From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #394 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Saturday, September 26 1998 Volume 02 : Number 394 In this issue: Re: Fw: [CANSLIM] Long Term Asset Sales [CANSLIM] More LTCB stuff Re: [CANSLIM] Long Term Asset Sales [CANSLIM] On "M"; Greenspan; etc. [CANSLIM] OFF TOPIC: Market Levity [CANSLIM] LTCM / Interest Rate Cut Question Re: [CANSLIM] M [CANSLIM] New York Times article on LTCM Re: [CANSLIM] On "M"; Greenspan; etc Re: [CANSLIM] On "M"; Greenspan; etc Re: [CANSLIM] On "M"; Greenspan; etc Re: [CANSLIM] M Re: [CANSLIM] Long Term Asset Sales Re: [CANSLIM] M Re: [CANSLIM] M [CANSLIM] LTCM Re: Fw: [CANSLIM] Long Term Asset Sales Re: Fw: [CANSLIM] Long Term Asset Sales ---------------------------------------------------------------------- Date: Fri, 25 Sep 1998 22:59:17 -0400 From: "Frank V. Wolynski" Subject: Re: Fw: [CANSLIM] Long Term Asset Sales At 14:29 9/26/98 +1200, you wrote: >I was expecting a bloodbath for Wall Street on Friday. But the market is >already antcipating an interest rate cut, helps the banks make more money on >the long term interest rate yield curve. The FED comes to the rescue and >saves the world! >My own cynical opinion, they should let them go under along with any other >hedge fund who has losses, forcing the banks to call in their loans, >creating a nice credit crunch for the economy. Then we would get a healthy >bear correction instead of these fake rallies. Once and for all, put an end >to this long slow torturous bear market! > Ditto. Let's recap, Japanese Prime Minister gets lecture from Clinton concerning proping up insolvent banking system. US even dusts off the old 80's story of how the resolution trust saved america from the S&L's and we are better off for it. Closed them down and sold off the assets. "Emporor has no clothes", indeed! Not that I want to see our financial system fail. I think there are excesses abundant and a cleansing is necessary to maintain health of the solvent and profitable. Daytraders making money in these markets. Also, Russian mafia, overexposed hedge funds, mismanaged foreign governments and Clintons 44 lawyers. I don't want to seem overly bearish, but I think the plan has to be, break to them gently, let it bleed slowly. Kinda the Bear in Bulls clothing approach! Frank Wolynski (CANSLIM in the closet, studying daytraders and tactics!) - - ------------------------------ Date: Fri, 25 Sep 1998 23:36:43 -0400 From: "Frank V. Wolynski" Subject: [CANSLIM] More LTCB stuff Welcome to The Greater Fool!=20 Open Letter to the Fed September 24, 1998 Messrs. Alan Greenspan and William McDonough Board of Governors Federal Reserve System Washington, DC 20551 Gentlemen: It was with great pleasure that we read in this morning=92s Wall Street Journal of your decision to help alleviate the unfortunate and unnecessar= y loss incurred by the investors and creditors of Long Term Capital Management LP. The rapid and unforesee= n decline in global markets has made it hard for all of us to master this universe. Your decision to intervene yesterday will certainly help Long Term Capital raise the funds necessary to buy into this unusually large dip. Americans everywhere are thankful for having such a thoughtful and forward-looking Federal Reserve System. We are writing you to inform you of our own investment losses of late (though, most unfairly, our losses have not been on the cover of BusinessWeek). The following is a list of reasons for this loss, which, we think, is not unlike that of Long Term=92= s:=20 - -We owned a large sum of derivatives, fully convinced of the smooth and continuous pricing of the markets. Our blind faith in Black Scholes model= s remains intact. - -Our models are perfect. It is the market=92s fault for not following the= m, not ours.=20 - -We were clueless regarding the nature of gamma risk. We are still a litt= le fuzzy on this.=20 - -We have never lived through a bear market, nor do we think we need one n= ow.=20 - -We have never read anything written by Nicolai Kondratieff, Sidney Homer= , Benjamin Graham, Alexander Dana Noyes, Robert Rhea, Ralph Elliott, or anyone else with a sense of history. History is a waste of time.=20 - -We invested heavily in junk bonds, especially those issued by countries which cannot be located on a map by our crack research department. We nev= er understood why people called them junk to begin with.=20 We think you=92re doing a great job, and we think you=92ll cut rates (win= k, wink, nudge, nudge). We think this will be pure gravy for all of us, and = we can=92t wait to buy more junk bonds on margin.=20 Enclosed you will find a more detailed list of our losses since mid-summe= r. Please enclose your check (payable to TheGreaterFool.com LLC) in the self-addressed stamped envelope provided.