Minyan Mailbag: Further Thoughts on Refco
I agree with your comments. I remember some years ago, actually it was in 1968 (I think), when I first started in the business with Salomon Bros., the stock market had to be shut down for most of the day, because they couldn't handle the paper work. I have no doubt that most of Refco's (RFX) book is OK, in fact it might all be legit. However it is the uncertainty that creates the doubt, and with so many 3rd party transactions not accounted for, no one knows exactly what they have.
Maybe there has to be a moratorium world wide so "we can catch up" to what has been actually written. I understand that in the meeting with the Fed a few weeks ago, the banks thought that they would need 6 months to catch up. In the meantime, this is a very, very, very scary market place.
Does this make sense or am I way off base in my thought pattern?
I did buy some RFX yesterday, not enough to stop me from having a great year, but enough to hurt. But then again the journey of life is full of bumps, some are just more enjoyable than others.
I just commented to another that I am mystified as to why the SEC and/or the Justice Department do not look into the whole underwriting business. Why does Goldman Sachs (GS) (or others) seem to miss their fiduciary responsibility in these things?
I doubt it is stupidity. Perhaps cronyism?
I did not mention that my "flyer" in RFX was in part justified by my position in GS: my small loss when RFX goes down will be offset 3 times by my gain in GS today (and I built it even more when the stock did not react initially to RFX news).
Few realize how fragile our financial system really is, how much leverage there is in it.
The Fed can control, and must, any individual situation, but cannot let it cascade for the whole system is fraught with peril.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter