Tontine Partners

I found the following letter from Tontine Capital Partners at Michael Covel's website which you can reach here. Apparently they are liquidating along with many other hedge funds. I saw them mentioned on Real Money, Googled them and found MC's piece.

After reading this letter, I've decided not to self-flagellate any more. Read a bit of it and see if you would let them boil water on your stove much less manage your hard earned doe.

A Rout by Any Other Name

. . . . is still a ^#!$!^&& rout.


I don't have anything to really say about today that you do not already know. Unprecedented---comes to mind. Unprecedented wealth funded by debt ends badly. Whether we are invested in the market or not, we will be affected.

Prudent savers and investors trusting the markets to eek out a reasonable return so that they can live a financially independent life may now have to re-write some of that.

Capitalism and consumerism fed all of this. The indictment is squarely resting there--oh but wait. Aren't capitalism and consumerism the centerpiece of our American value system? Somewhere we squandered the deeply felt and hard-won values of freedom and independence for these two whores that promise only fleeting pleasure and a very dear price.

I've surmised here that underlying concept of the 'NEW MIDDLE CLASS' in emerging markets. Always said do breathlessly and full of hope that the appetites of the rising Asian and Latin American populations would prove bigger than our own. The pay off: lucrative goods and services. Of course, we'd have to inculcate the values of spending v. saving. I still hear the echo of the money managers saying that while the middle class American wasn't really important anymore and the luxury good makers would weather just find. IN fact they would IMPROVE. The chart below--a massive head and shoulder that broke within the last few days--tells a different story.


For those of you who employ technical analysis, I (layperson that I am) encourage you to employ a longer term view--10 year. Would you buy this chart? Looks like some roll over potential there.


What about this chart? Perhaps IBM will find support at $80 or so. Their revenue grew at 5%. I don't see that revenue growth accelerating in the upcoming economic environment do you?


Husband is in West Virginia. Hopefully there will be no accidents. This Mercury Retrograde has been pretty devastating so far. My son's wreck on the first day. Then the market's wreck each and every day it seems. Click on the graphic below to read more about Mercury Retrograde. You may find it interesting to not that RIMM had a major snafu under a Mercury Retrograde (remember when their systems went down). Mercury rules communication.

Currency and Reserves

Bloomberg has this story (click on title below). I've been watching the stocks of the Latin American Complex get ripped apart. I have sector chart with just South American stocks. The banks were the first to lead. Stockcharts is down, otherwise I would put an SDA chart up which is mentioned in the article.

Latin American Banks Dig Into Reserves to Salvage Currencies

By Adriana Brasileiro and Andre Soliani

Oct. 9 (Bloomberg) -- Latin American central banks are being forced to draw on record foreign reserves built up during the six-year commodities rally to stop their currencies from sinking in the worst financial crisis since the Great Depression.

I do not have as good a command on the role of currency refers on foreign stocks. But the charts know! I think that you will find the chart interesting, and if you are like me and do not have as good a command on this issue as you should if you are doing investing in these types of firms, this article may be a wake up call.

I woke up parched. As I laid in bed wondering if I should get up, my brain governed by my parched body seized on the simple fact that I had enough ingredients to make a decent limeade (from concentrate). I'm no good this time of day. But as I was hydrating, I was reading. And...in reading I wanted to share this.

Lesson for you: stay hydrated properly and understand currency risk in changing times. Night, night.

Morning Post

When I closed my post last night I closed my post with the Nikkei being down 383. Looks like there was reinvigoration.

Our blog friend, Selden, dead but wise as ever instructs:

The great cause of loss in times of panic is the failure of the investor to keep enough of his capital in liquid form. (p. 71)

What is particularly unfortunate--and you may label me a conspiratorista (I still remember a commenter calling me a recessionista)--is that much of this demise comes from the wealth of average investors. I absolutely believe that there is no more destructive advice than to buy and hold. This is a zero sum game. Someone sold and locked in profits--it is not the Average American's portfolio that participated in that preservation of capita, preservation of profits. It's the most insidious type of wealth transfer that there is. And it is something that NO one talks about.

About face in the futures with the rate cut. Another interesting day ahead.

Market Grab

I suppose that the market was not satisfied with giving back thos 500 points yesterday, and snatched them angrily back from surprised investors. I've no great insights, but I know this, that no matter who you listen to, you have to own your investment decisions. Part of me wishes that I had made more money in this environment. But at least I've preserved capital. I was too early to exit some of my juicier positions. OCT DUG 35 calls and SEP DIA 125 puts. Both were bought in April. Both would have been worth mucho dollars--but no, Leisa was afraid of a monstrous rally.

