Jan

25

The Beat of the Tomtom, from Victor Niederhoffer

January 25, 2009 |

7 Comments so far

1. douglas roberts dimick on January 25, 2009 10:49 pm

   A, you mean pulling the cash out or system wide liquidity? Forgive if nonsensical; I am not familiar with the mechanics of rolling a la open interest.

2. Matt on January 25, 2009 11:48 pm

   I found Obama’s recent “trillion dollar deficits for years to come” statement astounding. Especially since the US is not relying on the excess savings of the American people to fund these deficits, but on the kindness of strangers.
   He should have just said, “Buy these bonds from us now and we guaranty that we will flood the market with more bonds for the foreseeable future.”

3. Jamshed Nazar on January 26, 2009 6:22 am

   I think several major banks including Citi and BOA are practically bankrupt - they have less equity and more losses “marked to market”. There is no market for these troubled assets and the losses will keep mounting, so the Banks cannot increase or continue their lending on the same pace as they did in 2002-2007.
   Obama administration / FDIC needs to seize these troubled banks, wipe out share holders since the equity already is negative, add money to these banks, acquire their troubled assets into a “Bad Bank”, and do a reverse IPO of the Refunded Banks in the private market.
   How much money should be paid for the troubled assets? Well, enough money to put the Refunded Bank Tier 1 ratio above healthy limits - say 7-8%. Reverse auction, discounted pricing etc all fail the purpose - the Government needs to refurbish the troubled banks to a healthy Tier 1 ratio.
   The Government then needs to hold on to the troubled assets for a long enough time and maybe it might not loose too much on these assets.

   There is no chance of a market recovery without healthy lending by commercial banks.
   At this time, all we can see are quarter after quarter new disclosures by Banks for further write offs and newly discovered losses found in their books.

   Perhaps one issue that is holding off the nationalization of major US banks is the CDSs on these institutions. The administration is possibly trying to figure out a way to avoid triggering these CDSs and at the same time go ahead with refunding the banks.
   However, at the current pace, it might take several TARPS and a few more years before bank balance sheets are fixed to the extend that healthy lending can return.

4. Chris Monoki on January 26, 2009 7:37 am

   Victor & Laurel:

   Allow me to introduce myself. I am Christopher Monoki. I have been living in the DC area (NoVA) for more than twenty years, even since I studied at GWU.

   I’m originally from the NYC/NJ area. Born in Queens, my father, Balazs, still lives there in Rego Park. My mother, remarried, lives in Morris County, NJ. My father came to the States in ‘56, after the Soviets rolled their tanks into Budapest. My mother is second generation Italian, and from Bensonhurt/Flatbush.

   At GW, I was secretary of the Objectivist Club, and so I’d like to assume I have a decent enough and working knowledge on the libertarian points of view. In fact, I view it much like Milton Friedman: I’m a libertarion with a lower-case L.

   Just before graduation, I began working for the oldest investment bank in Washington, DC, first in the accounting department, reconciling trades, then as a financial analyst for the investment management group. Some later interviews were disapppointing: I failed to get a job with Morgan Stanley; another beat me out at a position at Goldman Sachs Asset Management; and another edged me at then Dean Witter with William Dodge, someone who also began his career in DC and one that I continue to admire. I finally found new work at a small, local investment firm, then moved on to a hedge fund, which I now principle.

   I took, shall we say, a hiatus, when my USMC reserve unit was called to active duty in 2008 (Company D, 4th Light Armored Reconnaissance Bn). A late bloomer, at the age of 34 I enlisted, largely on what happened at 9-11. Funny, but out in the desert, armed with my wife’s care packages of research, short times on the Internet and a satphone, I was able to call some key shots.

   I’m back in the States now, and with a newborn son (ironically his name is Viktor). I came across Victor’s book, The Education of a Speculator. I’m currently rereading it and discovered this blog. With Hungarian roots, I know some that have worked for Soros, though that’s second hand. His book, The Alchemy of Finance was more intuitive and useful to me.

   Seeing what happened this year throughout all markets has lead me to N.N. Taleb and the problems that persist in MPT/VAR applications. This makes full circle to Soros and his reflexivity. These are striking blows to someone that was schooled under MPT — Markowitz, Sharpe, Black, etc. Mean-covariance is more the problem today than a solution assessing risk, in my view; the Gaussian bell curve largely omits the event of an event.