=20 Sincerely, TheGreaterFools P.S. Do you have the IMF=92s address? Enclosures Cc: Mr. David Komansky, chairman, Merrill Lynch & Co. Mr. Sanford I. Weill, chairman, Travelers Group Mr. Jon Corzine, senior partner, Goldman Sachs & Co. Mr. Douglas Warner, chairman, J. P. Morgan & Co. Mr. John Merriwether, general partner, Long Term Capital Management LP - - ------------------------------ Date: Sat, 26 Sep 98 00:09:43 PDT From: "Walter Stock" Subject: Re: [CANSLIM] Long Term Asset Sales > My own cynical opinion, they should let them go under along with any = other > hedge fund who has losses, forcing the banks to call in their loans, > creating a nice credit crunch for the economy. Then we would get a heal= thy > bear correction instead of these fake rallies. Once and for all, put = an end > to this long slow torturous bear market! Hi Dean, I don't think your view is cynical at all. Perhaps it is because I am = at heart a contrarian, but when I first read about it, this bailout made absolutel= y no sense. After all when you or I have a trading loss, the Fed doesn't show up on our doorstep to organize cash infusions. And no, its not just because we are small fry, and this hedge fund is a big kahuna.... Remember that the US Treasury, the Federal Reserve and even Clinton have all been hammering the Japanese for months to resolve their banking = problems, and not through a bailout but by letting the weakest institutions go unde= r (and without saddling the stronger banks with the weak banks' bad debts). So what happens? The Fed does the exact opposite of its own sermonizing and bails not a bank, but a hedge fund. A hedge fund !?!?!? Doesn't it know that it may create a stampede with every hedgie manager burned by the emerging markets pounding at the door, demanding his/her fair share of Fed time and largesse? There is only one way all of this makes sense. I harken back to my Macro-Economics 202 : the Fed has more, and better, and fresher financial information than any other institution or person in the world. The Fed leadership simply has access to data and to the big picture that = others only get weeks or months later (if at all). IMHO to make this kind of unprecedented move, the Fed must have looked = into their data, and seen something immense (and dangerous). The following was in one of the newswires on quote.yahoo.com tonight: But even as the fund and its bankers struggled to contain the damag= e, a fierce debate was raging in U.S. financial markets about the wisdom= of a rescue package that raises questions about the integrity of free = markets and ultimately may succeed only in prolonging the agony of the hedg= e fund and the financial markets at large. "It sends very questionable signals about our markets. We tell other countries that capital cronyism is bad and then we do something similar,'' said Richard Schwartz, who oversees $22 billion in bonds = at New York Life Asset Management. --- Reuters Walter Stock Oakville, ONT - Canada - - ------------------------------ Date: Sat, 26 Sep 1998 07:36:37 -0400 From: Jeffry White <"postwhit@sover.net"@sover.net> Subject: [CANSLIM] On "M"; Greenspan; etc. > I'm impressed with Jeffry's analysis that > Thursday looked like it would shape up to be a distribution day. He > had the nail on the head, and I was taken by surprise. However, I kept > my money in my pocket. But, it wasn't a "distribution day" in the WON sense, Dan. Just a down day, more of a TA phenomenon on the "bear flag"/"wedge" formation we are in. Bounced right of that trendline of that formation, and the 200 day moving average. Of course, everytime I make a comment on "M" lately, I open up IBD and read some contradiction to what I've come to trust over the years. Time to cancel the subscription, I think. My call was for a gap up open and a close lower to unchanged on the day with an increase in volume. True 'distribution days' must show that increase in volume over the prior day's trade. That we did not see. Jeffry BTW, I don't like this market. - - ------------------------------ Date: Sat, 26 Sep 1998 09:00:16 -0500 (CDT) From: mckeener@ix.netcom.com Subject: [CANSLIM] OFF TOPIC: Market Levity Tim Fisher, This is great. Many thanks. Mary Keener - - ------------------------------ Date: Sat, 26 Sep 1998 10:48:11 -0400 From: "Frank V. Wolynski" Subject: [CANSLIM] LTCM / Interest Rate Cut Question The article in the NYT indicated that the banks themselves may have positions similar to LTCM's in regards to T Bonds. Shorted them that is. Would not a drop in interest rates worsen the problem of the spread? What foreign firms have exposure similar? Couldn't this set off the