Wikinvest Wire
Wednesday, March 29, 2006
Crucial
I don't know about you but all the CNBC coverage of Gradient is helping me and everyone I have spoken to make a lot of money and be better investors.
Subscribe to:
Post Comments (Atom)
11 comments:
Why make light of a such an important issue? It is amazing they are covering it all.
I barely watch CNBC and I'm so sick of them beating that story to death. Then again, almost nothing on that channel makes me money... :-)
I think we need a channel with nothing but traders on it. Wouldn't that be interesting?
Hi Roger,
Long time reader, 1st time poster.
Sorry - I hear that on talk radio all the time and figured I'd give it a shot here too.
What do you think of JOF? It's a close end fund for Japan.
How does one rate a good CEF from a bad one?
OK, I must know-what the heck is gradient. I haven't watched those gonifs since 2000.
Thanks,
HLP
If you want to invest in japan one of the japan ETF's EWJ or ITF is probably your best bet.
CEF's introduce the nasty problem of the variable discount.
Roger,
I have stayed away from CNBC since the bubble. Always believed they were more similar to market cheerleaders rather than unbiased analysts. You have captured my interest and made me think of reconsidering, how have they helped you be a better investor? how have you made money out of Gradient thanks to them? --another long-time reader, first time poster, David
You still watch CNBC!
I thought you were a credibles source of information ;)
I do not watch CNBC. There is never anything on that helps me invest and/or trade better. I believe that CNBC pampers the already rich, retired community that has time to worry about 15K barbeques, expensive swimming pools, antique car auctions, excessive square footage homes. Sorry, most of America including myself does not belong in this category. I am nowhere near retirement. LOL
Having said that I keep one yye on this Gradient situation. CNBC has to cover it now as they are connected to many involved. In addition, CNBC finally dropped the one-sided defense act of Herb Greenberg and is via Gasparino trying to give us more info on both sides.
Personally, I believe they are guilty as I have been watching those involved for years and I have seen plenty that did not look right. But we shall see how it all plays out.
Roger,
I get that you were speaking tongue-in-cheek but there is something very big going on here.
Historically, anyone who saw a stock they were short rising on the market had no choice but to go to that market and buy to cover. The markets were the NYSE, the Nasdaq, and the AMEX. To speak of buying on the Philadelphia Exchange to cover a stock moving on the New York is just silly. Buying to cover could force the stock even higher forcing a "squeeze". Losses when shorting were theoretically infinite. Recently, on CNBC, that is what Christopher Byron said. He is right when the party shorting is a retail investor. The fear of infinite loss was a mitigating factor in manipulation.
In 2001 Old Mutual and CalPERS joined to form eSecLending "to earn incremental income on their portfolios." www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2000/nov/oldmutual.xml
Now hedge funds need not go to the market to buy in a short position. Instead, they can--through terminals supplied by their broker/dealer--borrow more stock and sell it short. Prior to 2001 a rise in a stock precipitated a squeeze which was beneficial to those long the stock because it raised the price of that stock. Now, a rise in the price of the stock results in an increase in the cost to borrow that stock which benefits the lender (like CalPERS which is too big to beat the S+P 500). But, also, as the cost to borrow increases it has the effect of bringing lenders out of the woodwork. This is good for these lenders because they see an increase in revenue from securities lending. What it does not do is lift the price of the stock and, this is what is important for your readers to understand. If they think that they can make money going long a stock that Gradient is dumping on they should understand that they are betting against someone who can never run out of stock to short.
In the link above it says, "Estimates place the size of the total market at between $1.5 and $2 trillion." That was in 2001. In 2006 it is over eight trillion: www.dataexplorers.co.uk/dxl/news.aspx?service=DataExplorers&id=90
There is a list of expensive to borrow stocks at www.dataexplorers.co.uk/dxl/service.aspx?service=performance under SUMMARY STATISTICS. Register for free. I guess these would be stocks to avoid if someone felt drawn to them by the "fundamentals".
By the way, I enjoy your blog.
Roger wont cover naked short selling. He works for Cramer that would be a conflict of interest for an employee of thescam.com. I wonder why he is bagging on Charlie. Roger you have gone donwnhill fast.
I've gone downhill fast? Sorry you feel that way.
Post a Comment