   And so I find this blog. By the intellectual standards possessed by many here I fell somewhat ill-prepared to debate and little contribute. But this one fact keeps me comforted: as crude oil raced to nearly $150, while all along a recession was very apparent in the States, with a logical deduction that it would weigh on the rest of the word’s economies, almost every doctorate from Harvard, MIT, Oxford, LSE, Chicago, from traders in the States to those in the UAE, they ALL got it wrong. No one, not even Pickens, possibly imagined $34/brl low in just four months. Thus I find comfort that some with a much more impressive resume than I have called a foul ball a homerun. With that, I hope I have something to contribute.

   And if I fail to contribute something in the financial arena, know this: I have a chili recipe that can’t beat; I have a rib-eye that makes one’s night; and a baked bean dish that’s to die for. Needless to say my Gulyasleves and Bogracsgulyas are second only to my father’s.

   With enthusiasm and humility, I hope I’m welcomed on this blog.

   Semper fidelis…and keep pressing,
   Chris Monoki

5. Musingsofatrader on January 26, 2009 2:32 pm

   Mr. Monoki should also read Mandelbrot’s The (Mis)behavior of Markets to complement the other fine books he has mentioned. I found it extremely illuminating when applied to all the recent ugliness.
   I.L.

6. vic niederhoffer on January 26, 2009 5:23 pm

   mr monoki and others who wish to join the spec list which is a dinner party for self improvement in markets and barbeque should send his email to us privately (vic2009 at dailyspeculations dot com) or contact me on bloomberg for our mutual benefit. however, all the books he mentions are not met with universal approbation here and belong in the same camp as those about the sage and the founder of fundamental analysis. vic

7. douglas roberts dimick on January 27, 2009 5:46 am

     Two asides…

   There is a cadence to both the harmonic reconciliations and a relinquishment of positions no longer tenable as old and new scores converge and diverge from the market choir… dr

   Sisters Make Up Over Madoff
   Bernard Madoff’s alleged Ponzi scheme may have ruined many lives, but at least it nominally helped two feuding sisters bury the hatchet.

   Milwaukee socialite Natasha Boncompagni said she is settling a lawsuit brought by her author sister Tatiana because Tatiana’s husband’s father was somehow involved with Fairfield Greenwich Group, according to The Daily News. Fairfield Greenwich has said that $7 billion of its $14 billion assets under management may have been lost in the Madoff situation.

   Tatiana had sued her sister, saying Natasha was unjustly claiming co-author credit for Tatiana’s upcoming book, “Hedge Fund Wives.” The court had issued a restraining order, forbidding Natasha from publishing parts of the book online.

   Natasha issued a statement saying that she was putting her differences with her sister aside to unite behind Tatiana and her children as she faced impending litigation over her father-in-law’s business dealings, The News said.

   Natasha’s largesse may also have been encouraged by a pending settlement offer. She is due to receive $6,000 if “Hedge Fund Wives” sells more than 20,000 copies by October 30, 2010, according to court documents.

   Natasha did not return an email from HedgeFund.net seeking comment. Joe Veltre, Tatiana’s literary agent, said a formal decision in the lawsuit was expected soon. He also said Tatiana had no comment on the Fairfield Greenwich situation.
   Click Here To Read Comments on This Story or Submit Your Own

   Fairfield Greenwich Exec Seeks Townhouse Sale
   An executive with the funds-of-funds firm hardest hit by the Bernard Madoff alleged Ponzi scheme reportedly is trying to sell his townhouse in the tony Manhattan neighborhood of Lenox Hill that he bought fewer than two years ago.

   Charles Murphy is talking to real estate brokers about selling the 1882 townhouse, located at 7 East 67th Street, according to The New York Times. Murphy bought the residence from Seagram liquor heir Matthew Bronfman in 2007 for $33 million, according to city records.

   Bronfman reportedly completely renovated the house. The limestone townhouse with 12,000 square feet of space, boasts an entryway flanked by Ionic columns.

   Murphy, along with other Fairfield Greenwich executives, has been sued by investors, angered over the loss of $7 billion, half the firm’s assets under management, that were placed in the alleged Madoff debacle that may end up costing investors $50 billion.

   Murphy could not be reached immediately for comment.

   The townhouse has not been a stranger to difficult times. City records show that Bronfman bought it in 1998 from the Foundation for Depression & Manic Depression.