Freed Roger wrote:When are we going to see the Longhorn Access Pyramid Limited Coast Future II LLC?
And how do I plow some money in?
A couple of guys from my graduating class started a hedge fund. They are very bright guys, but it was all I could do to keep from laughing when they told me one of their strategies was to invest in low cost Vanguard funds. Apparently they had $2.5 million in AUM. True story...
THAT is hilarious.
/it would be even funnier if I knew what the hell it meant.
Two 22-23 year olds, were able to convince investors to invest $2.5 million into a fund that primarily invested in low cost ETF's that any individual investor could buy.
longhornbaseball wrote:Two 22-23 year olds, were able to convince investors to invest $2.5 million into a fund that primarily invested in low cost ETF's that any individual investor could buy.
Company called ABB allowed Fidelity to do that shtuff with their 401K plan. Link isn't in laymans term, but at a seminar, it was described like your example. Only they charged them all sorts of fees to invest like that- because they thought they could get away with it. http://benefitsbryancave.com/401k-fee-l ... -sponsors/
“They were caught short,” said one experienced credit trader who spoke on the condition of anonymity because the situation is still fluid. "This is a very hard trade to get out of because it’s so big.”
He estimated that the initial loss of just over $2 billion was caused by a move of a quarter percentage point, or 25 basis points, on a portfolio with a notional value of $150 billion to $200 billion — in other words, the total value of the contracts traded, not JPMorgan’s exposure. In the four trading days since Mr. Dimon’s disclosure, the market has moved at least 15 to 20 basis points more against JPMorgan, he said.
"JPMorgan Chase has a big hedge fund inside a commercial bank,” said Mark Williams, a professor of finance at Boston University, who also served as a Federal Reserve bank examiner. “They should be taking in deposits and making loans, not taking large speculative bets
Question for youz guyz. The following statement does not make sense to me. Why would selling CDS contracts make you bearish? If you are selling credit protection on high-yield corporate bonds, you are betting that credit performance would improve, right?
In its simplest form, traders said, the complex position assembled by the bank included a bullish bet on an index of investment-grade corporate debt, later paired with a bearish bet on high-yield securities, achieved by selling insurance contracts known as credit-default swaps
longhornbaseball wrote:Two 22-23 year olds, were able to convince investors to invest $2.5 million into a fund that primarily invested in low cost ETF's that any individual investor could buy.
Company called ABB allowed Fidelity to do that shtuff with their 401K plan. Link isn't in laymans term, but at a seminar, it was described like your example. Only they charged them all sorts of fees to invest like that- because they thought they could get away with it. http://benefitsbryancave.com/401k-fee-l ... -sponsors/
and then one of their employees, very unhappy about this, filed suit against his employer. Instead of awaiting the result of the trial he shot and killed several of his coworkers
longhornbaseball wrote:Two 22-23 year olds, were able to convince investors to invest $2.5 million into a fund that primarily invested in low cost ETF's that any individual investor could buy.
Company called ABB allowed Fidelity to do that shtuff with their 401K plan. Link isn't in laymans term, but at a seminar, it was described like your example. Only they charged them all sorts of fees to invest like that- because they thought they could get away with it. http://benefitsbryancave.com/401k-fee-l ... -sponsors/
and then one of their employees, very unhappy about this, filed suit against his employer. Instead of awaiting the result of the trial he shot and killed several of his coworkers
I knew that was the same company, but didn't know that motive. weird, I picture most people (includling my accounting self) as to slow to realize they are getting screwed by their 401K fiduciaries.
The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank's initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses.
The source of JPMorgan's problems is an obscure group of indexes that track the performance of corporate bonds. One of the indexes, the Markit CDX NA IG Series 9 maturing in 2017, is essentially a portfolio of credit default swaps - basically contracts that protect against default by a borrower.
This particular index is tied to the credit quality of 121 North American investment-grade bond issuers, including such names as Kraft Foods and Wal-Mart Stores.
JPMorgan used that index, and others, to bet that credit markets would strengthen. Because that position is widely known on Wall Street, many traders are betting the opposite way in the hope of profiting as the bank's losses increase. The index has been moving against JPMorgan in recent days.
This does not sound like a traditional "hedge" to me! JPM is in the business of loaning those corporations money. Now they are also betting on the future value of those loans. Sounds like doubling down, not hedging.
It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.
The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.
Last week, in response to an Overstock.com motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed.
I contacted Morgan Lewis, the firm that represents Goldman in this matter, earlier today, but they haven’t commented as of yet. I wonder if the poor lawyer who FUBARred this thing has already had his organs harvested; his panic is almost palpable in the air. It is both terrible and hilarious to contemplate. The bank has spent a fortune in legal fees trying to keep this material out of the public eye, and here one of their own lawyers goes and dumps it out on the street.
The lawsuit between Overstock and the banks concerned a phenomenon called naked short-selling, a kind of high-finance counterfeiting that, especially prior to the introduction of new regulations in 2008, short-sellers could use to artificially depress the value of the stocks they’ve bet against. The subject of naked short-selling is a) highly technical, and b) very controversial on Wall Street, with many pundits in the financial press for years treating the phenomenon as the stuff of myths and conspiracy theories.
Now, however, through the magic of this unredacted document, the public will be able to see for itself what the banks’ attitudes are not just toward the “mythical” practice of naked short selling (hint: they volubly confess to the activity, in writing), but toward regulations and laws in general.
If this sounds complicated, just focus on this: naked short selling, in essence, is selling stock you do not have. If you don’t have to actually locate and borrow stock before you short it, you’re creating an artificial supply of stock shares.
In this case, that resulted in absurdities like the following disclosure in this document, in which a Goldman executive admits in a 2006 email that just a little bit too much trading in Overstock was going on: “Two months ago 107% of the floating was short!”
In other words, 107% of all Overstock shares available for trade were short – a physical impossibility, unless someone was somehow creating artificial supply in the stock.
The import of this is that it made it cheaper and easier to bet down the value of a stock, while simultaneously devaluing the same stock by adding fake supply. This makes it easier to make money by destroying value, and is another example of how the over-financialization of the economy makes real, job-creating growth more difficult.