You see, I've had some very expensive puts expire worthless. HIG--I was early to that pig. I had about 5200 in put premium that expired in May of this year. Yep. That's alot of money to me. The BEST lesson that I've learned, and paid handsomely (but not lethally) for is this very simple fact: Reality and the market's perception (or cognition) of reality can be separated from a fairly wide gap. I new that HIG was in trouble last year. Waited a whole year--a faint whiff of trouble but then stability. Now look at it.

I'm a much better observer than a trader! But my capital is intact. I've just enough short and long positions to be balanced. I closed my XLU puts for a nice 130% gain. But I could have waited just a wee bit longer. But as high as the VIX was and as sustained as a downtrend and OCT expiration....the sure thing seemed to be the smart thing.

Because I've not paid much attention to the market through a full cycle prior to this one, I did not have a full appreciation of (1) how far things can go up; (2) how far things can go down. Of course I've seen these things written, but until experiencing it, I could not appreciate it very well.

Long time readers will remember my uber-nerd project at the begining of the year of loading all the blasted symbols in by each sector. That project has more than paid for itself. HOWEVER, had I a more systematized way to tag things, it would have been all the more better. I'm still of the mind that being spider like--spinning one's web, crafted with fundamental expectations coupled with technical analysis (confirming the timing/accuracy of one's fundamental theses) , and then watching and waiting patiently is really the best mental model for being successful in the market.

I may have to re-do my blogand put a spider theme in it. It's a mental model that I like very much, and Halloween is coming soon and all of that.

I'm slipping into old habits. I'm drinking a glass of wine. Dinner is on the grill--pork tenderloin and baked potatoes. Grilled asparagus will be the accompaniment. I'm enjoying Va's Horton winery, Viognier. It is really nice. I used to enjoy wine nightly. I've not had wine since last Friday. I'm toasting my SIL's father who died one year ago today. Clink.

In another week, I'll be down in Hatteras for a few days. My SIL/BIL generously invited us. They go every year. We've not been on vacation for a bit. It is hard to get my kids' to go at their ages. We are mostly home bodies--but we've taken a few vacations here and there. Frankly, my husband and I do not travel well together. Despite my inate bitchiness (a blogger on another blog accused me of being the bitchiest woman on the blog), I generally try to find the non-confrontational line. But--once I'm on that line...well...it ain't pretty.

Nikkei down 383 as I write and sign off. I hope that you are faring well in this madness.

Morning Post.

Yesterday was an extraordinary day in the market with the DOW plunging 800 points before closing just down 357 or so. Yeah, a 300+ fall in the DOW and I use 'just'. A reminder that everything is relative--Albert Einstein reminded us of the power of that.

I've mentioned here in my amateur musings. In fact, I did a little search of my blog to see when I started to talk about it. I see that I was chatting about it for a while. De-leveraging and de-flation go hand in hand. It's not complicated. How far for how long is anyone's guess. But if we've been building this up for so long (more than 20 years), then... Well, you can connect the dots.

Minyanville had a interesting article which you can access HERE.

Morngin Post

No doubt you are waking up to a financial world in turmoil. Jim Cramer is in outright panic mode--when his show gets canceled on CNBC, we will know that the bottom is finally in. (That is not an original thought on my part. I found this on my blog from August 27, 2007. A simple reminder that I'm not a dolt.

If I had to guess--not that I have any special knowledge, but just for the fruitless task of stating an opinion--I guess that the minute that the market hears some bad news it is going to bolt like a skittish colt again. I don't think for a minute that we've seen the worst of this correction. We have only had investor cognition that the problem in the credit markets really is a problem. Further, if the magnitude is bigger than the market's expectations--and frankly, I don't see much quantification of the magnitude--then that skittish colt is going to hit a yellow-jacket's nest.

This weekend was more event-filled than normal. Unfortunately, I had to put Chloe, my geriatric poodle, down. She's been steadily deteriorating. She was deaf and blind. Her simple, shadow existence was pain-free and revolved around sleeping, piddling on the floor, and eating. Most recently she stopped eating. Yesterday I noticed that her eye had puss coming from it. I suspect that she had an abscessed tooth. She had terrible teeth--apparently a hallmark of poodles.

She hated baths, hated to be clipped and was very particular about her feet. Forget about brushing her teeth. This is a dog that we found in the wild some years ago. She also had two other comrades. One was found dead on the road by a neighbor. My husband, kind hearted soul that he is, buried it and then rescued the other two. We named them Sophie and Chloe. They were the most miserably looking dogs (they are miniature poodles) you could imagine. Scraggly, long nails, detritus in their hair (which continues to grow unless clipped). Sophie was so nasty and smelly I had to take scissors and clip close to the skin as the outside of her coat was a matted mess. But....they were not thin, so obviously they were quite effective in foraging.

These dogs were never able to learn effective potty training. Thank goodness we have no carpet. Sophie met her demise under the tire of my car, running out to greet me. She had done it for years, but this particular time, she ended up under my wheel. It was not a happy day. She died quickly, but not before biting me badly enough through the joint of my left ring finger. I had to go to the hospital and cancel a business trip.

