WRAPUP year of the rat

if you read this blog and sell most if not all of your stocks earlier, you have already protected your capital to losses of 15-20% min, even more so if you hold financial stocks, so read on.

BOA incident
integrity; credibility; ethics, you name it - they are all out of the window. back in mid dec [17 dec, the day of my blog on tbond yield ] lewis of boa knew that merrill ran into severe losses of 15b and wanted to scuttle the deal. he went to fed/treasury to tell them his intentions, but was told that it is in boa and the public interest that the deal goes through. tbond yield also fell through 3% at the same time. the deal went through with help from fed and treasury. layman can only guess what is happening behind the scenes, but tbond yield tells you something big is going on at that time. the rest are history.

thain should go, lewis should go.

BARCLAYS
brown announced a series of measures to bailout the banks. while barclays is not one of them, uk treausry thinks that the funds barclays got from customer CRN [callable rate notes at 9%+] are deemed too expensive and it got funds from treasury to pay them off as the traditional business it is running cannot generate enough revenue to get it going. so recently barclays pay off such notes in full. it is already nationalised and expect more funding from govt not in the form of preferred shares as they are now known to be too expensive, new ordinary shares will keep on diluting other common shares investors.

GOLDMAN
goldman got its share of [high interest rate] preferred shares or loan from buffet, i think there is a high chance that the deal be modified at a time when goldman shares hit low later. its share price still has room to go lower at present. you will not see 105/115 for goldman for a long long while, the price buffet stroke with goldman. this conclusion draws from the fact that the interest rate is too high for normal operations. after it converted to bank holding, it cannot leverage as high as before, also it does not enjoy the command and respect from hedge funds or have such leverage over them, thus it cannot command the resources to make its trading as profitable.

YAM
our HKMA chief recently stated that the second financial tsunami is coming and even more severe. he did so only after reading stories from wsj. if he had forecasted back in 17 dec - day of my blog, then he deserves his salary of usd1m plus.

GOLD
it went through the roof [hit 900+] last nite in us closing and 30 yr tbond yield rose above 3.2, all these pointed to the market thinking us govt have to print money to fend off a depression.

DJIA, HSI
it is almost certain that djia and hsi will trend lower. djia at 6000, hsi at 9000.