Brace Yourselves For Another Stock Market Dive On Monday

[g5000]

The Brent crude price right now is $37.07 and falling. It's dropped nearly 20 percent today.

 

[g5000]

It's looking like it is going to end up somewhere between 700 points to 1,200 points up over yesterday as more and more people realize that Left Stream Media tried to create a hoax panic and some people fell for it.

How you feeling now?

This too shall pass.

.

What I worry about are derivatives which amplify losses. There could be a hedge fund or bank out there which is overleveraged and on the brink of shocking the entire system.

Like Warren Buffet said, “You only find out who is swimming naked when the tide goes out.”

This will pass, but when? If I was pushing retirement age, I'd be very worried.

And if we tip into a recession, jobs get lost. Homes get lost. Businesses collapse.

Jobs are definitely going to be lost with the drop in the price of oil.

I'm not so flippant with "this too shall pass".

 

[OKTexas]

Might be a good time to buy into the market, it's definitely time to refinance a mortgage.

.

I mentioned a couple weeks ago the 10 year Treasury was hitting record lows and that I was going to refinance some property. I just got 2.65% fixed. Fricking awesome.

I'm working on a refi also, hoping to go from 3.85 to mid 2s. Great time to do it.

.

It's weird. I got three quotes from three different financial institutions. The highest was 4.5, the next highest was 3.5, and the third was 2.65.

It definitely pays to shop around.

I haven't locked yet, could have locked last week at 2.75 but I held off.

.

Lenders are being inundated right now. It is taking several days, up to a week, for them to process loans. You should get started now. I am in what is called a "floating lock" until the paperwork has been processed, which should be in two or three days. I started the process last week when the rate was 2.9. Since I am in a floating lock, it is now 2.65. At least, that's where it was Friday afternoon. It might be even better today.

Don't wait too long. There is a long queue.

Been there, all the paperwork is in, I'm not doing a conventional refi, I'm doing a VA streamline, not near as much paperwork.

.

 

[g5000]

I mentioned a couple weeks ago the 10 year Treasury was hitting record lows and that I was going to refinance some property. I just got 2.65% fixed. Fricking awesome.

I'm working on a refi also, hoping to go from 3.85 to mid 2s. Great time to do it.

.

It's weird. I got three quotes from three different financial institutions. The highest was 4.5, the next highest was 3.5, and the third was 2.65.

It definitely pays to shop around.

I haven't locked yet, could have locked last week at 2.75 but I held off.

.

Lenders are being inundated right now. It is taking several days, up to a week, for them to process loans. You should get started now. I am in what is called a "floating lock" until the paperwork has been processed, which should be in two or three days. I started the process last week when the rate was 2.9. Since I am in a floating lock, it is now 2.65. At least, that's where it was Friday afternoon. It might be even better today.

Don't wait too long. There is a long queue.

Been there, all the paperwork is in, I'm not doing a conventional refi, I'm doing a VA streamline, not near as much paperwork.

.

I'm doing the same. VA loan. Most of it is done online with e-signatures, but I had a few forms which had to be ink signed and faxed.

 

[Toddsterpatriot]

It's looking like it is going to end up somewhere between 700 points to 1,200 points up over yesterday as more and more people realize that Left Stream Media tried to create a hoax panic and some people fell for it.

How you feeling now?

This too shall pass.

.

What I worry about are derivatives which amplify losses. There could be a hedge fund or bank out there which is overleveraged and on the brink of shocking the entire system.

Like Warren Buffet said, “You only find out who is swimming naked when the tide goes out.”

This will pass, but when? If I was pushing retirement age, I'd be very worried.

And if we tip into a recession, jobs get lost. Homes get lost. Businesses collapse.

Jobs are definitely going to be lost with the drop in the price of oil.

I'm not so flippant with "this too shall pass".

What I worry about are derivatives which amplify losses.

But they don't. They only move them from one pocket to another.

 

[g5000]

It's looking like it is going to end up somewhere between 700 points to 1,200 points up over yesterday as more and more people realize that Left Stream Media tried to create a hoax panic and some people fell for it.

How you feeling now?

This too shall pass.