very thing they were attempting to avoid by rescueing LTCM? Perhaps if on the right side of their futures/derivatives positions a run up in the stocks could offset the rate spread position, until they unwind some of it, but I highly doubt their market bets are any better than their bond positions! Frank Wolynski - - ------------------------------ Date: Fri, 25 Sep 1998 22:35:32 -0400 From: "Frank V. Wolynski" Subject: Re: [CANSLIM] M At 13:21 9/26/98 +1200, you wrote: >They say the market rises on a wall of worry. So the article below must be >healthy for the market :-) Does anyone think this have any impact on the US >market. If not, why is the Federal Reserve getting involved then? >Where there is one cockroack lurking in the cup-board, there is usually more >to be found. Methinks there might be some Japanese banks invovled as well. I think it will take October to undercover what is being left out here. We only know what they had to tell us! Why else would AG have reversed his stance on interest rates in only one week! He's had one heck of a week I'll wager! I think the Fed will lower rates Tuesday, probably by 1/2%. What choice do they have, outright financial system collapse or a bit of inflation down the road a piece? I'm puzzling over the backlashes and ripples that are left to unfold. Lower rates, weaker dollar, imports more expensive, exports cheaper. How do the foreign markets react and more importantly didn't their holdings of US Treasuries just get knocked by the weaker dollar? What effect does this have on China, South America? Germany won't like the rate cut. They have the conversion to Euro-dollars coming up in January and they don't need that instability right now. Geez what a mess! Damned banks! PHDs, Nobel laureates no less. Long Russian Bonds and short US Treasuries! A blind one armed monkey with cooties could have been drunk, unconcious and lost his bladder on the financial quotations and done better! ( Hey wait a minute, I think he's working at LTCM, never mind.) Long Russian Bonds and short US Treasuries! What the hell were they thinking? Next we'll hear how they went long Japan at 15,000, and shorted oil at $15 a barrel. I don't think they were using CANSLIM so the relevancy of my ramblings are free to ignore. Frank Wolynski - - ------------------------------ Date: Sat, 26 Sep 1998 10:43:02 -0400 From: "Frank V. Wolynski" Subject: [CANSLIM] New York Times article on LTCM Hedge Fund's Bets Top $1.2 Trillion By JOSEPH KAHN and PETER TRUELL The speculative investment fund rescued by a consortium of Wall Street banks this week made complex bets on international financial markets with a total value drastically higher than previously estimated, financiers who studied its books said Friday. They said the fund, Long-Term Capital Management, used its $2.2 billion in capital from investors as collateral to buy $125 billion in securities, and then used those securities as collateral to enter into exotic financial transactions worth $1.25 trillion. Long-Term Capital's portfolio had been previously estimated at $90 billion. Using such a small amount of money to gamble on transactions worth far more is extraordinary even in Long-Term Capital's risky world of hedge funds, the largely unregulated pools of investment funds now receiving increased Government scrutiny. How and why bankers who dealt with Long-Term Capital allowed it to make such astonishing bets remains unclear. [News analysis, page B1.] The financiers who studied Long-Term Capital's books said the hedge fund had sold some positions since the end of August, reducing the total size of its holdings. Before it was taken over by the consortium of banks and brokerage houses Wednesday, Long-Term Capital also used up much of its capital base to pay loans. Those people said the hedge fund's capital base had shrunk to $600 million and its securities holdings to about $100 billion before the creditors took control of the fund with a $3.5 billion bailout package. But the look at the accounting books of Long-Term Capital at the end of August provides a glimpse into its operating style. It also shows the extent to which the hedge fund's backers, including many of the leading Wall Street investment banks, allowed the fund's star manager, John W. Meriwether, to amass such an enormous speculative portfolio. In part because of Long-Term's Capital huge exposure to financial markets, and worries that a collapse could destabilize financial markets around the world, banks that did business with the fund elected to arrange a bailout and assume control of it rather than let the fund fail. Some Wall Street executives said the total quantity of securities held by Long-Term Capital would have been difficult to sell. That