Auric Goldfinger's Short List Message Board

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Non-Tech : Auric Goldfinger's Short List

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To: Pravda who wrote (607)	11/1/1998 2:00:00 PM
From: Sir Auric Goldfinger	Read Replies (4) of 19428

Actually, the Wolfensohn witch hunt aside, I agree with JEB. If you remember the Barron's article on how BD's and Banks (in BT's case that would be both) have failed to hedge their gamma risk and how they still think they can hedge delta dynamically, you will note that in the event of a big down month of 20 to 30% (no one is sure) the book value of the likes of BT and most other brokers will likely be completely wiped out. I have it on reasonably good information that BT's book is very unmatched with respect to rapid delta/gamma exposure. Funny thing is that even top management is very unable to get their hands around their total exposure. That is not to say that the massive liquidity injections by the Fed will not save them for another day. Not a stock I would be long either. On a side note, a very senior VP from BT left to go to a Canadian rocket scientist software firm called Algorithmics. Company is run by the only Goldman IT executive to be named a partner. This software helps banks assess their exposure across the world in all instruments in real time. Too bad it is private. That is one stock we'd like to add to our portfolio of longs.

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