on the road to riches

Man, oh man, oh man.

I go away for a few days to Minnesota on business and the whole world goes to hell.  Not really the whole world unless your name is Eliot Spitzer aka Client 9 or if you held significant shares in Bear Stearns.  Damn, I guess I should have been asking him where the ho’s were.  You know how they say opposites attract….well if client 9 is a Spitzer – would that make his $5K friend a  _ w _ l l _ r ….hehehehehe

I would assume that there is some serious high-fiving being done by the Greenberg boys (Hank and son Jeff).  You probably don’t remember that Client 9 led an aggressive investigation that led to the ouster of the CEObergs – Hank (AIG) and Jeff (Marsh) for a series of financial improprieties.

In all seriousness, Spitzer was very effective at bringing a sense of reality to Wall Street.  His work on improper trading, bid fixing and subprime intuition were all right on.  It’s sad that he is now best known as the butt of many jokes rather than making Wall Street a safer place for you and me.

Speaking of Wall Street, gotta love the Bear Stearns debacle.  Happy St. Patty’s day you fucksticks!

What the FUCK!

Here is a company that prior to the subprime mortgage issue was trading at $171 a share a recently as January 2007.  Heck on March 11, 2008 it was trading at almost $63.00 – FYI the same day, repeat after me, same day, that the well known CNBC stock hawker (Cramer) was recommending not pulling your cake outta Bear Stearns.  Oops so much for that insight.

Zoom forward a week – On 3/17 after a significant save by the Fed, Bear Stearns was acquired by JP Morgan for $2 a share on Monday pending votes and all that legal shit. 

Good news is that the stock hit a high of $8 a share on the 18th.  So right now if you dumped your BS portfolio you’d only lose $55 per share.  My recommendation – hold it and hope that JPM increases their original offer.  Then again I’ve read the Call Transcript from JP Morgan regarding the Bear Stearns acquisition and this particular exchange jumped out at me:

Guy M – Merill Lynch

That’s fair enough thank you. Let me just follow up with one last question. On the mortgage businesses as you sort of compare what you already had in place in terms of the capital market side of your mortgage business and what you find at Bear how much overlap is there? How complementary are their platforms with your own?

Steve Black – JP Morgan, Co-Head Investment Bank

Guy, we’ve actually had a chance to be in there for exactly a day and a half. So I’d say it is probably too early to tell but clearly they’ve had an outstanding platform for an extended period of time. We have been growing and building ours. We’ll go in and do what we always do and figure out where it is complementary. Where there might be some overlap. What we think the normalized business looks like over the next 12, 18 to 24 months and then make the appropriate alternations that need to be made at that time. But it is way too early for us to tell at this stage.

Needless to say, a very, very good strong business and one that in the long run will be very additive and as you know from the conversations we had at investor day it is a business we are looking to pick up market share in and it is a great environment to be able to do that.Michael Cavanagh – JP Morgan, CFOGuy as you can see on page five to the first part of your question, the commercial mortgage backed security, prime and sub prime disclosures are not dissimilar in size to JP Morgan’s. Thehedging approach at Bear Stearns was not dissimilar to JP Morgan. As we stated on investor day we felt that we had not as much of that exposure as we really wanted to carry and hence the decent chunk of the mortgage related risk positions at Bear Stearns are being financed with the FED on non-recourse facility.

Guy M. – Merill Lynch Analyst

Just to cap it off, it certainly doesn’t sound as if when you went in there you found a massive problem with respect to risk management or hedging. It sounds like, given what you are saying it is very similar to your own, it sounds like you’ve found something you are fundamentally comfortable with. Is that fair?

Michael Cavanagh

That’s correct. To say that it was a very well run, tight operation with good risk controls and a risk discipline that was very similar to our own.

Ok, let me get this straight – the CFO of JP Morgan is saying the Bear Stearns was a well run, tight operation with good risk controls and discipline….same as JP Morgan. 

Hmmm as an investor, how would I feel about watching my investment go from $63 to $2 per share in one week.  How inclined would you be to believe Mr.  Cavanagh.  But what the fuck do I know, they’re the ones making multi-millions every year as thousands of investors watch their life savings get pissed away by meglo-maniacal fucksticks.

But I digress.  Here’s the deal folks, when investing in stock or anything else, use your head and always remember the saying – “Buyer Beware.” 

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