Here are a few predictions:
1. The Dow Jones Industrials will drop hundreds of points in a day, very soon, losing at least 3,000 points within the next few weeks.
2. The Shanghai stock market will lose half its value, dropping from 5,800 to under 3,000.
3. Major banks will be declared insolvent.
4. Major lay-offs will occur as U.S. retail, auto and house sales plummet.
5. The tech high-fliers (RIMM, GOOG and AAPL) fall will precipitously
The Bear's Lair: Level 3 Decimation?
Level 3 assets have only unobservable inputs to measure value and are thus valued by reference to the banks’ own models.
There has been no rush to disclose Level 3 assets in advance of the first quarter in which it becomes compulsory, probably that ending in February or March 2008. Figures that have been disclosed show Lehman with $22 billion in Level 3 assets, 100% of capital, Bear Stearns with $20 billion, 155% of capital and J.P. Morgan Chase with about $60 billion, 50% of capital.The Next Worry: Bond Insurers
[ACA Capital (ACA)] claims it has $1 billion in capital it could use for potential payouts if the CDOs it insures go bad. Yet it has sold coverage worth nearly $16 billion, with most policies written for CDOs created in the past couple of years.
Shorting/Buying Puts: DB, GS, MER, C, JPM, AIG, ACA, and ABK.
1 comment:
Bold calls, but I'm short myself so I won't argue. Does your going short affect the water purification plays mentioned 11/2? If you ever have the time I'd like to read your water thoughts in general as well as more specifics on your water purification plays. Most water plays, the ETFs at least, seem overbought and ripe to go down with an overall market correction. They would bounce back sooner though and then would be a prime time to go long and hold.
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