[machinehead]

Bloomberg has posted a long article, which provides an inside look at the Matrix described every evening by Mark and Buddha. The general theme is how educated aristocrats have taken over the trading rooms from the profanity-spewing lacrosse jocks of yesteryear. Even some brainy women are welcomed there now.

Bonds for Blondes

Some of the quotes are hilarious:

"[The trader's] team buys mortgages from such issuers as Fannie Mae and Freddie Mac. One trade in December involved buying $1.3 billion in mortgages and then carving them up into 10 tranches for resale. Most members of his staff are 30 to 40 years old and have been trading for eight to 10 years."

Yeah ... basically the 'Brooklyn bodega' trade: buy untaxed cigarettes for 3 bucks a pack, and sell 'em one at a time to junior-high school kids for 50 cents apiece. They're making 'tranches' in Sunset Park without even knowing it!

"This is not a zero-sum game, yet given the yield and volume, everyone can make money,'' says Strang.

That's right, Ms. Strang. ONE PLUS ONE EQUALS THREE! EIFUKU! Bwa ha ha ha ha ha

[EasyAl]

Quote

ONE PLUS ONE EQUALS THREE!

That's the same song the Street was singing when AOL announced that it would merge with Time Warner. Of course, the $98.5 billion lose in 2002 is even bigger than the annual budget for state of California.

[DogBoy]

The outcome of this will be that technical analysis will be largely discredited.

Those currently making lots of $$$ gaming short term movements will find that it doesn't work anymore as volume dries up and the market becomes, well let's say sort of "sporadic". Like te late period of the Gold Bear market.

Rally's will come out of the blue and then fade quickly. TA won't tell you a darn thing about the post-Bear market.

Heck my dog will be able to tell you more about what's going to happen in the market than the TA guys.

Don't get me wrong, I beleive in TA but just like the market as a whole it's been used and abused so badly by computer trading geeks, the FEED, the Gang etc. that it's a joke.

Case in point. Some TA guys say last week that the NAZ has great support at 24.50 and it'll bounce.

What happens ? Every time it looks like it's going to take a huge dump it always gets bought up at what level, you guessed it, 24.50. I wish I could count the number of forecasts I've read this week that mentioned 24.50. Sheeesh !!! What a bunch of crap.

I would even venture a guess and TA will take alot of the blame (undeservedly) for the crash (coming) and the Bear market.

Come on, gimme a break !!!! With almost every market participant trading on the same TA theories and the same charts if this isn't a self-fulfilling prophecy then what is ?

[Jorma]

How is this news? The invasion of the 'quants' as they were called in the 80's and their total victory soon after on Wall St. is old news.

Little noticed is that this was THE computer revolution. Especially in regard to the securitization of debt, it was computers and information technology which enabled the whole thing.

When bonds and stocks still had paper certificate status that was a simple abstraction. As financial assets have evolved into digital bits they have been sliced and diced into ever smaller and more arcane and complex abstractions, like mortgages cut into 10 seperate tranches.

Not a bullish defense per say, not from me anyway, is that this can be seen as being related to the theories of chaos and complex systems. Most here are certainly familiar with the popularized theories of this and the general conclusion that very complex systems are in fact quite stable. I suppose Easy Al's theories that the complex financial world especially derivatives have been a stabilizing influence stem from these ideas.

At root may bears, especially of the gold bug and hard money variety, are I think reacting to and against the newer levels of abstraction used to measure wealth. I'm as harsh a critic as many about the nature of the current financial world but I maintain that gold as 'money' or a store of wealth is itself an abstraction. A simple one perhaps but not something that is immutable or ordained or sacred in any way. In its simplicy lies its strength, the difficulty of manipulating it.

The crazy financial world of complex abstractions, derivitaves, is not bad in and of itself I maintain. The problem I think comes from the corruption within the system. I don't buy Al's case because of the corruption which underlies the current situation.

[Goldmember]

Soros, LOVE the babe shots at the end of your posts. Of course, we stoolies now EXPECT a babe shot with every post. Please keep up the good work.

ps: Just a little more flesh on the honeys would be nice though

[machinehead]

C'mon Goldmember. She starved herself just for you.

Bloomberg reports that the "Bond Math" story linked above was one of the most-read articles this week. Maybe because of all the hits from Stoolville?

[BAREister]

When Harold Schapiro wuz President of Princeton he brought a team of people, including the since-disgraced? Head of Admissions (P'ton's Admissions Office allegedly got caught sneaking into Yale's puter system and heads rolled, including the head of the Admissions Orifice) out to Seattle FUR a promo road show. He brought along the Dean of the School of Engineering, too, who, if HRFF recalls rightly got up and started rappin', inter alia, bout dual majors in math (Princeton has one of the finest math departments on earth) and engineering/computer sciences then related how these youngsters graduated and took jobs w starting pay in the hundreds of thousands, sans grad school degrees?, at the big investment houses on Wall St. This appeared to be held out as something to be proud of, FUR students to ASSpire ™ to.
Or that was HRFF's distinct impression. Ass the presentation progressed The BARE wuz incredulous.

Now you probably know where all those derivatives are designed and by who, in part, anyway.

Then,later, The BARE went back FUR his BIG reunion and met a friend from freshman year who's done good in the legal world, a partner in a big NYC FURm. What was SHE doing? REVIEWING and APPROVING all those derivatives, etc. Doing the DUE DILIGENCE on them, inter alia.

HRFF tried to keep a straight face throughout the conversation. Or at least from looking at her AGOG/ASSkance ™.

Think lawyers understand derivatives when those who design and or use them can't?

The article concludes by saying "the party's SNOT over yet". No. ItSNOT.

It says investment bonkers will be ASScendant ™ once again when IPO's pick up.



Faith in the party'SNOT ending and a rebound in investment bonking on The Street is unshakeable.

[Jorma]

yobob1, on Feb 2 2003, 09:09 AM, said:

Holy bat guano Jorma. Read Noland. Read him untill you understand. The corruption is allowed by the lack of transparency and complexity.

I'll tell you what, you take one of your abstractions and trade it for food outside of the financial markets. I'll bet that I can trade my metal for food just about anywhere on the planet, who do you think will go hungry?

Quote

The crazy financial world of complex abstractions, derivitaves, is not bad in and of itself I maintain. The problem I think comes from the corruption within the system.

Believe me when I tell you we don't have an arguement Yobob. Please. I understand Nolan pretty well.

Lack of transparancy is an issue seperate from the nature of any transaction. Complexity is neither bad or good in or of itself.