Are "Bear Raids" a bunch of BS?

Discussion in 'Trading' started by ChkitOut, Jul 16, 2008.

  1. All this talk about the uptick rule and so called Bear raids on a stock like BSC got me thinking and well,

    am I the only one who thinks so called bear raids to pound a stock into the ground is a bunch of horse shit.

    Cramer keeps talking about how these hedge fund desks call each other up and collude to short a certain stock.
    I swear this guy is clinically insane and delusional. I think his divorce really did him in mentally.

    No way can that be true, I can't see how that would even be possible. First of all you would have to have cooperation on a grand scale. Reason is no single desk is going to put all there capital to short something some guy on some desk told them to. What are they going to do have a massive conference call? lol.

    Then you would have the problem of everybody trying to cover quicker than the next guy. That alone makes this collusion idea not possible.

    Rumors dont work like they did back in the 20's and 30's. Information was very slow to distribute. Not true anymore. Bear raids are just an old time phenomena I believe.

    I do think this happened quite a bit in the early days of trading, BUT in this day of digital information distribution at lightning speed, no way. Cant happen. This aint the 30's.
  2. Mvic


    It depends who's doing the raiding. When it is hedgies in cahoots with the big banks then its not a problem, when its hedgies raiding the big banks then its a problem.

    Its sort of like a casino, its OK for them (IBs) to cheat you, its just not ok for you to "cheat" them (counting cards etc). After all they gotta eat, right?

    Anyone else loving the irony of Patrick Byrne calling the naked shorts out for so long and getting ridiculed by everyone on the street and ignored by the SEC only to now have the everyone from Paulson on down saying that shorting, let alone naked shorting, is so serious that it is threatening to take down the entire US financial system. The again ostk and the USA right now are pretty much analogous, and as someone who loves the red white and blue it gives me no pleasure to make such an observation.
  3. I agree that it is BS.

    Simply put, imagine that you are a hedge fund or a mutual fund holding a ton of LEH during this brawl between LEH's CFO and the short seller Einhorn.

    During this whole thing you are hoping LEH is right because, frankly, you have no choice. You are long the stock.

    The numbers come out and LEH's case is busted. The short seller was right.

    What do you do? At this point, you can't - if you are in your right mind - trust LEH mgt. or the LEH books.

    If you don't trust mgt. or the books - what do you do?

    Do you buy more LEH? No. Probably not.

    Do you just sit tight and hope that it "some how" works out? No, probably not that either.

    Start dumping the long position?

    Of the three choices, this seems most likely if you, as a money mgr,. can't trust the books or the mgt. for the stock that you own. You are managing other peoples money and you can't imagine what would be a suitable answer to "why are you still long this stock" could be three to six months from now. So you dump it.

    Cramer himself says this is what one should do if you are ever caught holding a stock that gets served by the SEC for stock fraud. Like Lucent or Enron or Merck w/ Vioxx. Just dump the stock. Take the loss and let it go. Because it just tends to get worse real fast.

    LEH did not get served, but they did fuck up "the circle of trust" pretty bad ... The impact on institutional holders is probably close to identical.

    I guess good old plain vanilla (hardcore) long liquidation is just too boring for our friends in the media ...

    But, Ohhhhhhhhh ... BEAR RAIDS ... now, that's exciting !!!

    I read once that Legg Mason's Bill Miller had 5.7 mln shares of BSC ... and he sold it all.

    What if someone had 2 mln of LEH and decided to dump 1 mln, without much finesse. And at the same time there is another liquidating 500,000 and another liquidating 250,000 w/o finesse. Some might call this a "bear raid" - when it is really a"just get me the fuck out" puke raid.
  4. Go back to the OSTK CEO thread. Tell me where I lied, or that something I said didn't happen.

    The big crime is, it took a man how many millions of dollars and risking his life to bring this out, while all our elected officials knew exactly what went on, and swept it under the table. Now, we get to clean up the mess.

    I have all the emails. Baker, Haley Barbour, Richard Shelby, Barney Frank, Martinez, yawn. They don't give a shit. They operate llike a lot of guys on these boards. If you don't get caught, it's ok.

    Yeah there's Bear Raids. But I don't feel like documenting them again. Ask yourself this question. Seen Herb Greenberg on CNBC lately? He said he was going to continue to work with them, and gosh, he's gone!!!. LOL. Are there Bear Raids???? Herb was the houka for the hash. What do you thnk the Gradiant / Rocker lawsuit is about? Why did Mel Weiss and Bill Lerach go to jail? Are you guys blind. MVIC is correct about everything but the irony. Patrick Byrne was correct from day one. And when he comes public with what the big Prime Brokers did to stop him, you'll shudder. I'll leave that there. But 777 and MVIC can guess. Let's just say the DOJ is well aware. And that's good enough for now.
  5. I can't believe people don't believe bear raids and all sorts of manipulation still occur in this day and age.

    Think about it. If you had oodles of cash and floor traders in your employ, wouldn't you collude to take out some stops or squeeze an overshorted stock? I would.
  6. remember I'm not talking about taking a stock from 50 to 45. Of course that type of manipulation could happen. No biggie.

    I'm taking about taking a large cap stock from 50 to 2 on rumors.

    Not possible if a company is in good standing.

    And on OSTK, I remember when OSTK became impossible to short from all the bitching that was done. All the stock did was go down.
  7. Mvic


    Impossible for retail to short but not necessarily for those with "connections", otherwise how do you explain the FTD that went on for months and months to the point where even legitimate buys were not getting delivered let alone borrows. Flytiger has called it right all along on the naked shorting and has been completely vindicated this past week. Live by the sword die by the sword, the IBs are getting a little taste of their own dirty medicine, luckily they are too big to fail (and too connected) and have Paulson et al to come to their rescue, no such luck for companies like ostk and many others.
  8. Mvic


    Money managers are notorious for averaging down, the value guys being the worst culprits. The bear raid is what gets the ball rolling to the point that holders puke, whereupon the bear raiders cover unless they have the power to take it down to 0.

    Having said all that though I think that what is a steaming pile of BS is blaming the current weakness in US equities on short selling (unless you are talking about short sale of residential real estate :) ). Nice try with the red herring Paulson et al.

  9. Mvic - I agree with you to a point. Bill Miller definitely got all of those BSC shares by averaging down. And if you were a money manager (mutual fund or hedge fund) awaiting the outcome of the Einhorn / Callahan feud - you probably had already done a fair share of averaging down.

    But when there is a public catalyst that signals mgt and/or bookkeeping irregularities - money managers are just as notorius for puking all of those "averaged down" shares out.

    Meanwhile, why is there no outcry about "bear raids" in Sprint (S)? The stock went from $13 to about $6.70 in three months - during the first quarter of 2008.

    At the same time, Miller's position in Sprint went from 48 million shares down to 30 million.

    Plain vanilla long liquidation. The price indicates that he probably wasn't the only one doing this in the 1st Q of 2008.

    If there had been any news re: untrustworthy books or mgt. at Sprint, this long liquidation would have been more aggressive and the sell off may have resembled what we have witnessed in some of the financials.
  10. I have a conspiracy theory. Maybe the PPT was buying into this recent selloff, but got run over hard in all the financials and futures markets. They couldn't understand why no other buyers were there, they were the bag holders. So now they get the SEC to basically call in the shorts this week on all the financials. Look at the huge move in the XLF today. I can't find any other reason. The feds could care less about short sellers in the overall scheme. But when they are being dumped on, they pull out all the guns.
    #10     Jul 17, 2008