Worlds Collide pt2, and the LEH situation

Jim Cramer had a great video article about how the FED screwed up really badly in not saving LEH. Yeah that cost me alot of money as a result, but its costing the economy about $1trillion in total debt that is in screwed state. There will be some investigation into what the heck was the analysis behind this, but in the end hindsight is 20-20, and in hindsight the Fed should be quite clear that they screwed up. Banks aren't like other companies -- when they go bankrupt they are screwed, there is no restructuring possible and really no assets to sell off. Don't get me wrong, LEH screwed up and shouldn't be bailed out, but the Govt screwed up worse by not doing what was needed to save the world at the expense of moral hazard. We are all paying for it now as LEH fallout has destroyed the world.

Anyways I am a little back in the action. Sat night I went out w/ this dude AC and Nobu. They say a few other girls are coming (my new girl too). I come to the station to meet them and I see AC and Nobu in deep conversation about this girl Mi that Nobu invited. Apparently the 3 of them (Mi, AC, and Nobu) went out last night and Nobu was into the gal so got her digits, etc and asked her to come tonight. But then it turns out AC had already slept w/ her and he thought Nobu knew, but he didn't. AC also invited some married girl he had slept w/ before, so it was like 2/3 of girls were people he has slept with so he was like damn man this is like worlds colliding!

The married girl was bringing a friend, but it turns out she is a girl that Nobu slept w/ before too recently and was in a semi-weird situation with. So basically there are 4 girls, everyone has slept w/ everyone at this party but most people aren't a couple, and other people are trying to sleep w/ other people. Isn't this like 90210 ? It was pretty messed up for both Nobu and AC, they both felt screwed that night because someone brought someone they didn't want to have in their company.

Man... this is Tokyo life man. Lots of screwing around.

The Girl, The Market, and the Golden Job

So I'm dating the new girl. So far its fun, I like her. I kind of wonder where it will go.. but oh well for now I guess I should go with it and not think too hard about it.

I noticed her taste is expensive although I don't feel she acts that way. Articles I spotted. Rolex watch, Channel earrings, LV bag, LV wallet, LV credit card holder, Channel rain boots, Cartier bracelet. Hmmmm... red flags???

In other news Market is tanking.

MS is dying again, I am still holding a put so its in the money now. wooo. Its hard to gamble short because the gov't keeps interfereing.. MS was definitely going bankrupt until all the intervention.

So I'm losing like huge 10,'s of thous on long positions now (as is everyone). I don't need to sell so only thing to do is play contra w/ options and try to make up some short term ground. So far.. not bad. I'm learning how to properly trade options and hedge exposure by buying calls/selling calls together (bull call spreads/verticals). I made few mistakes that cost me big gains, for example on Tuesday I tried to buy a bull call spread against SDS (an ultra-short index of S&P) but due to low volume of options trading on this it never got thru! Geezzz.. the market tanks tues/weds and I am screaming AAARRRGGGG $5k in gains missed...

But it made me wise up, the spreads (bid/ask) on these low vol options are murder, so I figured out I should play bear puts against a higher vol issue like SPY (S&P index). Very liquid, and easy to exec. Thurs decided to get back in, so made up $5k on that play.

However I need to do some spreadsheet math and figure out the right way to be trading.. I'm sure I am not optimizing my risk/reward ratio here.

Note, I realize I will lose my money eventually as my betting streak can only go so far. But its okay its all for "fun" anyways. I'm mostly trading short, so if the market turns +long at least my standard portfolio will recover I hope.

Golden Job..
No such thing. Its what you make of it, and lately I aint been doing nothing. Quite sad. I'm now the head of MBS Analytics (its a joke its just me). This project if it doesn't get killed would give me a lead into VP if it takes off again. So I guess I should focus. Getting used to the slacker schedule of post-bankruptcy:

• 930-10am get into work
• 10am get breakfast w/ my friend from Gay from Documentation
• 1030am start chatting online w/ my colleagues, check yesterdays market, stocks, bloomberg news
  
• 1130am start planning for lunch by figuring out who to eat with
• 130pm back from lunch, chat some more see how usd2jpy is doing
• 300pm plan for coffee break, figure out who to drink with
• 500pm start thinking of leaving or going for happy hour

Yes it was like literarlly 1hr of real work in a day.. now we are getting busier.. but the highlights of the day remain the same.

Collision of worlds

Wow tonight was like out of a movie.

The last girl (GirlA) I was dating wanted to meet up, so I said uhh okay, pretty sure I knew she wanted to try again, despite pretty much not being that interested in me the 1st time. Its like the Seinfeld episode, if the girl isn't into you, you dump them and obtain the upper hand. Why this works time after time I don' t know... its so lame.

