torsdag den 18. september 2008

Reality is close by....

This very simple fund manager have noticed one major change in the last 48 hours which I will call significant: More and more people have started, finally, to realise this is serious crisis - probably the worst crisis in my years in the market. That's a positive, because if we engage on the issue instead of disengaging there is fair chance REALITY will kick in.

I personally think we are 1-7 days away from getting change to marked-to-market practise - It does not make a lot of sense, even on a good day, to take somethingwhich is not priced relative to its intrinsic value. Take a house - even if a mortgage trades @ 20 cents in the US dollar, you would expect the house to trade 40-60% of price in sale?

The biggest joke is Morgan Stanley recent reporting - they made pretty much all their money from having issued debt - as this debt goes down they book the profit - they issue @100 - market is now 80- hence 20% profit - but the only problems being .. to take this profit.. you need to go bankrupt! Welcome to the world of finance.

This fund manager have reduced his EXTREMELY negative portfolio to 10% of Friday's position. There could be bounce or not - there could be more Socialist ideas like banning ALL short-selling etc - (for the record if anyone thinks banning short-selling helps the market - they need to get their school money back!).....

I am now 85% cash - and awaiting Monday --- still small long upside EURUSD, small downside in S&P - (deep-in-the-money Puts)...... rest I leave for the market to figure out.

I have become "crisis fatique" - and if even my local business newspaper have realised something is rotten in the state of Denmark - I will step aside......

This does not mean I have become positive- it merely indicates that too many indicators are at 10 standard deviations -reflecting lack of transparency even for veteran trader like myself.

Stay safe.


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