Tuesday, November 11, 2008


Between the DMV and the dentist I managed to squeeze in some trades today and it went fairly well for a messy tape. Fannie and Freddie came out with what I thought was fairly positive news about resetting mortgages but the market sold the news after an initial bump. The market has been bludgeoned with bad news of late and I was very surprised that when a decent piece of news came the market sold off hard. Certainly not bullish action. The shine seems to be off the apple with the one day wonder that was the China bailout and bearish sentiment seems to again be gripping the market.

I will try and be back with some charts shortly, I feel like I have been running behind since 6 this morning. Just one of those days,


EDC said...


No offense but please, the mortgage work out is a good deal? no way.

fannie and freddie,

IMO - this still does not address the problem. WRITING down bad debts.

We can't possible expect someone who is 90 days late on a mortage (possibly upside down on the home by several percentage points/thousands and thousands of dollars) to take the work out from the servicers. They now own an asset that is worth significantly less than they paid (we/you mortgage a house to the bank, they take the risk to finance it). Why in their right mind would they take the deferred principle/payments an not principle write down.

Until they kill principle, the housing solution will never correct until the prices, correct.

We could almost say, average nationally, if you bought after 2k3, you will be underwater in the next two years. The american dream isn't turning out to be a dream, more like a nightmare.

Morale hazard is kicking with all industries looking for a handout. Now we will have home owners thinking they will get a good handout and start to stop paying their mortgages.

To fix the problems the banks must, must write down principle and recognize their losses. The home owners should not take the work out because they will never, never, never ever see their values equal their loan balances. If the government is "hooking" the banks up, then pass the buck.

OR BAIL OUT NO ONE and let the market sort them out. That is the best idea.

upsidetrader said...

Hey great points and u will not find a more free market guy than me, I was speaking more to the trading reaction to what at that moment could have been perceived as a move to the right direction, it didn't take the market to digest the news and basically agree with your thought process. The market is desperate for any snippet of good news or news that helps the consumer and i thought that could do the trick near term,
but the affect wore off quickly.End of the day who cares and banks are still shorts and so is the market. Thanks for the insight

EDC said...


you are 100% correct.

You da man and the charts always rock. I wish I could trade as well as you and others on stocktwits.

I can only play the game from the stands, not on the field as y'all.

Keep on sharing your thoughts, they are very helpful.

About Me

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I am a former hedge fund manager, broker and capital markets dude who now trades for his own account. I love what I do. I will try to post some stocks and an occasional chart that looks attractive for entry.I will also try to point out the idiocy of conventional wisdom and the lack of value added by the mainstream financial media. These postings should not be viewed as recommendations.