Originally Posted by Biesterfield
Najdorf - Isn't the whole point though that it is very hard to pinpoint the exact odds of that wager due to its nature, so saying that you are getting a bad deal price-wise is just an opinion..
You and Xaston seem to think that all opinions are equal in the case. They are not. Phil Ivey's opinion on a given poker hand counts for more than mine. Bill Belicheat's opinion on the right defense to call counts more than mine.
Bill Ackman has zero fx experience. All he has is an opinion -- he has zero information that is not widely know to the market.
Let's try a different example: German CDS were 85 until recently, now they are ~1% for 5 year CDS on their sovereign debt [offer side obvs, not mid].
do you think the odds of them defaulting
this year on Republic of Germany sovereign debt [not EFSF or ECB] are more or less or equal than 0.80%?
Do you think that seasoned professionals can distinguish in this case the difference between odds of 90 bps, and, say 6-10 bps in this case?
What you guys are saying is that, yes, there are experts who know more than us, but, no, we amateurs get to decide when that is true on a case-by-case basis....and when we compare opinions with Phil Ivey and Magnus Carlsen and Dom DeLillo and Pat Metheny about their craft our opinions count just as much as theirs *and moreso* in certain specific cases.
Pro tip - what do you think the markup DB is charging Ackman is on a long-dated, highly structured, OTC option, with a binary outcome where they are massively short vol and gamma? Is Ackman's salesperson perhaps charging a markup on top of the bid-offer spread? [99.999% of the time, the salesperson gets none of the inside credit, that all goes to the trader.]
Do you think it's 1-2 bps on ~80bp, 5-10bp, 10-12? 15-20? More?
Hint: On vanilla long-dated IR swaps it's gonna be at least 5 bps.
Pro tip2: How did Ackman do on General Golf? Did he blow up his first fund? Borders? How much was he charging investors for his $2bn single-stock fund bet on Target? How much did they make? Is he a guy who is quite comfortable with printing major zeroes from time to time?
How would you compare his level of expertise in activist investing vs that of FX speculation? Is Phil Ivey as good a basketball player or chess player or craps bettor as he is at poker?