05/11/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST
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https://archives.warpradio.com/btr/InvestorsEdge/051118.mp3
JUST LETTING YOU KNOW
Let’s Hope We Don’t Have a Repeat of 2008
Thursday, after the close J.P. Morgan announced a $2 billion loss on “stuff.” I looked at what they were doing and how they were doing it – and let me be clear and concise. I don’t know what the heck they did. I don’t think Einstein knows what they did. But what do know is that the stock took a big hit. It was down almost 4 bucks to 37 dollars on 216 million shares today. Average daily volume is 30 million.
What does this mean? As you know, I was one of the ones that were out in front of the 2007-2008 debacle. Let me tell you my biggest issues. First and foremost – and I wish I was making this up – there’s anywhere from $500 to $750 trillion of what they call derivatives. Instead of going on a long dissertation on what derivatives are, let’s just say…it’s “stuff.” And a lot of it is leveraged and it’s backed by “that, that and the other thing.”
It’s just one big, gigantic merry go round.
Now what happened in 2008 is that a lot of these derivatives were based on one entity and that was housing. And, of course, housing prices crashed. And all those derivatives basically crashed.
Here’s what I think is the outcome of this:
- I think it’s good that it happened. You think I’m crazy right? No, it’s actually because it’s a wakeup call. Hopefully all these banking goliaths are in their boardrooms this week asking each other the question: “Do WE have any issues?”
- Hopefully, the people that are supposed to have oversight on this stuff say to themselves or to each other, “Let’s go over the offices of these goliath banks and let’s make sure.”
And that’s that. It was a bad bet. A lot of people are going nuts over it. J.P. Morgan has had a good reputation. It’s just tells you how much stuff is out there and that anything can happen.
Now the last part of this equation:
I better not hear that government gives another freaking dime to another one of these banking institutions if they lose money.
I am sick and tired of privatized gains and socialized losses.
You do realize that’s what happened, right?
These morons got a gigantic put with our dollars in 2008. It should have never happened. Government should have told them to take a flying leap, put a bunch of them in jail, and took away the key. But no. Some of the same people ran the show back then are still running the show right now.
It makes me ill.
Now I am a big fan of Jamie Dimon. I have no idea what happened here, who’s at fault – whatever. But we’ll find out more. I’m glad that something like this gets out the open…that risk is still out there. And it can hit at any time.
And let’s just hope that this nightmare of derivatives that the regulators have still not lassoed…let’s just hope that we don’t have a repeat of 2008.
So that’s the story.
As far as the financials are concerned, of course J.P. Morgan had some influence on them. Goldman Sachs got hit a lot – Citigroup also — but I really didn’t see a lot of damage out there.
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Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.