is especially true since the securities were used as collateral for the $1.25 trillion in derivatives and forward contracts, in many cases bets on the direction of interest rates and bond prices. The fact that Long-Term Capital took huge risks through derivatives and forward contracts does not mean that its collapse would have resulted in losses equivalent to their total value. But the sheer size of the fund's bets made them difficult to unravel,without unsettling the markets that Meriwhether gambled in. Especially when the market is moving against the trades, as they were in Long-Term Capital's case, selling its derivatives and futures contracts might have proven prohibitively costly for the banks that had money at stake. To offer a comparison, when the venerable British investment bank Barings P.L.C. collapsed three years ago, a rogue trader in its ranks had gambled on changes in prices of Japanese Government bonds and the direction of Japanese interest rates through financial instruments worth$30 billion. When the bonds and interest rates moved in the other direction of the bets Barings had made and those contracts tumbled in value, Baringsfaced losses of $1 billion and collapsed. Long-Term Capital's total exposure to financial market bets was about 40 times that of Barings and it did not have much more capital than Barings did. In a further sign of the Government's concern over how Long-Term Capital's near-collapse happened, Treasury Secretary Robert E. Rubin announced late Friday that United States agencies responsible for supervising financial markets would conduct a study on hedge funds and their relationships with creditors. In a statement issued after markets had closed, Rubin said the Treasury Department had been closely following developments related to Long-Term Capital. Congressional Republicans also announced they would hold hearings exploring all aspects of the hedge fund industry, including regulation and supervision. In comments earlier Friday, Rubin disputed the idea that hedge funds should be regulated like banks and put under some form of Government control. "I don't think it is a question of reining people in," Rubin told reporters in Washington. But he said Long-Term Capital's situation had raised some concerns. "There are questions about disclosure and other issues, and my guess is there will be a lot of discussion and debate about that," Rubin said. The fallout from Long-Term Capital's near collapse extended to Europe, with Dresdner Bank A.G. of Germany and Credit Suisse Group of Switzerland detailing losses from investment firm, which is based in Greenwich, Conn. But neither had exposure comparable to UBS A.G., Europe's largest bank, which took a $689 million charge against third-quarter earnings to write down its stake in the hedge fund, an adjustment that will probably cause the bank to post a loss for the quarter. Some European markets were also off sharply. United States stock markets fell in early trading but recovered to post a solid gain. Investors were nervously watching developments to determine whether other big players in the universe of 3,000 hedge funds, many of which had bond market positions not unlike those of Long-Term Capital, would face pressure from banks to sell securities to pay off margin loans, potentially weakening the already-fragile world bond market. Peter Bakstansky, a spokesman for the New York Federal Reserve, which arranged the private-sector rescue of Long-Term Capital, was cautious when asked if there might be other hedge funds that were at risk or if the bailout of Long-Term Capital had succeeded. But he indicated that initial signs were good. "The firm is operating," he said, "and the market reaction at this point seems to be reasonable." The New York Fed pulled together the consortium of private banks and brokerage houses early this week to rescue Long-Term Capital. Fed officials said they feared that a sudden liquidation of the hedge fund's holdings might send shock waves through the world financial system. But the Fed's quick action to save the hedge fund from collapse has raised other questions. Some Wall Street bankers say privately that they felt strong-armed by the Government into putting up the $3.5 billion for the bailout. Bakstansky, the spokesman for the New York Fed, denies this, saying some banks chose not to participate in the bailout and that the Fed had no way of forcing them to partake. But perhaps the main question raised early on in the takeover of Long-Term Capital was how so many well-regulated and risk-conscious banks could have leant so much money to a single speculative investor, albeit one with a stellar track record for producing outsized return in recent years. Even if hedge