Tuesday, August 14, 2007

The Beatles, "Hey Bulldog!"

I'll go mainstream on your asses for a bit.

Thornburg Mortgage CEO On CNBC

Erin interviewed the CEO of Thornburg Mortgage on Kudlow and Company today.

As you can see from the above graph, TMA hasn't been on a hot streak lately. In fact, it looks like the company is blowing up. It was halted just before the market closed today and they came out and said that they'd be paying their dividend late in response to "significant disruptions in the mortgage market which resulted in the sudden and unprecedented decline in the market prices of its AAA-rated mortgage securities that began on August 9, 2007 and subsequent increase in margin calls related to its repurchase agreement financings on those securities."

Sounds great! Well, for whatever reason, the stock is bid up a dollar after hours. Perhaps everyone thought they were going to announce bankruptcy. The graph sure looks that way.

So Larry Goldstone, CEO was interviewed by Erin. I have to give her props, she asked him hard questions.

She asked him, "So, is Chapter 11 next?" No, he said... Chapter 11 doesn't solve our problem.

She said there were a bunch of rumors out there that mentioned they were going under. He said that "80% of the rumors are untrue." He continued, "We have been able to meet all of our obligations. We are navigating our way through this process."

Goldstone said that "companies are not funding their loans" and that we are in the midst of "a severe credit crisis."

Erin asked him if his lenders were "forcing them to liquidate" to which he replied in part, "They are making it difficult for us to rollover financing."

Perhaps the most important quote I took away from the interview was Goldstone stating that they "cannot finance mortgages using any of the vehicles they've used over the last 14 years."

Erin pressed, "So how can you continue as a going concern?" to which Goldstone replied, "We have been selling securities in our portfolio. If we had to sell all of our securities, even at these 'bear market prices' we'd still have $14.28. So we're coming back, we just have to rebuild."

Erin asked, "But what if there is no buyer? Then the value is zero!" to which Mr. Goldstone replied, "That's just not true. There are buyers of mortgages."

I'm not sure how the interview concluded, because I had to split. A friend with a boat, took us out to enjoy the good weather. The market could melt, but still, I'll take boat drinks.

TMA closed at $7.61. After hours it's trading up at $9.48. Not spectacular, but still, quite a bounce.

Come Back Mojo!

Perhaps it was my lack of sleep but today I just missed out on the volatility.

I mean, when the Dow is down 200 points, you expect to be able to find and execute some decent trades. Today, I saw a lot of choppiness and I just wasn't convinced that my positions would follow through for me.

So, I lightened up my position sizes and played defense.

I mean, really, you have to be playing offense in this market. You need to be aggressive with your positions if you want to make decent money. However, there are times when you may not be feeling it for whatever reason (like you slept in a tent in your daughter's playroom) and you just need to be smart about it. You can't force trades.

So here's my best stock of the day, TFX.

I got short at $74.25 and added all the way down to $73.50. I actually thought this trade would work out much better, but the stock ran into some buyers and I was forced to cover. I missed the second short of the day around noon because I was in full on defensive mode at that point. I stood by my rule of not trading between 12 and 2 today because I just saw lots of chop with little follow-through.

My worst trade of the day was in FED.

I was short when he decided to rally from 11 to 11:30. He basically tore my face off. Now, I'm short overnight. I fully expect to lose money in my overnight short. I am not allowed to make money in overnight trades. God won't allow it.

Anyway, these last 2 days of trading make me really want to take that vacation I've been planning on. However, Tropical Storm Dean may make that an impossibility. Not because I was planning on going to Puerto Rico or anything but because this hurricane could really mess with the price of oil.

We'll see. For now, I've updated the sidebar with a website that is tracking the storm's progress.

Here's the stats:

Best, TFX, $493
Worst, FED, -$543

shares traded, 24,800
19 stocks traded, 9 winners, 10 losers
141 trades

NOTE: The CEO of TMA will be on CNBC soon. I'll post a synopsis... of sorts.

Virtual Office, $820. Dow, -211.18, 13025.51.

HPT, $500 on 26 contracts traded.
OBAT, $401 on 3600 shares traded.
Bubs, $304 on 1100 shares traded.
Me, $117 on 24,800 shares traded.
Denarii, no trades.

Misstrade, no trades.
Evolution, -$574 on 38,400 shares traded.

Well, volume was a little higher than the totals for yesterday, but still light compared to last week.

Bad news is still hitting this market. Today, Sentinel made a request to halt redemptions from it's fund. As I type, Thornburg Mortgage, TMA, is halted for trading due to pending news. Perhaps it's good news! HAHAHAH! Right. Anyway, it's tough out there...

It was a really wishy-washy day in the VO... no one really made or lost too much.

Let's see what tomorrow brings. Will the Dow hold 13,000? Will those who voted in my "poll" that the Dow would hit 12,500 before 14,000 "win?" We shall see.

NOTE: Meanwhile, if anyone subscribes to the WSJ online and wants to fill me in on the link made to my site from a comment made on this article I'd appreciate it. I'm not a subscriber... You can either email me or place a comment here. Thanks.

UPDATE: I just figured it out... The Wall Street Journal was probably just fishing for a link from my site. Pikers. Still, my request for information stands.

FLASH: Bank Run!

That's right. Trish Regan of CNBC just used the words "bank run" to describe what's going on in the credit markets.

Responsible financial journalism at its best.

Perhaps she should start yelling again...

Rumor has it that she also enjoys going to movie theaters and yelling "FIRE!"

Global Century Investments

Here's a funny S&L skit on Financial Advisors. (h/t- d.g morris)


First of all, I monitored the weather channel all day and didn't see one prediction for a thunderstorm.

Nonetheless, as we were setting up our tent, wondering about all the clouds, a thunderstorm, with lots of lightning cancelled our excursion.

In the end, we got home, wet, and pitched the tent in the playroom.

I didn't sleep well.