Saturday, May 12, 2012

Nah, More Like 1999

Perhaps the JPM fiasco and London Whale patsy is reminiscent of the Soc Gen "rogue trader"from a few years ago.  On Tuesday Dimon was telling analysts all is well, and on Thursday, we find out that he has been giving the finger to Congress, the SEC, and his own shareholders by running CDS trades (hedge would be kind) on European debt.  Don't be shocked by what will amount to an $800 million dollar loss (for now, after selling other assets against the loss but before the trade is unwound).  Don't be shocked that JPM and the never ending BS we have to hear about its "fortress balance sheet" could have a London office trading hundreds of billions of dollars.  Only be shocked that it took this long for a major bank to blow itself up or if you were dumb enough to believe that any of these fuckers had learned their lesson.

No, what I think is more important to realize is the massive fluctuations we're seeing in individual stock prices, particularly to the downside, after enormous gains the last few years.  Just last week Green Mountain (GMCR) fell 50% in a day after an already 60% decline over the last few months.  And this is a company that actually makes money.  First Solar (which we shorted at $175 and $125 for gains but didn't have the courage of Chanos to ride all the way) is now a $16 stock.  Pick your internet IPO loser from last year, Groupon and Pandora quickly come to mind.  Thanks to Apple, RIMM is now an $11 stock and Nokia is threatening $3.  Nothing like waking up and finding out the stock you bought was overvalued by 50% when you went to bed last night.

This shouldn't happen in a healthy market, this only happens in the casino.  The big difference is the ever looming possibility of QE infinity (Bill Gross said yesterday expect QEs 3&4 in short order), which says the worse things are, the better the market will do.  Hmm, sure feels like 1999 in here though.  Is JDSU $700 still?  I better get in before it's too late.