funds escape direct regulation as a result of the Long-Term Capital bailout, regulators seem certain to scrutinize the links between banks and hedge funds. Banks provide much of the capital the hedge funds need to take highly leveraged positions in stock, bond and currency markets. The Financial Services Authority of Britain has ordered 55 banks and other financial institutions to provide information on their exposure to Long-Term Capital and to other hedge funds. Swiss bank regulators asked UBS for details about its involvement in Long-Term Capital. The consortium of financial institutions participating in the rescue announced Friday that the duration of their recapitalization was three years, suggesting that they expected a slow resolution of the firm's trading positions. An oversight committee is being formed at the direction of the consortium to include representatives of Goldman, Sachs; Merrill Lyunch; J. P. Morgan; Morgan Stanley Dean Witter; Travelers Group, and UBS. The oversight committee, which now controls 90 percent of the equity in Long-Term Capital, has assumed authority over all aspects of the Saturday, September 26, 1998 - - ------------------------------ Date: Sat, 26 Sep 1998 15:08:04 GMT From: musicant@autobahn.org (Dan Musicant) Subject: Re: [CANSLIM] On "M"; Greenspan; etc On Fri, 25 Sep 1998 19:22:08 +0200, you wrote: :>I get a case of the shoulda-couldas when I see what DELL and YHOO did :>off of their lows. Dell's up about 4% today over 65, off of a :>post-split low of around 40. Yahoo at 118 looks nice off of a low :>around 80. My oh my. : : :To make it even worse, Dan, just imagine that you had put your money in :DELL one year ago. Did almost nothing, except visit this list once in a :while... to laugh. : :Can you image the problems you would be having? Something like: (You :talking to your significant other) "What would you prefer darling, Maui = or :the Virgin Islands?" (Your SO) "Let me think about that on the palne to :Fort Meyers this weekend." : ::) I got a laugh out of this anyway, Johan! Believe me! And, you know what? I knew that Dell was the undisputed leader in it's then emerging group about 3 years ago when I REALLY could have made a bundle. I thought of plopping down my whole nest egg on it, but was at that point preparing to start my investments, and hadn't put the plan into motion. Well, I certainly had a good idea. I had a job and we used two Dell computers. I had need a few times to contact Dell technical support, and found that they were infinitely more helpful and easier to reach than Compac. They were top rated in surveys in PC Magazine. I saw the writing on the wall, but I wasn't ready. Maui or Virgin Islands? That's a tough call. I lived on Maui for 2 1/2 years, and would sure like to check it out again. Would like to be able to buy a house there. Dan :Johan Van Houtven / CLICK! N.V. : : : : :- musicant@autobahn.org - - ------------------------------ Date: Sat, 26 Sep 1998 15:29:41 GMT From: musicant@autobahn.org (Dan Musicant) Subject: Re: [CANSLIM] On "M"; Greenspan; etc On Fri, 25 Sep 1998 13:28:59 -0700 (PDT), you wrote: : But it's distracting to state that the market :"can't possibly" do such and such, or the market "just has to" do so :and so. Remember the decline and fall of Elaine Garzarelli? : :--Db : Last I heard Ms. G. was still on her perch. I know she enjoys a diminshed reputation on this list, but has she really fallen? She is still called in every 6 months or so to chirp and smile her predictions on PBS. Is she not a CEO?=20 Dan musicant@autobahn.org - - ------------------------------ Date: Sat, 26 Sep 1998 09:00:09 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] On "M"; Greenspan; etc <> She's still around, and memories are short, but she isn't accorded the oracle status she once had. A lot of people lost too much money. She didn't just stub her toe, she smashed into a glass door face first. <> Of her own company. She probably wouldn't have been so vilified if she hadn't been involved in so much arrogant self-promotion. I think Abby and Ralph are well aware of what happened there and are trying hard not to give the impression that they have a trunkline to God. Once they stumble, I suspect they'll be forgiven pretty quickly. