Santayana

Everyone who thinks these kinds of days have been lovely should really be happy with the way today is shaping up.

My concern with thinking the derivative liabilities are balanced by the assets is do you know whether their counterparty is able to pay the other side of that trade.

I sold Jan $65 puts this morning and used the proceeds to buy the $75 calls with a few cents left over. Had the idea last week, wish I had jumped on it then!

Rumors that Paulson is liquidating his entire GLD position. Add some margin calls to that and down we go. The real action today is in silver!

Ah, so you were just trolling ;D

I'm not a gold bug. But what on earth does a short term price move have to do with anything?

What's the easiest to solve sovereign debt problem? I'm guessing you think that it is printing. I don't think that's such an easy solution. What about default, that's pretty easy, doesn't require any action at all.

Inflation is the absolute least of my concerns right now.

I would say that the conservative investor isn't really worried about relative performance. It's all about the level of risk that you can sleep with. I've picked up some more MSFT over the past couple of days, but am still sitting at about 40% cash and am also holding SPY puts. Having my 2 biggest positions be cash and FFH keeps me from worrying about much of anything that happens in the market. If I miss some 30% runup, oh well, I know my financial plan is working out just fine.

What's the cash to debt ratio? I see Peter just beat me to it....

Greek 1yr yield up to 139% this morning!

Do plans for a "smaller" BAC have any effect on anyone's thoughts about their upside from here? Wouldn't a smaller balance sheet mean the earnings potential isn't as great, although the tradeoff is that you would also have reduced risk?

What a great thread this has become. I had been wondering where Mungerville went. I sure don't know what is going to happen economically, even if I could predict the individual events. But I do think that what's going on with EU sovereign debt and the EU banks is going to be a factor in where we go from here. Given how things are looking the amount of risk I see is way to high to be long without significant hedges. I may be passing up on some awesome future gains, but I sure do sleep better at night. For those who think it's not 2008 all over again, are any of you buying the Greek 1yr bonds yielding 80%? Or do you see a scenario where Greece can fail and the whole system doesn't implode again?

Not sure what moore_capital had in mind, but the Europe situation is weighing large in my decisions. Then you have the employment number today and what's looking like contraction in the various Fed industrial/manufacturing surveys.

Go long wheelbarrows! ;D

This could be an interesting development... Racketering? Securities fraud? http://www.bloomberg.com/news/2011-08-25/bank-of-america-citigroup-depressed-libor-rates-schwab-says-in-lawsuit.html

I agree that you said all those things Sanjeev. I mostly believe them myself which is why I'm long BAC. I just don't see how this morning's news confirms any of those points to the degree of warranting an "I told you so".

I'm really surprised at a lot of things being said by so called value investors in this thread. Starting with Really, what did you tell him? That BAC was going to raise capital? That a 20% pop in the stock price means it's a good investment? Or is it just because Warren buys that it must be a good deal? Preferred is just as risky as the common? 6% yield isn't worth bothering with? I'm long BAC LEAPS myself, but how can people not admit that this deal isn't what it's being cracked up to be.

They don't necessarily have to fail to trigger the CDS. What should be illegal is selling the CDS without adequate capital behind it a la AIG.

ubuy2wron-- Twice you've mentioned that gold bugs would be unhappy if the US reverted to a gold standard by using the ratio of money in circulation to the amount of gold in Fort Knox. With M2 currently around $9.3 Trillion and Fort Knox officially holding 147 Million ounces of gold, I think most gold holders would be quite happy if that happened. Even if you were much more conservative and used M1 at $2 Trillion, and added the Federal Reserve's 225 Million ounces to the government's holdings, you would end up with gold priced at over $5000/oz.

That doesn't mean that everyone who wanted to sell was able to find a buyer though.

Prem has said he thinks US debt is good for the long term. Does anyone think he'll be taking profits at these levels?

It all depends what you want to insure against. I have a small amount of physical gold in case I ever experience that unlikely scenario where my family was forced to become refugees. I really don't ever expect that to happen to me, but it does happen in this world from time to time, and gold has proven itself through history to be the best way to transport wealth should that happen.

Take a look at the DXY chart and ask yourself if you see support anytime soon. I wonder how long gold can keep it up as well, but I think pretty much the only thing that can slow it down is strength in the USD. For someone who wants to short gold, going long UUP could be a way to play that gold/USD correlation. It may not be perfect, but at least you get the known potential downside of a long position vs. the unlimited downside of a short.

Treasuries don't seem convinced that we had a bottom. The action on the 10 year is keeping me nervous.