In markets we often look to historical comparisons. As they say, history doesn’t repeat, but it often rhymes.

This chart is courtesy of dshort.com

The blue line is our current market. We are in a nasty global recession. The market has more work to do on the downside before anyone should be thinking about a potential bottom. It is nowhere in sight. Stay tuned.

Peace

Click to Enlarge

I think I just found another stock that is going to 0. Here we go again. (PLD) isn’t even at zero. Yet. And now, I think I found another one. This one is in an entirely different industry. But it smells like the same old story. Too highly leveraged. After some collaboration and some fundamental research, I may start accumulating puts in this name very very soon. You might find me throwin’ some orders around the pits tomorrow. This one feels like a big big hit.

This stuff has been going on for so long. It was written about very eloquently in the 1600’s.

Some in clandestine companies combine;
Erect new stocks to trade beyond the line;
With air and empty names beguile the town,
And raise new credits first, then cry ‘em down;
Divide the empty nothing into shares,
And set the crowd together by the ears.

-Daniel Defoe

Click to Enlarge

Some things are so obvious they are completely, laughably predictable.

Tonight, Bloomberg reports:

“Sept. 22 (Bloomberg) — The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs (GS)  and Morgan Stanley (MS) concluded there is no future in remaining investment banks now that investors have determined the model is broken.”

Now that investors have determined the model is broken?

Are you trying to tell me that you are the victim of some self fulfilling prophecy?

You are throwing in the towel because you know that you cannot double down one more time.  The lights are out.  Gambler’s ruin has set in.

At the very least get a new PR agent.  These excuses don’t fly anymore.  You need to take a bit more accountability than that.  Come on.  Let’s get real here boys.  The locker room conversations have yet to get out.  When they do, the blame game will start.  When the blame game gets really hot, you are all going to look completely ridiculously obvious.  Even your most staunch supporters will have to run for cover.

Another thing, I am not gonna write about telling you I told you so, but I might right now.  After all, we are in the early days of this blog.  I do need to establish a bit of a track record if I want people to read me. So I quote from my September 12th post:

“Investment banking as we know it is over.  Lights out.  Game over.”

The next sector that will scream that they are the victim of a conspiracy is the commercial REIT sector.  You know my favorite short there.

Peace

This morning I wake up to see the following analyst coverage of Prologis (PLD):

Oppenheimer initiates (emphasis mine) Prologis (PLD) with an Outperform, Target $50.

Initiates with an outperform?  I am so baffled by this one that I really don’t know what to say.  What a horrible assessment of this company.  How many of the entities entities were you able to analyze?  This thing is way too complex to even try to assess a value other than the fact that the path of least resistance is zero.  Is this analyst a CFA?  If he is, he has just discredited that designation.

RBC Capital downgrades PLD to Sector Perform from outperform.  Target lowered from $60 to $33.

Sector perform?  Commercial REITs are the most toxic sector in the universe right now.  The same paper exists in the commercial market that does in residential.  The problem?  Commercial paper is more leveraged.  FAR more leveraged.

Deutsche Bank downgrades shares to Hold from Buy.  Target lowered from $58 to $36.

Hold?  Don’t buy it but hold it?  Word to the wise: If you don’t want to buy something, you shouldn’t want to hold it.

Are any of these analysts reading the financial statements?  Are they reading the same ones I am?  How can they possibly think that the common stock of this company is survivable?

My target for this stock remains the same.  0.

For a thorough analysis of this company, see Stripnomics.

Peace

I just heard that a bobble head type marketing person who makes more money marketing the buying and selling of stocks than he does trading stocks saying that :

“I think the shorts tried to break Goldman Sachs (GS) and Morgan Stanley (MS).  Goldman had a great quarter, no big write-downs. I bet Morgan Stanley’s okay, too.”

Since you are a betting man (well not really when you don’t have any money on the table), then I’d like to engage in a bet.  Morgan Stanley is not okay.  Look at the price.  Does this look okay to you?  Let’s make a deal.  The January 5 puts are .90 cents.  That’s a lot of premium to pay.  They are .90 cents for a reason.  The reason is that Morgan Stanley is not okay.  Nor is Goldman, nor is GE, nor is anyone.

Mr. Cramer, normally I would not pay .90 cents for something where the profit potential is capped at $4.10.  However, If you are willing to sell these to me, I will buy 1,000 contracts.  I will only buy them from you though.  We will have to arrange this transaction through a broker.  You bet they’re okay, I bet they’re not okay.  Let’s get a contract on the table.

Peace

Click to view larger