In case you missed this..."The Options Specialist"

Home › Groups › misc.invest.options › In case you missed this..."The Options Specialist"

Number of messages in the thread: 1

1. Date: 2008-10-09 06:16:02
Subject: In case you missed this..."The Options Specialist"
From: "i...@x...ws" <i...@x...ws> Search message by this author

In case you missed this..."The Options Specialist"

Hi Trader,

As we repeatedly predicted, many, many moons ago, and most notably
within several issues of "The Options Specialist", Options
University's monthly newsletter, we've arrived at the time in which
Congress is now in "full press" mode of their predictable "witch hunt"
looking to "string up" someone as the "fall guy" for this cataclysm
that Congress itself not only failed to prevent but in fact actually
encouraged. That's an entirely different matter however and not our
focus at the moment. We were just reminded again earlier this week
that things could have been much different, not only for the markets
but for many investors that relied on the typical news sources for a
"read" on things. We have to take exception with comments made today
by Lehman Brothers Holdings CEO Richard "Dick" Fuld in front of the
House Committee on Government Reform. On Monday, he served as the
"poster boy du jour" for the posturing pols. Below we're quoting
directly from the prepared remarks of one Dick Fuld. He's just the
latest "tricky Dick" to become a thorn in this country's side but a
few lines that we've highlighted truly astounded us. Behold:

"No one realized the extent and magnitude of these problems, nor how
the deterioration of mortgage-backed assets would infect other types
of assets and threaten our entire system. In April 2006, Chairman
Bernanke predicted that the housing market "will most likely
experience a gradual cooling rather than a sharp slowdown." In March
2007, "the impact on the broader economy and financial markets of the
problems in the subprime market seems likely to be contained."
Similarly, Secretary Paulson said in June 2007 that the crisis in the
mortgage markets "will not affect the economy overall," echoing the
views of the International Monetary Fund. And at Lehman Brothers'
annual shareholder meeting, I too said what I absolutely believed to
be true at the time - that the worst of the impact to the financial
markets was behind us. With the benefit of hindsight, I can now say
that I and many others were wrong. Far from the credit crisis being
contained, we now exist in a world where there are no major
independent investment banks; where AIG, Fannie Mae and Freddie Mac
are under government control; where we are seeing the largest bank
seizures in history; and where we are struggling daily to stabilize
the financial system. These events have been as stunning as they have
been swift. On September 14, there were four major stand-alone
investment banks, and they were considered essential for the flow of
capital to and investment in American business. Within a week, there
were none. Since July of this year, nine banks across the United
States have been taken over by government regulators. Creditors and
shareholders have lost money on their investments, employees in the
financial industry - from support staff, administrative professionals,
and recent college graduates to thirty-year veterans - have already
lost jobs. Around our country, workers in industries dependent upon
the flow of credit fear they could be next."
Fortunately we're able to produce a track record across various media
of having forecast just such a scenario. We don't claim to be alone in
that as a few others were certainly sounding the alarms but we were
vociferously consistent while remaining specific and exposed the
mainstream financial media as the Wall St. cheerleaders that they are
in fact are and remain.
We include a few choice pieces from Options University writers Ryan
Mastro, Gregory Wolfe and their ethereal colleague "The Grayman":
A snippet from Ryan Mastro writing in The Option Specialist January
2008 issue:

There are too many factors to go into of why this is not the right
thing to do and why the Federal Reserve is just a puppet to the big
banks. The reason why this band-aid will only help in the short term
is that with rates decreasing banks can borrow money at a cheaper
rate. The lower the interest rates are the looser the lending
practices become. This is what we saw with the last housing bubble.
Short term rates were cheap, long term rates were relatively cheap
allowing people to finance and refinance exorbitant amounts of debt in
their house. They used their houses as ATM's. I am all for using
equity in smart ways. I suggest keeping about a max of 25% equity in
your house and using the balance to create wealth in other ways. But
back to the economy. SO to bail out themselves, banks need to get the
interest rates down to a level where investors will start to purchase
mortgage backed securities that offer a little higher rate than
average. The problem is now why would anyone get into a risky mortgage
backed security or CDO (Collateralized Debt Obligation) for slightly
better than average return? You wouldn't! There needs to be a complete
flush out of these old products. New standards and new risk measures
have to be installed to reduce the risk for the average investor to
get back into the murky waters. Banks are on the hook for all of the
CDO's on their books at this time and there is still more to come.
This interest cut will not get people interested in the CDO's until
the risk is reduced. The banks cannot sell these worthless pieces of
paper to anyone so it is forcing them to write them down. We are now
getting numb to the fact the banks are writing down multi-billion
dollar quarters. How many years does it take to get back those
billions of dollars in revenue? I think the banks are insolvent at
this point, but the Fed will print as many dollars as possible to keep
the major banks afloat. They will also force banks to merge to hide
the carnage. Case in point is the Countrywide deal. If Countrywide
failed, we would have even larger problems.