.

What I worry about are derivatives which amplify losses. There could be a hedge fund or bank out there which is overleveraged and on the brink of shocking the entire system.

Like Warren Buffet said, “You only find out who is swimming naked when the tide goes out.”

This will pass, but when? If I was pushing retirement age, I'd be very worried.

And if we tip into a recession, jobs get lost. Homes get lost. Businesses collapse.

Jobs are definitely going to be lost with the drop in the price of oil.

I'm not so flippant with "this too shall pass".

What I worry about are derivatives which amplify losses.

But they don't. They only move them from one pocket to another.

The pocket from which they move goes under. Just ask Lehman or Bear Stearns or LTCM.

 

[Toddsterpatriot]

It's looking like it is going to end up somewhere between 700 points to 1,200 points up over yesterday as more and more people realize that Left Stream Media tried to create a hoax panic and some people fell for it.

How you feeling now?

This too shall pass.

.

What I worry about are derivatives which amplify losses. There could be a hedge fund or bank out there which is overleveraged and on the brink of shocking the entire system.

Like Warren Buffet said, “You only find out who is swimming naked when the tide goes out.”

This will pass, but when? If I was pushing retirement age, I'd be very worried.

And if we tip into a recession, jobs get lost. Homes get lost. Businesses collapse.

Jobs are definitely going to be lost with the drop in the price of oil.

I'm not so flippant with "this too shall pass".

What I worry about are derivatives which amplify losses.

But they don't. They only move them from one pocket to another.

The pocket from which they move goes under. Just ask Lehman or Bear Stearns or LTCM.

The pocket from which they move goes under.

Sometimes.

Just ask Lehman or Bear Stearns

They went under because they financed a huge bond position, which went down in value, with overnight borrowing, which they couldn't roll over, Nothing to do with derivatives.

 

[OKTexas]

It's looking like it is going to end up somewhere between 700 points to 1,200 points up over yesterday as more and more people realize that Left Stream Media tried to create a hoax panic and some people fell for it.

How you feeling now?

This too shall pass.

.

What I worry about are derivatives which amplify losses. There could be a hedge fund or bank out there which is overleveraged and on the brink of shocking the entire system.

Like Warren Buffet said, “You only find out who is swimming naked when the tide goes out.”

This will pass, but when? If I was pushing retirement age, I'd be very worried.

And if we tip into a recession, jobs get lost. Homes get lost. Businesses collapse.

Jobs are definitely going to be lost with the drop in the price of oil.

I'm not so flippant with "this too shall pass".

I just don't see it going there, I think by the end of Jul or Aug people are going to be wondering what all the panic was about.

.

 

[g5000]

How you feeling now?

This too shall pass.

.

What I worry about are derivatives which amplify losses. There could be a hedge fund or bank out there which is overleveraged and on the brink of shocking the entire system.

Like Warren Buffet said, “You only find out who is swimming naked when the tide goes out.”

This will pass, but when? If I was pushing retirement age, I'd be very worried.

And if we tip into a recession, jobs get lost. Homes get lost. Businesses collapse.

Jobs are definitely going to be lost with the drop in the price of oil.

I'm not so flippant with "this too shall pass".

What I worry about are derivatives which amplify losses.

But they don't. They only move them from one pocket to another.

The pocket from which they move goes under. Just ask Lehman or Bear Stearns or LTCM.

The pocket from which they move goes under.

Sometimes.

Just ask Lehman or Bear Stearns

They went under because they financed a huge bond position, which went down in value, with overnight borrowing, which they couldn't roll over, Nothing to do with derivatives.

Lehman financed derivatives using massive leverage.

The collapse of 2008 was greatly amplifed by leveraged CDS.

LTCM went under because of arbitrage bets on bond yield spreads around the world which ended up having a correlation of 1 when they all went sour. LTCM was leveraged 100 to 1.

 

[Fort Fun Indiana]

Post the proof I'm wrong.

Post the proof you are right.

Exactly as isaid. Thank you.

 

[g5000]

Well, it dropped another 250 points today. If the virus keeps spreading and people keep dying without any effective response from the government, expect next week to be a bloodbath on the market as well.

