Hiding Bear Posted November 1, 2003 Report Share Posted November 1, 2003 Great comments Doc & Mark. Doc is absolutely right. It was recently revealed that most brokers do not have (actually can not get) additional insurance over the SIPIC amount of $500,000. Therefore amounts over $500,000 in broker accounts - while technically segregated from other assets of brokers - could due to fraud be used by a broker and not returned in the event of a bankruptcy. Just something to think about. I think any MF that borrows more than a little money for more than a few days will suffer from bad public relations. Even worse, any MF that issues scrip to stockholders would probably be soon finished. Imagine if this Putnam thing speads to 2 or 3 major fund families at the same time. AO, tanks for your charts. Link to comment Share on other sites More sharing options...
HiHat Posted November 1, 2003 Report Share Posted November 1, 2003 I think that news today about England probably raising interest rates next week is very important. If I recall correctly Canada raised rates recently as well. The LIBOR tail may wag the EU dogs.... Implications being that FED funds rate hike is priced somewhat by this Market as not being raised until somewhere out in middle of 04. Therefore.. Realization that interest rates in U.S. will be forced to climb sooner, rather than later for various and sundry reasons may add on to tipping point. Link to comment Share on other sites More sharing options...
Hairy_Dent Posted November 1, 2003 Report Share Posted November 1, 2003 p.s. That soup used to be featured at an upscale Chinese restaurant ... it was called "Cream of Sum Yung Man." Please, Screws, it's dinner hour out here on the left coast. Link to comment Share on other sites More sharing options...
RockLedge Posted November 1, 2003 Report Share Posted November 1, 2003 Hey Ned... check this out. Smallcapcenter Link to comment Share on other sites More sharing options...
dozer Posted November 1, 2003 Report Share Posted November 1, 2003 re Putnam story: I don't see this triggering the long-awaited 10sigma.These pension funds are not liquidating their holdings, as much as changing asset managers. They will hold the same stuff, but at a different brokerage. Industry-wide, it would seem to net out. alex, i was not suggesting that putnam was "the 10 sigma event". simply speculating on what course it might follow...and what an enjoyable display a run on a big MF would be i agree completely that the coin will likely remain in the markets in some way, and simply switch to a different manager. on the other hand..... (just to be a devil's advocate on this spooky day... ) ...let's assume doc's right, and putnam IS going to basically be liquidated. might even the sleepy J6P take at least -some- notice? in a month when his heat bill is climbing, and his semi-annual RE taxes are due, and xmas-shopping is coming up....might a few of 'em think this is a good time to cash out a few stocks? maybe not a lot of 'em...maybe not all their holdings...but how much would it take to snuff the potential big-rise at this pivotal moment, and force it into being just a SWUP...or even a SWDN ?? And how would that affect mkt psychology in general? what would matrix reaction be to a failed further-rally ? just speculating here. further, i'm not sure it's safe to assume that the funds will be put back into the -same things- at a diff. MF. for example, the earlier story on the PA pension stated that the putnam acct was in "intl. securities", but the in-house acct. it was going into was an "indexed" fund. index of what, we don't know; but it sounds significantly different from where the money WAS. perhaps the fact that so MANY accts are being moved, accts which surely must be in all sorts of different mkts, will cause things to average out to zero-net-change as you suggest. but it's also possible that the fund-managers who are moving this money out of putnam are going to choose more "conservative" destinations "till things blow over". that in itself could have some effect on the mkts. for instance, it might nick the russell or nasdog, and boost the dow or the stoolwhethers. or perhaps a big chunk of this money leaves stocks in general, and moves to -bonds- for a few weeks or months. one might assume that putnam was invested in high-risks, in order to catch up with peers... and we're talking about a quarter-TRILLION dollars, eh? and just at this one firm. that might be enough bucks changing hands to affect the mkts a few points. if just a few J6P's join the party; pulling some funds from MF's in general, while at the same time FNM is diving, energy is rising, middle-east is boiling over.... not to belabor the point, but i'll reiterate that a month ago, there were at least as many MF-scandal headlines, yet not a SINGLE big customer moved their money out. but this time, not only are they bailing in droves, they're making it pointedly public that they're doing so. something IS different this time around, maybe just the crime involved, or maybe the particular MF involved, or perhaps the psychology, i.e. people starting to reach the breaking-point in cumulative amount of scandal, publicity, and potential damage they're willing to risk... so, no, i didn't suggest this was the notorious 10-sigma event; but something's different this time; that's all i'm saying. in stool-speak.... LOB ! Link to comment Share on other sites More sharing options...