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Sat, 26 Sep 1998 10:35:05 -0700 From: Tim Fisher Subject: Re: [CANSLIM] M Greenspan doesn't lower rates by 1/2%, only 1/4% at a time, so I say a quarter now and a quarter in Nov. at the next meeting. At 10:35 PM 9/25/98 -0400, you wrote: >I think the Fed will lower rates Tuesday, probably by 1/2%. >What choice do they have, outright financial system collapse or a bit of >inflation down the road a piece? > Tim Fisher, 1995 President, Pacific Fishery Biologists Ore-ROCK-On Rockhounding Web Site PFB Information mailto:tim@OreRockOn.com WWW http://OreRockOn.com - - ------------------------------ Date: Sat, 26 Sep 1998 18:59:17 GMT From: musicant@autobahn.org (Dan Musicant) Subject: Re: [CANSLIM] Long Term Asset Sales On Sat, 26 Sep 98 00:09:43 PDT, you wrote: : : "It sends very questionable signals about our markets. We tell = other : countries that capital cronyism is bad and then we do something : similar,'' said Richard Schwartz, who oversees $22 billion in bonds= at : New York Life Asset Management. --- Reuters : :Walter Stock :Oakville, ONT - Canada : I have not a deep insight into this, but saw a 5 minute piece on PBS about it where they interviewed a man close to the situation. "Cronyism" seems at least somewhat apt. What apparently took place is that a group of large banks were brought together and asked if they would not oversee the crisis. They elected to manage. What they get is liability and a chance to make a lot of money if the investments of the sinking hedge fund do reasonably well. They were willing to take that risk. It therefore looks like a consorted business decision. That's my take on this. They make it all seem like one of life's miraculous events, like the Dream Team, however. Perhaps it is, on some level. But it wouldn't surprise me if they don't make a bundle saving the sinking ship. Dan musicant@autobahn.org - - ------------------------------ Date: Sat, 26 Sep 1998 17:13:28 EDT From: Ssingh@aol.com Subject: Re: [CANSLIM] M Yes Tim. Why not 1/8, 1/16 or 1/32? In a message dated 9/26/98 1:41:00 PM Eastern Daylight Time, tim@orerockon.com writes: << Subj: Re: [CANSLIM] M Date: 9/26/98 1:41:00 PM Eastern Daylight Time From: tim@orerockon.com (Tim Fisher) Sender: owner-canslim@lists.xmission.com Reply-to: canslim@lists.xmission.com To: canslim@lists.xmission.com Greenspan doesn't lower rates by 1/2%, only 1/4% at a time, so I say a quarter now and a quarter in Nov. at the next meeting. At 10:35 PM 9/25/98 -0400, you wrote: >I think the Fed will lower rates Tuesday, probably by 1/2%. >What choice do they have, outright financial system collapse or a bit of >inflation down the road a piece? > Tim Fisher, 1995 President, Pacific Fishery Biologists Ore-ROCK-On Rockhounding Web Site PFB Information mailto:tim@OreRockOn.com WWW http://OreRockOn.com - >> - - ------------------------------ Date: Sat, 26 Sep 1998 15:16:44 -0700 From: Tim Fisher Subject: Re: [CANSLIM] M Look at the historic interest rate chart. Since Greenspan the decreases have been 1/4 pt. at a time, no more, no less. At 05:13 PM 9/26/98 -0400, you wrote: >Yes Tim. Why not 1/8, 1/16 or 1/32? > >In a message dated 9/26/98 1:41:00 PM Eastern Daylight Time, tim@orerockon.com >writes: > ><< Subj: Re: [CANSLIM] M > Date: 9/26/98 1:41:00 PM Eastern Daylight Time > From: tim@orerockon.com (Tim Fisher) > Sender: owner-canslim@lists.xmission.com > Reply-to: canslim@lists.xmission.com > To: canslim@lists.xmission.com > > Greenspan doesn't lower rates by 1/2%, only 1/4% at a time, so I say a >quarter > now and a quarter in Nov. at the next meeting. > > At 10:35 PM 9/25/98 -0400, you wrote: > >I think the Fed will lower rates Tuesday, probably by 1/2%. > >What choice do they have, outright financial system collapse or a bit of > >inflation down the road a piece? > > > > Tim Fisher, 1995 President, Pacific Fishery Biologists > Ore-ROCK-On Rockhounding Web Site > PFB Information > mailto:tim@OreRockOn.com > WWW http://OreRockOn.com > > - >> > >- > Tim Fisher, 1995 President, Pacific Fishery Biologists Ore-ROCK-On Rockhounding Web Site PFB Information mailto:tim@OreRockOn.com WWW http://OreRockOn.com - - ------------------------------ Date: Sat, 26 Sep 1998 11:43:01 +0200 From: Johan Van Houtven Subject: [CANSLIM] LTCM Dean, We are certainly climbing a wall of worry the last few weeks. I had to laugh a bit when I read the following comment about LTCM: "You can't put $4 Billion to work leveraged 20 to 1. But you won't be humiliated on the front pages of the WSJ and NYT like LTCM's Nobel Laureates, Harvard professors and former Salomon Liars' Poker players. If you kick yourself from time to time when you make an investing or trading mistake, just remember you didn't take your fund from $4 billion to $500 million in eight weeks. And you're probably not personally and professionally bankrupt as a consequence." The "eight weeks" is also interesting. This 'news' must have doing the rounds before it became news for the rest of us during the last few days. At 01:21 PM 26-09-98 +1200, you wrote: >They say the market rises on a wall of worry. So the article below must be >healthy for the market :-) Does anyone think this have