From Gregory Wolfe in The Option Specialist May 2008 issue:

Add to all of this the weak fundamental picture that remains, and the
constantly amended financial write-downs and the "worst is over" kool-
aid could be souring in the stomachs of even the most ardent and
gullible sheep. Sorry, I meant bulls. What the matter of the next
couple of months really boils down to is: Who and what is going to
save the markets this time? Since October, the two times that the INDU
approached 20% correction from its highs, surprise stimulus and
liquidity measures were miraculously revealed from Washington (the
second of which was predicted the day before it happened in the OUS
forum). A 20% retracement, of course, is an official bear market. Now
I am no conspiracy guy, I even believe that we really landed on the
moon, but it just seems a little coincidental that these measures were
taken while we are in an election year, especially in an election year
where there is widespread public dissatisfaction with the incumbent
party.

A cutting from Warning Signs, the Grayman's column from The Option
Specialist March 2008 issue:
The Grayman isn't absolving any of the culprits in this mess but
unfortunately the damage has already been done. The really good news
is that Washington will now subsidize not only the crooks on Wall St.
but many foolish consumers as well. "Socialist Creep" had now become
"Socialist Ramp". It seems as though a bailout is on the way for
virtually every one and every group in "Bailout Nation". The f.r.e.e
market will continue to take the majority of the blame and socialism
will continue to win out. The irony is that the reckless intervention
and manipulation by Washington and the FED combined with a
practically worthless federal government are really what caused our
current problems more so than anything else. The beauty of it all from
their perspective is that they now have the f.r.e.e market set to play
the "Fall Guy."

How would the Grayman like this to be resolved? As Quixotic as it may
be, we're calling for an "unwind" here. We'd like to see all of the
players that participated in this tragedy be made to pay for it. That
includes- but is not limited to- all the agents, brokers, loan
officers, inspectors, appraisers, attorneys, Wall St. salesmen et al.
They had the party and they should experience the hangover. The more
rational and reasonable investors who did not indulge in the mania
shouldn't have to purchase the black coffee for these greedy
opportunists let alone be responsible for nursing them back to health.
If the government can build an Atom bomb, fake a moon landing, and
keep a straight face about inflation being under control, then they
should be able to find enough bean counters to reconstruct the housing
bubble larceny to its sources and leave the rest of us alone.

Finally one more blurb from Warning Signs, the Grayman's column from
The Option Specialist May 2008 issue:

The financials will be back on center stage again very shortly. We
know that some hall of fame level shenanigans have been perpetrated in
that sector to prop things up but we're curious to see if it can last.
We know that all stops will be pulled to keep the charade going but
we've found it interesting that commentators have begun to suggest
that things will appear to have gotten better for the financials over
the past quarter. Reality would argue otherwise as would our research
but if investors are indeed optimistically looking towards this next
round of reports that sets up potential for serious downside
fireworks. Just as the warranted concern last time around served to
propel the financials higher on the subsequent manipulation, the
opposite could occur very shortly when the reports really start to
come out.

BUT, let's get back to the present. We take no pleasure from actually
witnessing in real time some of our worst economic fears become
manifest. We're writing to implore investors to become familiar with
even just a moderate body of practical options knowledge and a
reasonable dose of our "alternative" commentary because that would
have allowed investors to not only protect their portfolios, but
depending upon the level of aggressiveness, possibly permitted sizable
gains in this bear market environment.

We encourage everybody to explore things further at http://adcurl.com/s65
(Go to Newsletter at the bottom).

Options aren't nearly as risky and inaccessible as they've been
purported to be and learning how to use them the right way has never
been as convenient, nor as critical as it is today.

Pierre Pienaar
Xcellence Wealth Creator
Box 30662 WINDHOEK NAMIBIA
Tel: 264 61 243704. Fax: 264 61 247037 (GMT 1+)
E-mail: p...@i...na, mailto:x...@g...com
Skype: xcelwealth
Internet Million Dollars Wealth Blog: http://adcurl.com/f60
Your Ultimate Wealth Creator Blog: http://adcurl.com/m84
Option Profits Blog: http://adcurl.com/v70
Profitable Trading Plan: Click now http://adcurl.com/p41
Xcellence Profitable Forex Trading Tools: http://adcurl.com/u37
Profitable Forex Trading Biz - http://adcurl.com/v13
Wealth Building Website: http://adcurl.com/g42
The Free Internet Million Dollar Newsletter, click now http://adcurl.com/s20
Invitation to join the Xcellence Wealth Creation Group on LinkedIn -
Here's the link to join: http://adcurl.com/v91