Anyways she says she's coming to my train station in 10min so I get ready to go meet her.

Rewind a bit, and I'm interested in this new girl (GirlB) I just met and went out with twice. I e-mailed her to say hey can I call you later to say goodnight (see how sweet I am?) and she says hi, I forgot I had dinner plans w/ my friend so I'm in xyz (my town). I'm like wtf your in my town? So I'm actually walking to the station at this time to meet GirlA and thinking oh shit, they may both be standing at the standard waiting spot at the station and I'll be busted.

So I email her back saying where are you? where you eating at? hey you should call me after and I'll come say hello. She says she's waiting for her friend but cool she'll call me after, so I'm like oh shit, she is also waiting there.... panic sets in as I'm pretty much across the street, I'm thinking if I walk up there is a good chance both will see me then see each other and I'm screwed. I quickly assessed the situation and called GirlA and said oh shit I have a work problem (I'm in IT its believable) and need to go back and send a file real quick... sounding a bit panic'd (for other reasons so it works). I say hey why don't you meet me at this restaurant up the street in 10min... so I sneak back away from sight.

Works like a charm, she is diverted to a location that I think is nowhere near where GirlB is eating. I join later, have some snack and brief chat, I asked my friend P to call me in 1hr to pretend I need to go, but didn't need it, due to my inherent panic'd look she could tell I had something to do so she let me go after 50min and after her telling me she has emotional scars from last bf which is why she has trouble opening up to people, blah blah blah. In the end I say look, we need to take a break.. this was going nowhere. And so be it, we part ways. Phew narrowly escaped.

Now waiting for GirlB to call me so I can go meet her. But I think to be safe I need to call GirlA again to ensure she is not in town and already safely tucked away at home before I venture out again.

Damn I'm not even a player.. I don't see how true masters can do this. Too much stress for a small town guy like me. Admittedly I get a kick out of it.

Sorrow But Why....

I often wish I could be a playboy like my friend VIG. I say it again.. at times I play the game, but I don't have the stomach for it.

I was seeing this gal for a bit.. off and on for months and months, I never knew what the deal w/ her was, but I did know there was a lack of passion and I never felt much commitment/interest from her. I think she lacked the clinginess that I'm used to, thus never got much e-mails or anything.. quite odd.

But in the end, I let it drag out.. and then came to feel it was a waste of time, so I said hey lets be friends this is going nowhere. But to my surprise she says she wants to try harder and I say well I guess we don't spend much time together maybe we should start there... but in the end I feel it was too late. We started talking and sharing our thoughts at a point when it was already a dead relationship (other than occasional action). I guess even at my age I haven't learned the secret of expression.

Oh well this one is dead, and she feels really sad, which makes me sad because I am somewhat of an empath... I don't know if I did anything really wrong, but I feel bad that things were so unclear and nobody stepped up to say what they wanted. Lesson learned, be direct, nobody has time to dick around these days.

But my sorrow is shallow.. in the end this girl wasn't doing anything for me really. So gotta move on, its the right thing to do.

I'll go watch an inspirational movie I've downloaded for free now.

Party On!

Damn, what a party, good shit man. I threw a party for my ex-college Eon. Its funny invited like 10 girls, 10 guys, and about 20 girls and 10 guys turned out.

I was very entranced by this short gal w/ nice cleavage that apparently loves korean things. When you meet someone like this.. its like a freebie, and she was quite cute. So I will see where that goes.

But I also invited this Taiwanese gal I met last weekend and damn she is really the best. She has a boyfriend unfortunately so I must strategically wait it out..... her korean friend seemed quite interested in me as well and while I was definitely poised to strike (ie she invited me to her place), I opted to pass since I am more interested in the Taiwanese friend...

Hmmm why did I retire from going out I wonder... damn there is so much out there!

Exposure

I started dabbling in options trading. I think most people lose all their money in this, and perhaps I shall too. Well I decided to put a loseable stake and try trading, so far doing ok. It only takes a few bad moves to wipe you out of course. Its total guesswork/gambling. The only thing you can do is protect your downside w/ the various combo strategies out there.

Fun stuff. Makes me rush home to see the market open and watch my fortunes rise and fall!

Having a huge party tonight for my colleague who moved here. Funny what happens w/ parties. I invite like 10 dudes, 10 girls. The girls always wanna bring like 3 girls so suddenly its like 20 girls 10 guys. I'm like hey its not my fault I invited 10/10.. but then the girls start bitching wtf why is it all girls at your parties? I say i can't help it if girls come in packs. Its impossible to plan for balance. I give up.

