Originally posted by wonderworld
The smart money is still sitting on the sidelines. The only people trading are those who want gamble on making a quick buck before SHTF. I pulled out
in Oct. 2007.
So I assume you wouldn't consider Warren Buffet "smart" money, because he's been pumping more money in all the way down.
Congrats on having a hedge fund job. There isnt much leveraging going on now is there? I personally blame hedge funds for the problem we are in.
Well at least you're not blaming the government or the grays or the reptilians under ground.
There are a few hedge funds that were VERY large contributors to this crisis, however, don't damn the entire industry for the actions of a few. The
main culprits were the heavy dealers in CDS and CMO's.
I'm surprised a person of your stature doesnt understand the difference of a bear market rally and the next step to the Great Depression. Have you
seen the Correlating charts. We also have never seen this sort of volatility in history. We haven’t seen blood on the streets yet.
Firstly, I've done nothing to illustrate my stature. I could fill the printers and order lunches for the group for all you know.
The major difference between this rally and bear market rallies (and the great depression) is the thawing of the credit markets. A bear market rally
is not fueled by fundamentals or the availability of new credit into the system. Bear market rallies are fueled by false optimism of "well the worst
MUST be over" That already happened and then we had March. The policies of the Fed, treasury and administration have worked very hard to help
liquidate the frozen credit markets, and we are certainly seeing these efforts bear some fruit. I will NOT say that the equity markets will not
retest their lows, I will however say that unless something new happens (e.g. terrorist attack, if this swine flu does turn out to be a big deal) we
have seen the darkest days of this financial crisis.
This is the calm before the storm. Look at Vanguard, for instance. Who would have thought it would break a buck. Everyone fled to treasuries. I for
one went a different route.
A lot of people in the Hedge Fund industry were not surprised that Vanguard broke the buck, in fact, many of them bet a WHOLE lot of money on it. We
may not be a scrupulous bunch, but we know how to do what we do.
No insult intended but we cant take financial advice from anyone in the hedge fund business.
I don't believe I offered any financial advice.
Look at Warren Buffett. His cool minded buying was a huge mistake. I saw it before he did and I'm not a pro.
Mistake? run the numbers my friend, Buffett put $5b into Goldman Sachs @115/share. It's currently $127/share. On capital appreciation alone he has
made over $500 million on this investment (that's a 10% return since September) But this isn't plain old common stock, it was 10% PREFERRED stock,
so he gets an additional $500million/ year without any capital appreciation. So far he has accrued more than $250million.
So he has made three quarters of a billion dollars on a 5 billion dollar investment. That's 15% He made that less than 8 months. Not included in
this is the fact that Buffett ALSO reserves the right to buy $5billion more at any time in the next 5 years @ $115. So let's pretend Goldman sees
$150 a share by 2013. Not ONLY is that another billion on his initial investment, but another 1.5 billion of INSTANT profit, PLUS the 10% coupon
he's been clipping and will continue to clip for the foreseeable future. Yeah...big frigging mistake.
A good investor knows good investments, not market timing. Warren Buffett has NEVER claimed to had a crystal ball, just fierce loyalty to his ideas
and investments...I think we can see why.