One of the worst things you can do in the markets is to position yourself so that you lose money when you are totally right about a move. Livermore was spot on - the big money is made by sitting tight for the bulk of the major move. Trying to scalp every little 5% counter-trend blip is a mug's game.
But where's your discount then? 20 bill for the market fall, and 50 bill for legal costs/damages and lower future earnings, brand damage etc. You have exactly the same value as you did before the spill. Why pay the same valuation for a company in the current mess as for one without any mess, as BP was 2 months ago? With all this risk and uncertainty you should demand a huge discount to fair value, not be paying exactly the same valuation. IMO fair value for BP after this disaster is probably in the high 20s to low 30s, using conservative assumptions. With aggressive assumptions it could be in the 40s up to 50, but who uses aggressive assumptions in investing? Even if its worth in the 40s, that's a 20-30% return, hardly outsized given the risk involved. So I wouldn't be interested until at least the low 20s and ideally the teens. It might not get there, but markets often overreact and I doubt we have seen the worst of the news out from BP yet. Imagine if a hurricane comes along and sprays all that oil inland across the Gulf, or if it's still leaking by August, or it comes out that BP were criminally negligent. They could lose their entire US assets in the courts.
Mr. Mortgage tells me by email he is short the homebuilders but is afraid that the trade is too obvious
I dont believe the liabilities at present value will be all that massive. But its true, this is not a slam dunk, which is why I'm not pulling the trigger. But I'd say its likely one of the 4 horseman is a huge buy
Fascinating article in the new yorker about wikileaks and its owner http://www.newyorker.com/reporting/2010/06/07/100607fa_fact_khatchadourian?printable=true It seems that they have a sophisticated security system involving a number of different countries
An interesting article about Venture Capital and startups http://pmarchive.com/guide_to_startups_part1 There are 2 type of investment opportunities I dont myself even doing it. One is running a business(a real business, non-fund management) and the other is picking real estate(other than primary residence) No1 seems to have a ton of hassles that decreases the quality of your life, still thats is not a strong enough argument. I would take a lower quality of life for a certain period in exchange for some millions of dollars. The real argument is that if someone is good at predicting the future(as it seems the case as this people who want funding for their 'glorious products') then why he isnt investing in global small cap stocks picking the ones he is 'sure' are the next big thing?Maybe he doesn't have any money for that, that would be a legit argument but I'd suspect if he saved some and employed his 'skill' for some years, he would be financially independent. The truth is most people dont have such skill, Taleb has some anecdotes that tons of inventions were the result of luck not carefully planned forecasting No2 the same thing. If the person is so good at finding value in real estate markets(because of discipline, logic etc), then he probably can use that skill at stock and other financial markets(I accept he will have to go through a period to learn the tricks of the trade and technicalities). The advantages is that he doesn't have to deal with all the illiquidity and losing time. He can get all the 10-Qs and 10-Ks of any company within seconds
What level and month of the FF contract are you looking at as a place to get in? Between yesterday, today, and a blowout NFP number coming on Friday, you might get a shot.
I'm unloading Aug and Sep this morning. Still keeping the Dec in(the largest position). I'm considering selling before the number and buying after