We estimate that Chloe was about 17 or 18. She had a good life, even though she would not submit to the ministrations (grooming) to keep her looking cute. She was a rugged girl from having to fend for herself for however long in the wild. So I buried her under the redbud, next to Greta. I imagine that before my life comes to an end, the red bud will be the hub to the spoke of beloved pet carcasses. Perhaps, even mine (ashes) one day.

Hold onto your hat.

I'm Outing Myself

No, I'm not gay, but I have here never before published photos of me. You can now put a face with this space. I hope the reality is not too jarring!

Last night was the expiration of the last of my getting-older reminders. Last night was my 30th HS reunion. I'm embarrassed to say that I had to look at lots of name tags, but most fessed up that they had to do the same.

Lest you have to wonder, that is me in the middle of those two good looking fellows, Buster (l) and Allen (r). My husband and I split our social obligations. He attended the party of a dear friend's surprise 50th birthday party. My BIL, who also graduated in this class, was on a fishing trip. So I was on my own.

Well, not quite on my own. The only reason that I went to the reunion was because my best girlfriend from high school was coming down from Northern Virginia. Here's a pic of me and my friend, Robyn, taken at her home. Even at 48, our fathers somehow treat us as if we are still teenage girls. Hers insisted on driving her down to the Richmond Convention Center, the site of the reunion.

After brief consideration I told her that I'd pick her up and take her back to her parent's house. It was in the immediate circle of driving that I would need to accomplish to fulfill my other chauffeuring duty which was to collect my husband from the party.

As another reminder of the ever increasing space between our tender teenage years and our hard-bitten advancing years, I had a hard time finding Robyn's home. Oh, I was on the right street, and as I was slowing down in front of her home, a home that I had been to hundreds of times in my life, it did not quite look like 'it'.

A few doors down, I could see a young fellow 12-13 sneaking a smoke. He was lurking around one side of his home. As he saw me driving slowly down the road, I could see him worming his way around the back--but not quite wanting to turn the corner. No doubt he would be visible to his parents inside. I found it laughable that he thought that in such a neighborhood he could sneak anything outside.

Ultimately, I resorted to calling to get Robyn's parents' phone number, as my call to R's cell phone went unanswered. So I was talked in (embarrassingly) from 3 houses away! Sigh . In fairness, I had LINGERED in front of the right home, but 15 years or so time, the LAST time I had been by there, small trees/bushes become BIG trees and bushes.

I'm not sure how Robyn and I became friends. She was outgoing, I was not. But she had transferred in from another school and was in my Algebra class. Though shy, I did outreach. Our friendship blossomed, and over those two or so years in high school we did fun stuff. Some of that included sneaking downtown the the "Shockhoe Slip" and ordering drinks though we were under-aged. Never once did we get carded. Picking up guys was never our intention. And we never did. We were good girls on an adventure.

We'd find guys, certainly. Rather, they found us. Robyn was always so dazzling with her blond hair and pretty tan, she was like a light to these man moths! And while our potential as a 'coupling opportunity' was degraded rather quickly with these guys, we were unique in that we could hold our own in any conversation. Even better, we had perfect comedic timing. So we'd have these guys howling with laughter. I guess if you're not going to get sex, a good laugh is a reasonable compromise. (I realize that I'm writing that from a female perspective and the testosterone infused opinion on the matter is likely a wee bit different!)

My friendship with Robyn is very special. Geography and family/work responsibilities are life's wedges in interpersonal relationships. The same is true for both Robyn and I. However, though she's not part of my everyday life, and she has not been for some time, she's NEVER forgotten one of my birthdays over all of these years. I cannot say the same. Ultimately, we carry our friendships in the pocket of our hearts, easily reaching in to pull it out when life's wedge is temporarily removed.

Even 30 years post high school, Robyn's and my differences are still the same. Here I am in my unimaginative black dress, and Robyn dazzling, as always, in something both stylish and colorful. And in yet another testament to timelessness of the "things never change" aphorism, Robyn's Dad suggested that she wear her shawl and NOT take it off.

Right.

Sweet Sadie

I've mentioned in this space my SIL's dog who was diagnosed with terminal cancer. Today, Sadie was transitioned. Her quality of life up until yesterday was quite good: healthy appetite, pain-free movement, enjoyment of her family. Yesterday the cancer felled her, and she was listless and uncomfortable. My SIL made the difficult but compassionate decision to have her put to sleep. Her blood pressure was so low the doc and personnel had difficulty finding a vein.

My SIL had the good fortune to have three of her life long friends with her. They have been getting together for every year since they've graduated from high school. This year, my SIL had the girls over to her home, as it was a fishing weekend for her husband.

So in today's brilliant fall sunshine, these long time friends took turns spading the ground for Sadie's grave.