Posted on 10/17/2009 6:09:52 AM PDT by Wolfie
Edited on 10/17/2009 8:54:23 AM PDT by Admin Moderator. [history]
On Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness — "like buying 1.7 million lottery tickets," according to one financial analyst.
Fine analogy, WTG!
I’m just a dumb country boy who dutifully puts his retirement into a 401(k), but something dawned on me reading this article.
Americans have invested tens, if not hundreds, of Trillions of dollars into the stock market in the past 25 years.
After reading this article, it occurs to me that the big Wall Street companies are simply lying, cheating and stealing that money from each other. In the process, our retirement is not growing and many millions are simply having their money stolen from them.
Yes. Taibbi has such audience.
Short selling is when you sell stock you don’t own, because you think it is going to go down (and/or you are trying to push it down).
I borrow some stock from Alice and sell it to Bob, then I go out and buy on the open market to return what I borrowed from Alice. In practice it’s more complex than that (you may be asking what’s in it for Alice, in reality she probably never knows I “borrowed” her stock).
What’s described in the beginning of the article are options, in this case put options. When you buy a put option, you get the ability to sell a certain number of shares for a certain amount of money at a certain time. When that time comes, if the value of the shares have fallen below the agreed price, you can buy them at market price and sell them for the agreed on price, pocketing the difference (minus the cost you paid for the option, but you’ve already lost that money whether you exercise the option or not).
See also call options and naked shorting.
http://www.investopedia.com/terms/s/shortselling.asp
for an ordinary retail trader like me, we can “sell” shares which we don’t own.....hoping the price will soon go down, at which time we buy to “cover” at the lower price. (if it goes up enough to reach max pain, we cover at a higher price).
What I THINK you want to know about is organized manipulation that is beyond the reach of we retail traders....this will explain in detail in lay terms....well worth watching, as it is the object of all that you’ve heard about “naked” short sales that has taken down the market cap of many companies:
http://www.deepcapturethemovie.com/
Another know-nothing post ... seeing as you are so wise, why not favor us with actual discussion instead of personal attacks not backed up with facts.
PS.....here is the current RegSHO list....the page is also full of hotlinks for you to learn more about it. I suggest watching deepcapture before more than a quick look here:
http://www.nasdaqtrader.com/Trader.aspx?id=RegSHOThreshold
Fascism is to be fought[Bailouts, TARP].
I have little regard if the guy is ‘left’, it matters not, and even less respect for supporters of Gov’t bailouts and socialism.
Well, a very long article. There were crooked shennanigans but who was responsible? The headline and the lead suggest that it was wicked capitalists. “Wall Street.”
So, yes, most of what he says is true, but he seems to leave some stuff out. Like it was Chris Dodd, Barney Frank, Bill Clinton, the Congressional Black Caucus, and others whoo were most responsible for this lack of regulation. In other words, it was Big Government that made it possible, and that put CRA on steroids.
Paulson seems to have been at the center of the storm, and it turned out that Paulson was working for Obama, which became entirely evident when Paulson sprung the October Surprise on the hapless Bush and McCain, which put Obama over the top on election day.
Who got the largest contributions from Goldman Sachs, the firm that made the biggest bucks on those bank and investment firm crashes? Chris Dodd and a junior Senator from Chicago, Barack Obama.
Who got the money that Obama and Dodd demonized AIG for? Why, none other than Goldman Sachs, where Paulson was the former CEO.
Naked shorts? The government did absolutely nothing about that, although there were many protests from, well, Wall Street. Jim Sinclair among others was yelling abouot it for years, to no avail.
Who removed the uptick requirement for shorts, at the height of the financial crisis? None other than the corrupt fed regulators. That rule was installed in 1987, and removed just in time for the 2008 market crash.
Yes, there were corrupt folks on “Wall Street.” But they were working hand in hand with Big Government. And they still are. And Obama was far more involved in it than Bush, who simply didn’t understand what was going on during his watch.
” the insane ranting of a Neo Marixist know nothing clown? “
One of the distinguishing features of FreeRepublic is that the audience demands facts...and ad hominem rants are a manifestation of intellectual weakness and ineffectiveness(liberals). If you have some proof of your accusations...i’m sure we all would be happy to see it.
One idea is to start reading Denninger’s Market-Ticker.
You can search it for ternms, like ‘naked’:
Bump.
Yeah, dealing with the idiocy this generated on FR made me sad, not quite suicidal.
“In Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less”
1.7 mil is loose change. Wonder why the Rolling Stone commie isn’t concerned about the 500 billion dollar run on money market accounts on Sept 18th?
And yes, Taibi is the new Michael Moore commie clown.
i learned more from that article than i have from 2 years worth of material posted here.
bump
I think the uptick rule for sales was enacted in the 1930s.
Taibbi Bump....he is to the left but makes good points
Can always repost excerpts (w/ your analysis).
When he's actually right.
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