any impact on the US >market. If not, why is the Federal Reserve getting involved then? >Where there is one cockroack lurking in the cup-board, there is usually more >to be found. Methinks there might be some Japanese banks invovled as well. > >$80b hedge fund threatened >Long Term Capital Management, one of the world's biggest hedge funds with >US$80 billion, could still collapse despite a bail-out brokered by the >Federal Reserve. > >The US fund was pluncked from the brink by a US3.75 billion bail-out >by at least 15 of the world's financial institutions. But its survival is >not certain and the fallout could be vast. > >This could have start to have a domino effect on US institutions and abroad. >There is a real systemic risk. The Federal Reserve is clearly worried. "That >is why they got involved," a Standard and Poor' Ratings Group director, >Tanya Azarchs, said. > >Financial stocks from Zurich to New York fell on concern that the full >extent of the damage -- both to Long-Term Capital's creditors and to other >hedge funds that followed similar strategies -- was not yet known. > >Early Friday, credit rating agencies Moody's Investors Service Inc. and >Standard & Poor's Corp. said they were reviewing all major U.S. and European >banks for possible downgrade. > >The Union Bank of Switzerland said it had already lost $US685 million from >its direct stake in LTCM and other financial institutions are expected to >follow suit. > > >``We're scrutinizing every bank with emerging markets exposures, hedge fund >exposures and other types of risky assets that could be impacted by these >huge market movements,'' said Christopher Mahoney, managing director at >Moody's. > >Long-Term's troubles raised concerns banks would pull back from all but the >highest-quality borrowers, triggering a worldwide liquidity crunch. > >``The credit cycle has definitely turned,'' said Tanya Azarchs, director at >Standard & Poor's. > >Standard & Poor's took the first shot at banks Friday by cutting its rating >on Bankers Trust Corp. senior debt to A-minus from A. It cited the bank's >heavy dealings with riskier clients. > >As banks and brokerages realign their securities portfolios to reflect a >risk-averse global financial environment, major western bond markets seem to >be holding strong. > >U.S. Treasuries were also higher late Friday. > >The LTCM debacle triggered fears that bad trades by the fund would lead to >more market turnoil since hedge funds typically make leveraged speculative >trades, often totalling more than 10 times the amount they initially put >down. > >TCM, which boasts Nobel laureates Myron Schoeles and Robert Merton among its >partners, was hit by massive losses on global markets in the flight to >quality after Russia defaulted on its domestic debt more than a month ago. > > - Reuter > > >- > > Johan Van Houtven / CLICK! N.V. - - ------------------------------ Date: Sat, 26 Sep 1998 11:51:00 +0200 From: Johan Van Houtven Subject: Re: Fw: [CANSLIM] Long Term Asset Sales >Once and for all, put an end >to this long slow torturous bear market! Remember that only 10 weeks ago we were at new market highs. Patience... ;^) >How To Tell The "Health" of the Stock Market At Any Time ... > >Check the New York Stock Exchange NYSE New Highs and New Lows every day. The >"New Highs" are the stocks that have traded higher than their 52 week high >price. The "New Lows" are stocks that have traded lower than their 52 week >low price. > >If the number of NYSE New Lows consistently remains below 30, then we are in >a relatively flat to strong market. > >If the number of NYSE New Lows consistently remains below 20, then we are in >a very strong (bull) market. > >If anyone has been making money in this market, let me know which stocks you >have been buying, besides the big caps. There must be a number of people who have been making big bucks in the medical and Internet sectors lately. (I'm not one of them.) Johan Van Houtven / CLICK! N.V. - - ------------------------------ Date: Sun, 27 Sep 1998 00:09:21 -0400 From: "Frank V. Wolynski" Subject: Re: Fw: [CANSLIM] Long Term Asset Sales At 11:51 9/26/98 +0200, you wrote: >>Once and for all, put an end >>to this long slow torturous bear market! > >Remember that only 10 weeks ago we were at new market highs. Patience... ;^) > Maybe for the narrow 'Blue Chips', but the Russell 2K hit its high on 4/21 and hasn't been back since. Since the R2000 stocks are populated with the types of stocks that would qualify as a canslim candidate, it seems like it has been going on for a longer than 10 weeks. Regards, Frank Wolynski - - ------------------------------ End of canslim-digest V2 #394 ***************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.