I'll post this, I posted the link before.
It was also written about by David Tice & Bill Fleckenstien.
Welcome to The Greater Fool!
Open Letter to the Fed
September 24, 1998
Messrs. Alan Greenspan and William McDonough
Board of Governors Federal Reserve System
Washington, DC 20551
Gentlemen:
It was with great pleasure that we read in this morning's Wall Street Journal of your decision to help alleviate the unfortunate and unnecessary loss incurred by the investors and creditors of Long Term Capital Management LP. The rapid and unforeseen decline in global markets has made it hard for all of us to master this universe. Your decision to intervene yesterday will certainly help Long Term Capital raise the funds necessary to buy into this unusually large dip. Americans everywhere are thankful for having such a thoughtful and forward-looking Federal Reserve System.
We are writing you to inform you of our own investment losses of late (though, most unfairly, our losses have not been on the cover of BusinessWeek). The following is a list of reasons for this loss, which, we think, is not unlike that of Long Term's:
•We owned a large sum of derivatives, fully convinced of the smooth and continuous pricing of the markets. Our blind faith in Black Scholes models remains intact. Our models are perfect. It is the market's fault for not following them, not ours.
•We were clueless regarding the nature of gamma risk. We are still a little fuzzy on this.
•We have never lived through a bear market, nor do we think we need one now.
•We have never read anything written by Nicolai Kondratieff, Sidney Homer, Benjamin Graham, Alexander Dana Noyes, Robert Rhea, Ralph Elliott, or anyone else with a sense of history. History is a waste of time.
•We invested heavily in junk bonds, especially those issued by countries which cannot be located on a map by our crack research department. We never understood why people called them junk to begin with.
•We think you're doing a great job, and we think you'll cut rates (wink, wink, nudge, nudge). We think this will be pure gravy for all of us, and we can't wait to buy more junk bonds on margin.
Enclosed you will find a more detailed list of our losses since mid-summer. Please enclose your check (payable to TheGreaterFool.com LLC) in the self-addressed stamped envelope provided.
Sincerely,
TheGreaterFools
P.S. Do you have the IMF's address?
Enclosures
Cc: Mr. David Komansky, chairman, Merrill Lynch & Co.
Mr. Sanford I. Weill, chairman, Travelers Group
Mr. Jon Corzine, senior partner, Goldman Sachs & Co.
Mr. Douglas Warner, chairman, J. P. Morgan & Co.
Mr. John Merriwether, general partner, Long Term Capital Management LP
Links Outside the Bubble
Fiend's SuperBear Page
The Contrarian
The Prudent Bear
Grant's Online
Elliott Wave International
Dow Theory Forecasts
Yardeni's Economics Network
Asia Crisis Home Page
Stock Market Cycles
Value Investor's Workshop
Links Inside the Bubble
The Motley Fool
The Raging Bull
StockFever.com
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Stock-Line
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The Short Term Stock Selector
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