Gotta love ZERO RISK in the SP500 = $$$

Discussion in 'Trading' started by makloda, Jan 27, 2007.

  1. S2007S


    put on cnbc "on the money" they are going to have a segment on a possible hedge fund bubble about to burst....with cnbc mentioning this I think the chances of this happening are about 1%.
    #1201     Feb 15, 2007
  2. S2007S


    Hedge fund bubble.


    Over the Hedge
    Signs of the coming hedge-fund apocalypse.
    By Daniel Gross
    Posted Tuesday, Feb. 13, 2007, at 7:16 AM ET
    Because I'm writing a book about booms and busts in American history, I've spent a lot of time thinking about how real and rational economic trends cross over into bubble territory. For the Internet, residential real estate (now officially popped), and alternative energy, there were always telltale signs of bubbleness.

    Those same signs suggest that our next bubble is already here, and it's … hedge funds.

    Let's review the classic warning signs:

    1) Public investors are getting really excited when insiders sell, believing they're being cut in on a great deal. Friday was the IPO of hedge fund Fortress, the first U.S. hedge fund to go public. It was priced at $18.50 and closed the first day at $31, a 67.6 percent increase. The whole idea of hedge funds is that they are exclusive and that the massive rewards—2 percent management fees and 20 percent of the profits—flow to the guys who own it. The advantage of running a hedge fund, as opposed to a mutual fund, is that you don't have to tell the public how much you've made or shed any light on precisely how you did it. So, why are some of the sharpest tacks in the business willing to sell out now and sacrifice all the advantages inherent in the hedge-fund structure? According to the prospectus, the five guys who started the business collectively own shares worth about $9.4 billion based on today's price.



    2) Everybody and their mother is getting into the business. In the late stages of most bubbles, people from outside the hot industry—including many who never showed much interest in business at all—plunge headfirst into the boiling waters. You know them. The Fortune 500 corporate warriors who reinvented themselves as dot-com hipsters in the spring of 2000, the accountant who gave it all up to flip condos in Naples last year, the oil-company executives who would like you to think they're really interested in carbon capture and cellulosic ethanol. Now, we've got politicians, diplomats, and policy wonks, who are frequently the last to know about any important private-sector trend, starting hedge funds.

    3) As the naive newbies are plunging in, the successful early adapters move on to the next big thing. Charles Merrill, the founder of Merrill Lynch, famously sold stocks before the 1929 market crash. AOL founder Steve Case saved his dot-com fortune by acquiring the more-solid assets of Time Warner in 2000. The founders of Fortress aren't the only really rich people who are moving to diversify their holdings away from hedge funds. Spectrem Group, which tracks the spending and investing habits of the very wealthy, in January reported that truly, filthy rich (those with household net worth of more than $25 million) have recently cut back sharply on their hedge investments. The percentage of such homes with hedge-fund investments fell from 38 percent in 2005 to 27 percent in 2006. Generally speaking, the truly, filthy rich are truly, filthy rich because they know something you and I don't.

    4) In the late stages, the investment craze crosses over into the broader consumer culture. In the summer of 1929, stock promoter John J. Raskob's article in Ladies' Home Journal, which urged everyday Americans to build leveraged portfolios, was a clear sign of the top. In the 1990s, the appearance of money maven James Cramer in ads for Rockport shoes proved to be a similar omen. For hedge funds' dangerous spillover into mass consumer culture, look no further than your local Kenneth Cole outlet, where you can slip your tired feet into the Hedge Fund, which is … a loafer! And, uh-oh, the $160 shoe is already marked down 25 percent! (Hat tip to Forbes, registration required.)

    5) My portfolio is in turnaround. If there's one group of businesspeople that is even slower on the uptake when it comes to hot trends than politicians, it's Hollywood executives. Which is why television shows are often excellent signs that a bubble is popping. In 2000, Darren Star, who had developed the zeitgeist-capturing show Sex and the City for HBO, rolled out The $treet on Fox, a show that chronicled the hot goings-on at a brokerage firm. It was canceled a few months later, when the American public suddenly fell out of love with stocks. In October 2005, the inevitable real-estate sitcom, inevitably titled Hot Properties, and inevitably detailing the escapades of four hot female brokers, debuted on ABC—and was canceled soon after, when the American public began to fall out of love with real estate. Now, Doug Ellin, who developed Entourage for HBO, is making another HBO series based on a hedge fund.
    #1202     Feb 15, 2007
  3. S2007S


    the talk about the housing market bottoming left and right on cnbc has me laughing so hard, they mention it about 2-3 times a day....:p :p :p :p :p :p
    #1203     Feb 15, 2007
  4. <i>"I think austin was being sarcastic, but he'll correct if I'm wrong."</i>

    Oh yes... heavy on the sarcasm there. My apology it was missed :<(

    For the record, I feel like this is deja vue February 2000. All the same things I heard, read and saw back then are repeating now. Not saying the market will top and turn full-blown bearish or anything like that.

    But I do know this: when they finally correct this giant air-pocket on stilts, it is going to be most interesting indeed. A lot of traders who only know price action going upward are in for quite the education indeed. Those who enjoy volatility are in for a real treat, for sure!
    #1204     Feb 15, 2007
  5. S2007S


    On Wednesday, adds David Gaffen, something happened that hasn’t happened since March 17, 1998 - new closing highs for the Dow industrials, Dow transports and Dow utilities, as a sanguine outlook for the US economy from Ben Bernanke, the Fed chairman, lifted the stock market.
    Such a triumvirate of highs has occurred just 19 times since the start of 1929 (not including yesterday’s) - it cropped up six times in that year alone, and seven times in 1986, the year before a major market correction.
    #1205     Feb 15, 2007
  6. i went long 20 es's at 1456.50. i'm 100% certain futures at 1460 by am. i'm so sure i get hit at 1460 by 9:30 am i've already spent the $3500 on a carribean can't lose going long.
    #1206     Feb 15, 2007
  7. T280


    What a complete tool... if you were the only one to see it who was doing all the buying to create the huge rally????????

    #1207     Feb 15, 2007

  8. If they break 1456, Es will see 1450-1451 tomorrow.
    Lot of eco data and option exp leads me to believe we will close around 1450 cash tomorrow.
    #1208     Feb 15, 2007

  9. duh..... ONLY ONE ON ELITETRADER....!!

    Show me another post from 4 years ago where YOU said to go long every day?

    ... oh that's right.... you cant..... ROFL!!:eek: :eek:
    #1209     Feb 15, 2007
  10. have fun all....

    off to watch the IronMan in Pasadena baby $$$

    I love free supplements at the fitexpo$$$$
    #1210     Feb 16, 2007