Strength and Honor

I need to watch a movie or two to remind me of what my values and principles to live by are. Basing values on fictional movies is maybe not the best thing to do... but whatever works man. "Strength and Honor" is the (pre) Gladiator code.

I think on weekends when I'm chilling I tend to think alot more than I need to.

I played in a 9-ball tourney. I played a top seed 1st round, bad luck. I lost 5-3, very close match. God damn... I was under severe pressure. He was clearly better, but I had my shot to win many times. Maybe I shall retire from 9-ball as well.

Hmmm time to buy? I make a bold prediction..

Fun site: http://wallstfolly.typepad.com/wallstfolly/

I ponder if the market is about bottomed out for now.
I think its oversold a bit, so I would not be surprised for a slight rebound this week.

That being said,I would not load up too much for the long term because I feel the market is going to be weak for the foreseeable future (ie, 3-6months), and likely sag slowly like Japan has over the past 15 years. That sucks.. but one has to step back and think.. the market has always gone up in the past since 1932. It has its hiccups but its always been rising.. who says it has to keep rising all the time??

Note, Nikkei index was at 38,000+ in 1989. What is it now? Its been trading between 10k-20k for some time, and is presently below 10k as is the DOW. Thus.. if the DOW falls from its alltime high of 13k... down to 6k, should we be so shocked?

For me I'm staying in cash but may dabble in long/short positions to make a few bucks on the side. But not much long term plays. I've learned I can't pick long term winners in general.

Black Friday

As the market is about to open, I already know whats going to happen. its going to be a rout of epic proportions. I was telling my friend I thought Thurs would pull back with a small gain but Friday would be like a -1200 record crash day. Maybe not that bad today, but bad.

In it all we have to ask ourselves.. what are we doing, what is our strategy?? I was in the crash of 2001 and I lost alot then, and I feel I have followed the same patterns then as I did now which puts me in this horrible loss position. I was trading when I didn't have time to watch my positions, and I did not put stop limits in place to protect myself.

My only lucky save (not much of a save) is that 75% of my 401k is in cash, so only the remaining 25% is losing 30% as the indices do. I did buy some puts recently.. but maybe not enough. Overall I'm down big like everyone else.

MS is an interesting one.. I was telling people all week its dying. I hate to see it since less banks ini the future is not good for my career, but its so obvious whats happen after living thru it myself just 5 weeks ago. Well maybe the govt will save it this weekend.

In the end, we all have our health, we have jobs, so its not all that bad. I'll still go on vacation each of the next 3 months.

It goes up and down

Experts say this to me. Tombo says to me the same, it goes up and down.

I guess so. Lately just down.

I can't sleep because I am following MS and that sucker is going down fast. The run on this bank is crazy, I have been watchings its CDS (credit spreads) and they were thru the roof last week and didn't budge. I think its a prequel to failure, at least thats how it was for LEH.

Its nuts.. market is nuts. I placed some hedge positions w/ options and UltraShorts recently but its not enough. I am way overexposed. Shit.

God help us all. But I guess its just money. This type of volatility makes option trading easy money. Biggest limiter is that the trading software on Ameritrade and Schwab sucks for volume option trading. Or maybe I am using the wrong tools.. more likely. Hehe.

Meltdown part 2

One version of the inside story I heard today.

Friday we had $70b in liquidity/cash available so no worries. CEO says shit we can live 6 months if nobody trades w/ us so screw you bastards. Then suddenly counterparties stop paying us on and we are out of cash because in the biz, you owe billions and billions are owed you by various banks like JPM and GS. So they stopped paying because they weren't sure anymore if we would pay back. So saturday rolls in and we are now in dire straights and out of cash.

CEO says we are screwed, need bailout. BAC was interested as were others, so the famous meeting happens to bail us out of this mess... but surprise surprise..

Treasury secretary is known in the industry as a mortal enemy of our CEO. So of course Paulson decides not to back the deals w/ an govt money, despite implying that they'd not let banks fail after the Bear disaster and after bailing everyone else out. Without backing nobody wants any part of this deal, but smart guys like Merril's Thain realize holy shit, that dumbass Paulson is going to let them go bankrupt, is he mad? This is going to cause a ripple that is going to crush any bank in trouble including mine, thus he engineers the deal w/ BoA (BAC). Good move they were about to go down as was Morgan Stanley.