Please cite for us the Article and Section in the U.S. Constitution that makes healthcare the responsibility of government.

Fucking imbecile.

The government is responsible for the general welfare, dumbass.

And we all know you and the rest of the pseudocon hive mind would be blaming Obama with every breath you draw if he was President right now.



Trump was all over Obama for golfing during the Ebola scare.

Guess what Trump is doing today.

 

[g5000]

When Trump visited the CDC, he made the coronavirus epidemic all about him. Gee, these guys are surprised at how smart I am! I had a super-genius uncle at MIT which makes me a super-genius! I coulda been a great doctor!

This from the fuckwit who thought a vaccine was just a couple months away and asked an astounding number of ignorant questions of his medical team.

He also said the missing-in-action test kits are "perfect, just like the letter, just like the transcript".

We have a real fucking idiot clown in Trump.

 

[Toddsterpatriot]

This too shall pass.

.

What I worry about are derivatives which amplify losses. There could be a hedge fund or bank out there which is overleveraged and on the brink of shocking the entire system.

Like Warren Buffet said, “You only find out who is swimming naked when the tide goes out.”

This will pass, but when? If I was pushing retirement age, I'd be very worried.

And if we tip into a recession, jobs get lost. Homes get lost. Businesses collapse.

Jobs are definitely going to be lost with the drop in the price of oil.

I'm not so flippant with "this too shall pass".

What I worry about are derivatives which amplify losses.

But they don't. They only move them from one pocket to another.

The pocket from which they move goes under. Just ask Lehman or Bear Stearns or LTCM.

The pocket from which they move goes under.

Sometimes.

Just ask Lehman or Bear Stearns

They went under because they financed a huge bond position, which went down in value, with overnight borrowing, which they couldn't roll over, Nothing to do with derivatives.

Lehman financed derivatives using massive leverage.

The collapse of 2008 was greatly amplifed by leveraged CDS.

LTCM went under because of arbitrage bets on bond yield spreads around the world which ended up having a correlation of 1 when they all went sour. LTCM was leveraged 100 to 1.

Lehman financed derivatives using massive leverage.

Link?

And another link that their derivative portfolio played more than a minor part in their collapse.

The collapse of 2008 was greatly amplifed by leveraged CDS.

Not really.

LTCM was leveraged 100 to 1.

I don't think it ever got that high.

 

[Toddsterpatriot]

Post the proof I'm wrong.

Post the proof you are right.

Exactly as isaid. Thank you.

Show the percentages of each group that were infected.
You'll realize your error.

 

[g5000]

What I worry about are derivatives which amplify losses. There could be a hedge fund or bank out there which is overleveraged and on the brink of shocking the entire system.

Like Warren Buffet said, “You only find out who is swimming naked when the tide goes out.”

This will pass, but when? If I was pushing retirement age, I'd be very worried.

And if we tip into a recession, jobs get lost. Homes get lost. Businesses collapse.

Jobs are definitely going to be lost with the drop in the price of oil.

I'm not so flippant with "this too shall pass".

What I worry about are derivatives which amplify losses.

But they don't. They only move them from one pocket to another.

The pocket from which they move goes under. Just ask Lehman or Bear Stearns or LTCM.

The pocket from which they move goes under.

Sometimes.

Just ask Lehman or Bear Stearns

They went under because they financed a huge bond position, which went down in value, with overnight borrowing, which they couldn't roll over, Nothing to do with derivatives.

Lehman financed derivatives using massive leverage.

The collapse of 2008 was greatly amplifed by leveraged CDS.

LTCM went under because of arbitrage bets on bond yield spreads around the world which ended up having a correlation of 1 when they all went sour. LTCM was leveraged 100 to 1.

Lehman financed derivatives using massive leverage.

Link?

Bankruptcy of Lehman Brothers - Wikipedia
Lehman borrowed significant amounts to fund its investing in the years leading to its bankruptcy in 2008, a process known as leveraging or gearing. A significant portion of this investment was in housing-related assets, making it vulnerable to a downturn in that market. One measure of this risk-taking was its leverage ratio, a measure of the ratio of assets to owners equity, which increased from approximately 24:1 in 2003 to 31:1 by 2007.

