Use access key #2 to skip to page content.

InvestorDeb (71.55)

Bear Hunting Season Opens Today

Recs

4

September 08, 2008 – Comments (3)

US Government action over the weekend to place FRE and FNM into conservatorship shoul ignite quite a rally in all the other financials and give us a huge boost in the broader market averages -- at least for a day or so, which will provide enough fire power to inflict some real pain on the bears. I am going to sell some out of the money covered calls into the opening and throughout the day on every single share I bought into the pain of last week.

Remember what I have posted in the past: there comes a point when the bears will become the champions of the bulls because they will HAVE TO BUY back their borrowed shares, and for many of the weaker ones, today will be day one. Happy hunting to my bullish bretheren...

3 Comments – Post Your Own

#1) On September 08, 2008 at 8:24 AM, DemonDoug (98.95) wrote:

there comes a point when the bears will become the champions of the bulls because they will HAVE TO BUY back their borrowed shares

Unless you shorted any number of financial companies that have gone to zero.  If you short a company and it goes to zero, you never have to buy it back.  Many of us would do this as we feel that many companies are actually worth zero, but we also know that big banks and the FIRE economy do not allow that to happen to the people who are hooked into the inside (see: BSC).

You are right thist may cause a short covering rally, probably will, but after this week, there are absolutely no bullets left in the stimulus machine.

Well I take that back, there is one: inflation of 50% per year for the next 4 years.  Imagine paying $20/gallon for gas.  Sounds fun doesn't it?

(also the fed can cut interest rates to .1%, but it won't matter, no one will borrow b/c if they have to cut that far then no one is likely to be wanting dollars at that point.)

I expect the Fed to cut interest rates some time in the next 9 months, at least another quarter point.

In the meantime I expect my CAPS score to go down by a thousand points on monday.  Best of luck to all the "strong short" red thumbers out there.

Report this comment
#2) On September 08, 2008 at 10:43 AM, Imperial1964 (97.92) wrote:

The government has been hunting bears since that emergency rate cut on the day of options expiration almost a year ago.

This is the first time I've been burned by it, though.  I'm "hedged" right now, and my losses on Puts have been offset by gains on my longs.

The problem is my Puts have an expiration and the longs don't.

Report this comment
#3) On September 08, 2008 at 11:23 AM, leohaas (92.02) wrote:

I am a big fan of DemonDoug, but this comment of his make me curious:

"Well I take that back, there is one: inflation of 50% per year for the next 4 years.  Imagine paying $20/gallon for gas.  Sounds fun doesn't it? (also the fed can cut interest rates to .1%, but it won't matter, no one will borrow b/c if they have to cut that far then no one is likely to be wanting dollars at that point.) "

I'll gladly take out a loan at 0.1% while we have 50% inflation! In 4 years I'll pay back with dollars that are worth only 6.25% of what they were worth when I took out the loan...

Report this comment

Featured Broker Partners


Advertisement