackbacks (0)

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Soon. No one's quite sure how much of the bad mortgage paper is lying around or where it is. Look for financials with low leverage and no exposure to this stuff. It's getting a little silly right now and the herd is going over a cliff. Watch for news regarding leveraged holders of the 'toxic' stuff. Big banks, money center and investment, make me a little nervous right now. Not sure if the bad news has hit a crescendo yet. Some things are getting a little too cheap, no doubt. BTW, some quant funds are getting killed.
#1 Tom C., Stamford,Ct. on 2007-08-10 11:55 (Reply)
Renaissance Medallion, up an average 30%/yr for 20 straight years, down 9% in August. Pure black box, the biggest brains in the biz. What went wrong? It'stats alright, but a human enters the data--and someone overvalued growth, and hence underweighted default aggregates. I think it may have been a sort of black swan --such as, a good-times-hidden accumulation of, well, shamelessness in the boomer tailenders, who nowadays see less personal failure in going bust on a mortgage, and thus walk away in greater numbers than they would if there was more of a personal rather than strictly financial stake in a default. Black swans are defined by such unseen forces suddenly manifesting in action.
#2 buddy larsen on 2007-08-10 12:39 (Reply)
Regarding shamelessness, that's comes from seeing bankruptcy turned into a business strategy, "what does "is" mean?", a general decline in manners, a rise in vulgarity and coarseness and a pirate booty feeling in making money like the the hedge funds or credit card companies that change rates at the drop off a hat.
BTW, lots of money will be made by the careful investors buying low in the mortgage market.
#2.1 grant1863 on 2007-08-10 14:00 (Reply)
Been in cash & gold & silver for 2 years..
5000 shares BAC
zero debt

sleep like a baby.
#3 Habu on 2007-08-10 13:47 (Reply)
I sleep like a baby too. Wake up crying every two hours needing a diaper change.
#4 buddy larsen on 2007-08-10 13:57 (Reply)

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