And another link that their derivative portfolio played more than a minor part in their collapse.

Same link as above:

In 2008, Lehman faced an unprecedented loss due to the continuing subprime mortgage crisis. Lehman's loss resulted from having held onto large positions in subprime and other lower-rated mortgage tranches when securitizing the underlying mortgages.

Those "tranches" were from CDOs.

Collateralized Debt Obligation (CDO) Definition

A collateralized debt obligation (CDO) is a complex structured finance product that is backed by a pool of loans and other assets and sold to institutional investors. A CDO is a particular type of derivative because, as its name implies, its value is derived from another underlying asset. These assets become the collateral if the loan defaults.

The collapse of 2008 was greatly amplifed by leveraged CDS.

Not really.

Yes, really.

Credit Default Swap (CDS) - A Major Player in the 2008 Financial Crisis

Before the financial crisis of 2008, there was more money invested in credit default swaps than in other pools. The value of credit default swaps stood at $45 trillion compared to $22 trillion invested in the stock market, $7.1 trillion in mortgages and $4.4 trillion in U.S. Treasury. In mid-2010, the value of outstanding CDS was $26.3 trillion.

Many investment banks were involved, but the biggest casualty was Lehman Brothers investment bank, which owed $600 billion in debt, out of which $400 billion was covered by CDS.


In other words, the bulk of Lehman's collapse was due to CDS, which are derivatives.

LTCM was leveraged 100 to 1.

I don't think it ever got that high.

It got much higher than that.

Long-Term Capital Management - Wikipedia

LTCM was essentially betting that the share prices of Royal Dutch and Shell would converge because in their belief the present value of the future cashflows of the two securities should be similar. This might have happened in the long run, but due to its losses on other positions, LTCM had to unwind its position in Royal Dutch Shell. Lowenstein reports that the premium of Royal Dutch had increased to about 22%, which implies that LTCM incurred a large loss on this arbitrage strategy. LTCM lost $286 million in equity pairs trading and more than half of this loss is accounted for by the Royal Dutch Shell trade.[26]

The company, which had historically earned annualised compounded returns of almost 40% up to this point, experienced a flight to liquidity. In the first three weeks of September, LTCM's equity tumbled from $2.3 billion at the start of the month to just $400 million by September 25. With liabilities still over $100 billion, this translated to an effective leverage ratio of more than 250-to-1.

 

[g5000]

I kind of know what I'm talking about...

 

[g5000]

The Dow is about 300 points from officially being a bear market.

What a shit show.

 

[Dirk the Daring]

Geez, even my gold stocks are taking a beating...

 

[g5000]

Geez, even my gold stocks are taking a beating...

Pretty weird since actual gold has been spiking for the past week.

 

[Toddsterpatriot]

What I worry about are derivatives which amplify losses.

But they don't. They only move them from one pocket to another.

The pocket from which they move goes under. Just ask Lehman or Bear Stearns or LTCM.

The pocket from which they move goes under.

Sometimes.

Just ask Lehman or Bear Stearns

They went under because they financed a huge bond position, which went down in value, with overnight borrowing, which they couldn't roll over, Nothing to do with derivatives.

Lehman financed derivatives using massive leverage.

The collapse of 2008 was greatly amplifed by leveraged CDS.

LTCM went under because of arbitrage bets on bond yield spreads around the world which ended up having a correlation of 1 when they all went sour. LTCM was leveraged 100 to 1.

Lehman financed derivatives using massive leverage.

Link?

Bankruptcy of Lehman Brothers - Wikipedia
Lehman borrowed significant amounts to fund its investing in the years leading to its bankruptcy in 2008, a process known as leveraging or gearing. A significant portion of this investment was in housing-related assets, making it vulnerable to a downturn in that market. One measure of this risk-taking was its leverage ratio, a measure of the ratio of assets to owners equity, which increased from approximately 24:1 in 2003 to 31:1 by 2007.

And another link that their derivative portfolio played more than a minor part in their collapse.

