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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Jon Koplik who wrote (7425)	9/24/2006 12:01:51 PM
From: Hawkmoon	Read Replies (1) of 33421

Once the trade went sour, Amaranth was trapped: selling into a falling market, scrambling to meet margin calls from nervous lenders, stuck in a position in a market where — to use a common phrase on Wall Street — “you get your face ripped off.” One has to wonder how many other hedgies are about to have their faces "ripped off" by a collapsing energy market, especially when it was over-valued to begin with. What Amaranth was thinking by being so long the NG markets is anyone's guess. But I can't believe they were alone.. Which means the next "implosion" can't be too far away.. Especially when those who are long are required to sell into a panic to reduce their exposure.. Btw, I heard one of the counter-parties on Amaranth's trades was a former Enron trader and he apparently made out like a bandit on Amaranth's turmoil.. Btw.. was driving in S. Maryland yesterday and say gas at $2.08/gal. But just down the road was a "mom & pop" gas station (BP affiliated) where they were still selling gas at $2.78/gal.. Seems they must have purchased their inventory at much higher prices and aren't willing to drop that price because they know they're going to take one hell of a loss. Hawk

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