The fallout is immense. The WSJ article says it.. and the hindsight is that you could have put $30b up to back the deal, and saved yourself a huge costs unwinding us and $billions in loses by counterparties who are all screwed now in a $600b bankruptcy, and $700b bailout. Add the horrific fear in the markets.

Inside the walls of the offices people were definitely in shock that you could wake up Weds, stock price shoot down 50% each on Thus and Fri, then be forced to enter the weekend looking for a buyer, and start Monday in bankruptcy.

People in the trenches gave their hearts to this org, the culture was really great in many ways. I really liked the people I've met so its sad for the 10, 12, 15yr veterans that really built this place up. These guys for good and bad leveraged their lives in this place.. its sad to see it go away due to some circumstances.

The Monday of the bankruptcy was a holiday in TK but people came in to pack their things up not knowing if liquidators would come in or what the heck would happen. Tuesday people were instructed to come in, but people were standing around doing nothing, the e-mail systems were almost crashing due to the amount of people 1) emailing code/files out to their personal acounts, 2) people sending resumess out, 3) people sending "here's my contact info keep in touch"... even out division head said people please keep in touch, since the inevitable is near... but in all this, no word from the CEO, wasn't till like Weds or Thurs night that he spoke up in a lame email.

First week was full of shock. Later in the week got worse for Asia as BarCap only decided to buy only the US business/operations. Things looked really bleak, people weren't sure we'd make payroll this month so we maybe were working for free. But Friday the Asia CEO on Friday gave a rousing speech stating payroll would be made, and that the Asia business has value and will be sold.

I was on vacation at this time but kept in touch and got the news as it came. I guess it was best not to be there. Way too much time and anxiety in the office to deal with. Its bad enough now.

Push the button

Wonderful article on the meltdown and how jacked up everything is right now because nobody saved us.
http://online.wsj.com/article/SB122266132599384845.html

Last night, the new company that bought us finally sent us an offer letter via e-mail and there is some link you follow and a button you press to "accept" the offer. I am an anarchist and I don't like to accept stuff without creating drama. So I am asking around whose pressed the button, making jokes like I heard the first 100 who press don't get paid or get paid, or get bonus or don't, and the last 100 don't get x/y/z, or that after 3000 clicks the button stops working and says "capacity has been reached".

Anyways the whole days been about "did you press the button?" Even the CTO comes out has a meeting w/ all of IT which is like 200 in Tokyo and basically says, "you should press the button" and explains why we should accept it and how there is no reason not to. It is bizzare man. Its like I'm waiting to press the button to start nuclear war, but in reality its nothing but a strawman poll they will give to the new buyers to ensure people are onboard w/ this acquisition. Its a confidence vote.

I haven't pushed the button. In fact ponder not pushing it. You see, they tell you to push it but don't tell you what happens if you dont push it. I asked HR and they also gave me shit like look man this is a great deal push the button dude. And I'm like look man, I am not saying I'm not gonna push the button, I'm saying what the fuck are my rights if I don't push the button, I should make an informed choice. The guy doesn't know but he doesn't think there is any severence or future if I don't since I'll be with a bankrupt entity awaiting the court to assign residual payments.

Let me backtrack, you see, if you push the button, you become an employee of the Japanese bank and forfeit any rights to the bankrupt entity for severence/pay/etc. Thus I ask the natural question "so is there severence if I don't push the button and I stay in the bankrupt org?" Note, 95% of the people don't have the option to sit at a bankrupt company and wait for severence when a paying job is available, but I am different, I am curious if I should go move to China and study Mandarin and Kung-Fu. I am living as free as they come in life. So I must find out the truth.

So anyways I investigate and find out that in Japan employee rights in bankruptcy are #2, right after (#1) paying the administrators of the bankruptcy itself. Thus unpaid salary and severance are top creditors ahead of vendors, bondholders, shareholders, etc. So despite what HR tells me, it seems if I don't push the button I could and should get severence. In Japan Labor law appears to say severence is a right, but only possibly just 1month. So my evaluation is that you can sit and wait for 1 month severance at the expense of everyone saying WTF dude why didn't you push the god damn button???? If it were 3-4months I'd say okay I'm in, but 1 month.. sheesh I might as well sit as they re-org and do nothing for 6 months as they figure out what to do, then collect 70% of my bonus.

So the deadline for the button is 5pm Friday. I'm interviewing w/ some companies Thurs/Fri so depending how that goes will determine if I push the button at 4:58pm on Friday. I'm giving myself 2 min of cushion in case the browser freezes or something.

What nonsense.. push the button..... just push the button..... hellfire of course I'm gonna push the button. What the hell else am I going to do. But so much drama...