Just look at a list of public banks against 1 yr performance and start with the best performers.

What are you in SKF at?

july calls, 100 strike. they were just slightly in the money when bought.

i used to just short xlf and started playing skf instead for some reason i dont remember now that i think about it.

can you explain your thoughts regarding how these two can both happen:

- financials ---> 0
- inflation jumps bigtime

if the US pours money into banks (i.e. fed with created money) and that money then goes to 0, isn't it now out of the system. velocity would stay super low, reserve requirements would spike and the money supply would not shoot up like many are stating it will.

Barron

well like ive said before i think the US dollar could be in for a huge rally if this happens, i.e. more massive scale losses, without the fed reacting very aggressively first.

also the government will recover some but the common share holders wont which is my argument. I did say its not a bad idea to buy preferreds and bonds of the financial companies while shorting commons. Also if the government shares still go to zero the firms will have used the money to pay off their liabilities and it will be stuck in the system. The fed could be stuck with a lot of illiquid assets or assets that they cant afford to get rid of to really rain in the money supply.

the basic theory i have is that after the debt overhang crashes, which it will one way or another, either from political renegotiation, defaults, bankruptcy courts or whatever. This means the economy will have shrunk to its real size but after all the fed monetization there will be a lot of money out there compared to economic activity and the real economy and it will end up bidding up prices. In the mean time the amount of money relative to the bloated economy is not very large and this provides currency stability we see today. When the economy shrinks enough though and they print enough there will be no more demand for dollars to cover these massive losses and all the money they created will be left hanging over the economy. the liquid money supply will be huge relative to real activity and the currency will lose a lot of value in real terms so will buy less in the economy. Velocity is also the ratio of money supply to gnp or gdp and it will only be low in the sense that money will have grown far faster while nominal income maybe stays the same but the money will eventually push up nominal gdp. once things are more settled i think the money freeze will end since most of it is surrounding the uncertinaty of losses but these are gonna have to be faced at some point and like i siad demand is gonna wane significantly since hte current demand is inherently short term pressure to cover crunching and when thats over the need for dollars will sink causing sellers to pile up. there is also easily the chance that everything is monetized to the point that banks will expand their balance sheets and the amount of money in the system is no properly taken out by the fed and everything explodes given what reserve levels will be at.

Every time I read threads like this I think about a page in the Intelligent Investor. There is a description of a TV station (like CNBC) broadcasting about the bear market. But instead of traders in the pit holding their heads in their hands with red numbers above them, they have a bunch of traders being happy as there is a big 50% off sign in front of the exchange. The reporter talks about the declining market and says it's a great day for the market and hopes it continues into the next trading day.

Not saying the market is a buy or something, I just like how the opinion of the general public is not to invest in the bottom (or more towards the bottom than 6 months ago), and also how the general public loves buying at the top of the bull market. Buying high, selling low ftw.

I thought the public liked buying when the stock was dropping (IE buy because its so darn cheap!) instead of buying when it's on the up (where the stock will obviously sucumb to gravitational pull)

I have no numbers or anything. But every time I hear someone in real life about the market he's scared to invest. On the internet it's even worse because if the predictions on all the forums came through we would all be fighting each other for the last bag of potato chips on the planet. But they loved buying their ****ty companies in 1999. They think a bear market is more dangerous than a bull market. Obviously that's not the case.

you can accuse me of a lot of things but one of them is not advocating whats in the mainstream or common opinion or having a crowd mentality.

also ive said short financials since they were still in bull markets. im just saying they are still significantly overvalued and are effectively insovlent by any reasonable measure and the consequence of this to the common share holders is likely dire.

Right but given the timing of your prediction there should be a story of how youve made 100x your investment. I suspect theres not.

But you are *now* advocating a mainstream and very common opinion of the crowds. Note the stock prices of BAC, C, RBS, et al, not to mention what everyone has already seen with AIG, FNM, FRE and others.

As for the e-peen "I was so rite!" I shorted multiple banks, mtg insurers, and mtg firms in March of 2007. It's meaningless to what happens with your next trade. Utterly meaningless.

GL,

im just saying im more accurately characterized as a contrarian than a follower. i didnt take nearly as much advantage of situations as i should have, mostly because of a lack of portfolio management skills.

on net i gave back lots of profits i made shorting the dollar during its rally and on commodities since i didnt think the fed would fall behind the curve the way they did. i also lost on my treasury shorts. on my financial plays though alone ive done nothing but very well. in general i started shorting equities when the dow was 14k with a target around 8k. my target is now even lower than then hence why i still have many short plays in tact.

your absolutely right except i still very much disagree that the crowds agree with me or the stocks would be worth a lot less. people are pessimistic but im calling for serious **** to go dooown.

I would tend to believe a higher % of the big name banks go under, rather then a high % of all public banks.

There are a lot of regional/state banks that will survive. I'd say there are more regional and state banks then big name banks.

But what do I know.

The banking sector seems ridicuously complicated to me, I think that's part of the problem with people trying to predict it.

You are short the dollar again which currencies?

regionals have horrible exposure. both are gonna suffer dearly. the bigger they are the harder they will fall though and smaller banks are in a better position to restructure so there may be some merit to your points. overall though i dont think its a question of high importance. many are massively overvalued in both and throwing a few darts at names of either group will likely yield many names that will go broke.

im only short the dollar in that im short dollar securities. i have no currency shorts on the dollar right now. ive tried to make some bets on dollar volatility to benefit from any large swings up or down.

Highly politicised and very little data to support it =/= good trade imo.

Also, it's old news.

rgemonitor has a report, the imf does, goldman sachs does. there is tons of evidence of this. if you look at the assumptions in all these reports you can see they are being overly conservative too. hence whey the figures from all groups have been rising significantly consistently.

all the effects are not priced in now so the news isnt old enough and the effects obviously arent well understood. i am shorting and just suggest others do the same.

i'd currently bet there will be an orderly strengthening of the dollar until monetary policies converge. that's when i'll be getting short the dollar :-)

Barron

further on this would be good.

like i said in the OP, they make assumptions from historical crisis like the S&L and others that were not as severe.

i dont know whats gonna happen in the short run but im also looking to start making my long term bets aginst the dollar once policy rates converge or convergence is adequately priced in so essentailly have the same picture.

What are those long term bets, generically.