Same link as above:

In 2008, Lehman faced an unprecedented loss due to the continuing subprime mortgage crisis. Lehman's loss resulted from having held onto large positions in subprime and other lower-rated mortgage tranches when securitizing the underlying mortgages.

Those "tranches" were from CDOs.

Collateralized Debt Obligation (CDO) Definition

A collateralized debt obligation (CDO) is a complex structured finance product that is backed by a pool of loans and other assets and sold to institutional investors. A CDO is a particular type of derivative because, as its name implies, its value is derived from another underlying asset. These assets become the collateral if the loan defaults.

The collapse of 2008 was greatly amplifed by leveraged CDS.

Not really.

Yes, really.

Credit Default Swap (CDS) - A Major Player in the 2008 Financial Crisis

Before the financial crisis of 2008, there was more money invested in credit default swaps than in other pools. The value of credit default swaps stood at $45 trillion compared to $22 trillion invested in the stock market, $7.1 trillion in mortgages and $4.4 trillion in U.S. Treasury. In mid-2010, the value of outstanding CDS was $26.3 trillion.

Many investment banks were involved, but the biggest casualty was Lehman Brothers investment bank, which owed $600 billion in debt, out of which $400 billion was covered by CDS.


In other words, the bulk of Lehman's collapse was due to CDS, which are derivatives.

LTCM was leveraged 100 to 1.

I don't think it ever got that high.

It got much higher than that.

Long-Term Capital Management - Wikipedia

LTCM was essentially betting that the share prices of Royal Dutch and Shell would converge because in their belief the present value of the future cashflows of the two securities should be similar. This might have happened in the long run, but due to its losses on other positions, LTCM had to unwind its position in Royal Dutch Shell. Lowenstein reports that the premium of Royal Dutch had increased to about 22%, which implies that LTCM incurred a large loss on this arbitrage strategy. LTCM lost $286 million in equity pairs trading and more than half of this loss is accounted for by the Royal Dutch Shell trade.[26]

The company, which had historically earned annualised compounded returns of almost 40% up to this point, experienced a flight to liquidity. In the first three weeks of September, LTCM's equity tumbled from $2.3 billion at the start of the month to just $400 million by September 25. With liabilities still over $100 billion, this translated to an effective leverage ratio of more than 250-to-1.

Lehman borrowed significant amounts to fund its investing in the years leading to its bankruptcy in 2008, a process known as leveraging or gearing.

Yup. They were leveraged.

Lehman's loss resulted from having held onto large positions in subprime and other lower-rated mortgage tranches when securitizing the underlying mortgages.

Yup. They held lots of mortgages.
​

Those "tranches" were from CDOs.​

Yup, they held a lot of the crap from their own securitizing operations.

Many investment banks were involved, but the biggest casualty was Lehman Brothers investment bank, which owed $600 billion in debt,

Lehman owed money. They borrowed. They couldn't rollover the debt.

out of which $400 billion was covered by CDS.

Other firms held CDS, betting that Lehman would default.
You thought Lehman got in trouble by betting Lehman would default?
That's funny.

In the first three weeks of September, LTCM's equity tumbled from $2.3 billion at the start of the month to just $400 million by September 25. With liabilities still over $100 billion, this translated to an effective leverage ratio of more than 250-to-1.

Thanks for the link. I heard that before and thought it sounded outrageous.
​

Although LTCM is a hedge fund, this issue is not limited to hedge funds. Other financial institutions, including some banks and securities firms, are larger, and generally more highly leveraged, than hedge funds. LTCM, with total assets of $129 billion at the end of 1997, was significantly larger than any other reporting hedge fund family at that time. Only 11 reporting hedge fund families, including LTCM, had total assets exceeding $10 billion at the end of 1997. At the end of 1998, LTCM's total assets were $89 billion. The notional amount of LTCM's total OTC derivatives position was $1.3 trillion at the end of 1997 and $1.5 trillion at the end of 1998. LTCM's balance sheet leverage was 28-to-1 at the end of 1997.​

​

Hedge Funds, Leverage and the Lessons of Long-Term Capital Management: Report of the President's Working Group on Financial Markets​

​

The CFTC has a lower figure though...…….​