Gold and Silver Juniors, Mid-tiers and Producers Message Board

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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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To: tyc:> who wrote (60395)	7/18/2008 3:10:33 PM
From: LLCF	Read Replies (1) of 78417

<It's interesting that shorting the common against a holding of warrants is not considered shorting.> I'm not up on the latest particulars of "margin" on such trades and fed rules, etc. My point is that if I'm long warrants covering a million shares struck at $2 and short a million shares (trading @ $10) I'm NOT betting the stock will go down. When evaluating the intentions of the trade "long majors short juniors" it's implied the trade is betting majors (value of holdings) will go up more than juniors (value of short) go up. <However I heard a Hedge fund "manager" on BNN boasting that his hedge fund was 55% short and only 45% long.> Yea, that's what I'm talking about with other "pair trades"... a guy like that (if not more specific) may be long "anything" and short "anything"... the implication is simply that they are good stock pickers and just toss them into a portfolio... I DONT think these are considered "bonified" hedges (although of course parts of their portfolio might be) for margin purposes. I think that's just the nomenclature they use now... "we're net short"! Probably long a lot of pet stocks and short the S&P when convienient. There is a graveyard at the end of Wall Street full of those guys. :) <But do shorts really hedge longs when they are unrelated ?.> NO and it's not considered a hedge officially... but these guys just add up Betas, etc and ram it all together with a dallop of S&P futures depending on how many drinks they've had. :)) <but who police's the meaning of words ? lol> Well, that's the problem... when I was still in the business a decade ago they started letting "basket trades" be considered bonified hedges and allowed selling on "downticks"... don't know how all that stands any more. That banking law that Phil Grahm rammed through also loosed all the wackey derivative and swap traders to net out all sorts of risk... I don't know if ANYONE knows WTF is going on but the banks. Each risk dept actually has REAL ROCKET SCIENTISTS involved... that's not to say they don't use that brain power to get away with whatever they can BUT when a REAL BANK goes down... City, BAM, any Euro bank you can TAKE IT TO THE BANK that they knew all about the risk. As for FNM... shit you think they were going to pay up for a bunch of 5mill a year guys who know WTF is going on to run things there?? What for, we got the "banksters" telling us how this stuff works! Oh, yea, and selling us all these swaps and stuff. Don't worry, be happy! Everyone on WS knows FNM and FREDDIE didn't really necessarily understand this stuff... and the oversight committee?? Well, you can't expect them to, although there have been plenty of people with friends on WS that knew this and have been all over FNM and FREDDIE for YEARS trying to slow them down... all politics. DAK

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