Howl Posted November 1, 2003 Report Share Posted November 1, 2003 re Putnam story: I don't see this triggering the long-awaited 10sigma.These pension funds are not liquidating their holdings, as much as changing asset managers. They will hold the same stuff, but at a different brokerage. Industry-wide, it would seem to net out. The difference is that Putnam will be forced to sell. The receiving funds are not forced to buy. Forced selling always creates a discount. Link to comment Share on other sites More sharing options...
Butterfield 8 Posted November 1, 2003 Report Share Posted November 1, 2003 Interesting points. The large cap China ADR's have all dropped this week. Maybe there is a connection with redemptions on International funds. Link to comment Share on other sites More sharing options...
alex Posted November 1, 2003 Report Share Posted November 1, 2003 Howl wrote: The difference is that Putnam will be forced to sell. Are you sure? Whenever a retail investor changes brokers, they simply transfer their assets - unsold - to the custody of a new broker. Why wouldn't institutions use this same transfer mechanism to avoid market disruption? Also note CALPERS, the largest pension fund, is staying put for the time being. I think the other pension funds are just avoid scaring their school-teacher constituencies (bad PR for them, too). I just don't buy the wholesale liquidation scenario because the ultimate mechanism for this would be a legal one. If Frank Quattrone can get away, why wouldnt a MF with $272B in assets and owned by Marsh/MacLellan? Spitzer is good, but they wont let him get away with collapsing the capitalist system overnight. I believe what's really happening is that the MF pie is shrinking, and the weaker are being winnowed out. The money is simply moving to "stronger hands." Link to comment Share on other sites More sharing options...
alex Posted November 1, 2003 Report Share Posted November 1, 2003 Butterfield wrote: The large cap China ADR's have all dropped this week. Maybe there is a connection with redemptions on International funds. I think this probably more relates to "sell the news" on announcement of new China index on US exchanges. The index features China's equivalent of blue chips -- all of which ramped up to the announcement earlier this week, then sold off mildly after the news came out. NTES drop on earnings scared off some investors, too. Also, note that India closed-end funds -- IFN, IIF -- hit new 52-week highs today. Link to comment Share on other sites More sharing options...
rayok Posted November 1, 2003 Report Share Posted November 1, 2003 Unbelievable chart mhcayiay[pb50!b200!i!f][vc60][iUb14!Uh14,3!Ll14!Lc20!Lm19]&pref=G]http://stockcharts.com/def/servlet/SC.web?...33;Lm19]&pref=G Must be a great company. % held by insiders is -16.72% Link to comment Share on other sites More sharing options...
dozer Posted November 1, 2003 Report Share Posted November 1, 2003 hihat: i too thought that BOE announcement on rate-rise was significant. sterling went up on it. there was also a scathing comment on US rate/deficit policies by a european today....can't remember which one. also noticed this comment: "This bull market will not end until the Federal Reserve ends it," he said. (Tracy Herrick, chief investment strategist at Jefferies & Co.) pretty much in-line with doc's POV. and doc sez that Al is tightening up.... Link to comment Share on other sites More sharing options...
dozer Posted November 1, 2003 Report Share Posted November 1, 2003 alex, your points are well-taken. and certainly, every scandal so far has had minimal effect on the mkts. i guess the next week will tell the tale... Link to comment Share on other sites More sharing options...
alex Posted November 1, 2003 Report Share Posted November 1, 2003 Dozer wrote: i guess the next week will tell the tale... ... or the following, or the following ... Link to comment Share on other sites More sharing options...
dozer Posted November 1, 2003 Report Share Posted November 1, 2003 Dozer wrote: ... or the following, or the following ... ha ha roger that ! Link to comment Share on other sites More sharing options...
wndysrf Posted November 1, 2003 Author Report Share Posted November 1, 2003 Yeah, this MF scandal will have no effect on the market. Lots of guys at the MTV Spring Break might be puking in the bushes, but as long as everyone else is getting laid with strange chicks, they could care less about the pukers. The only think that will stop this rally is if the MTV Spring Breakers all get the clap at the same time...... Same old, same old..... Link to comment Share on other sites More sharing options...
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