Bear Stearns sells out for 2 bucks a share. The biggest bailout of all time is coming

Parent Cafe
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<p>Last summer was the time to buy the put options.</p>

<p>“Buy on the rumor, sell on the news”?</p>

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<p>I’m short some puts. Not my usual amount though. ;)</p>

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<p>J.P. Morgan is Bear’s clearing bank (look up what that means)</p>

<p>Phone calls:</p>

<p>JP Morgan to Bear: Hello Bear. You don’t have enough money in your account.</p>

<p>Bear to JP Morgan: Hi Morgan. Yeah we know. You got a BIG problem.</p>

<p>click, and another dial, </p>

<p>JP Morgan to The Fed: Hi Fed. We BOTH got A BIG problem.</p>

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<p><a href=“http://www.dailygalaxy.com/photos/uncategorized/2007/10/21/iceberg_3.jpg[/url]”>http://www.dailygalaxy.com/photos/uncategorized/2007/10/21/iceberg_3.jpg&lt;/a&gt;&lt;/p&gt;

<p>I think that picture is a good indication of what is coming.</p>

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<p>The Asian markets are getting slaughtered right now. Nikkei down 3.5%.</p>

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<p>Exactly. Is the fact that Bush and Paulson signed off on the Morgan/Bear
deal supposed to make me feel better? Shrinky Dink on the greenback.
So I guess we can expect this to be called the St Patrick’s Day massacre?</p>

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<p>Well I suppose this is another good example of why you should never hold significant holdings in the company you work for because, as will likely happen to some starting tomorrow, you could be out your job and your wealth. Once the bell rings tomorrow morning BS shares will be worth about 2% of what they were just a few weeks ago…</p>

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<p>One part of me says the newbies to IB and trading are gonna remember this
for a long time…the adrenalin rush and all the jib jab. Another part of me
says the smell of fear will be pungent as the folks enter the street tomorrow.</p>

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<p>

Be careful. Just asked my H, fortunately he cleared all of our positions (short, long, put/call options, etc.) last Friday when he read the news. He was planning to do the same as you, I gave the same words. With kid go to college this fall, home mortgage, and the job security in looming, we can’t take any risk.</p>

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<p>

What about china market? For those hold china company shares, sell before Summer Olympic. Rumor is china government support the market until Olympic.</p>

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<p>Now is the time to buy & hold stock for the long term (as if there is any time when you shouldn’t) but I’d stay far away from the market if I planned on holding stock for the short term or had any big financial obligations coming up.</p>

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<p>I suppose this is also a good lesson for why portfolio diversification is super important. There are some folks out there that will lose most of their life savings when the opening bell rings this morning simply because they had too much of their assets in one investment (99% of the value of Bear literally vaporized in the last few days). However someone with a well diversified portfolio (e.g. no more than about 5% of assets in any one company) will only take a hit of a few percent today… not nice but far from a disaster.</p>

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<p>In 1980, when Chrysler was bailed out, Tom Paxton wrote a song about it. Putting Bear Stearns in the place of Chrysler doesn’t sound as good…but the sentiment is the same:</p>

<p>"Oh the price of gold is rising out of sight
And the dollar is in sorry shape tonight
What the dollar used to get us
Now won’t buy a head of lettuce
No the economic forecast isn’t right
But amidst the clouds I spot a shining ray</p>

<p>I can even glimpse a new and better way
And I’ve devised a plan of action
Worked it down to the last fraction
And I’m going into action here today</p>

<p>CHORUS:
I am changing my name to Chrysler
I am going down to Washington D.C.
I will tell some power broker
What they did for Iacocca
Will be perfectly acceptable to me
I am changing my name to Chrysler
I am headed for that great receiving line
So when they hand a million grand out
I’ll be standing with my hand out
Yes sir-ee I’ll get mine"</p>

<p>Here’s a link to all of the lyrics: [LYRICS</a> - I’m Changing My Name to Chrysler](<a href=“http://www.arlo.net/resources/lyrics/chrysler.shtml]LYRICS”>http://www.arlo.net/resources/lyrics/chrysler.shtml)</p>

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<p>Well so much for the red…prior to noon and Dow is already in the green.
Death by a thousand cuts or delay the blood until tomorrow?</p>

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<p>I don’t know who to blame more…</p>

<p>The Repubs/Fed want to prop up investment banks.
The Dems want to prop up induhvidual homeowners.</p>

<p>I don’t want any of my tax dollars going towards these bandaids.
Let the self-cleaning oven work its magic!</p>

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<p>As much as I like to hate them, IBs do serve a major function in our economy which is providing capital to companies at the lowest cost. When they try to expand that role into dealing with the general public or just churning deals is when they get into trouble and become a negative force.</p>

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<p>The only true winners are the vultures…the lawyers are swarming!
[Stunned</a> Bear investors eye legal claims: Financial News - Yahoo! Finance](<a href=“Yahoo Finance - Stock Market Live, Quotes, Business & Finance News”>Yahoo Finance - Stock Market Live, Quotes, Business & Finance News)</p>

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<p>Talk about suing an empty shell. What do they expect to get? There is nothing left but a mountain of laptops and blackberries and guys in snappy suits looking vacant and forlorn with their Ivy diploma hanging on the wall. Makes you smile just a little.</p>

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<p>What about their personal assets? Can they go after the CEOs and top executives a la Enron?</p>

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<p>Tonight on cnbc at 8:00 pm they are having a special called “Is Your Money Safe?” This may be interesting to some who have questions.</p>