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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (991)	10/30/1999 5:57:00 PM
From: Bobby Yellin	Respond to of 2794

thanks Henry.. a friend ( who is much wiser and more knowledgeable than I(deadly combination)) and I have been having an ongoing debate re current evaluation of market how should one view the market's current high PES now compare to the the PES in the past when one takes into consideration lower interest rates,no dividends, and buybacks and insiders issuing options? (part of the argument stems from my belief that the economy or rather consumer spending to a large part is fueled by capital gains rather than wages..)

To: Henry Volquardsen who wrote (991)	11/1/1999 10:02:00 AM
From: Paul Berliner	Read Replies (1) \| Respond to of 2794

Henry, PBS broadcasts a program on weekends called debatesdebates. The link below shows a list of recent topics that have been discussed. Unfortunately, the site doesnt seem to have transcripts. debatesdebates.com Anyway, Martin Mayer of the Brookings Institute seems to take issue with your opinion on derivatives. He spoke against non-exchange traded options/off-balance sheet transactions, arguing that they are a ticking timebomb because so long as we don't know the actual open interest in a market we cannot hedge ourselves properly nor prepare ourselves should too many participants be caught on the wrong side of a trade, because we don;t know the true number of participants. IMO, the most brilliant comment he made during the debate was when an argument insued about the current degree of leverage in the global markets. Mickey Levy stated that he was quite sure (as he claimed to be privy to the portfolios of 'all the major players') that leverage was now just 25% of what it was prior to the Russian default. Martin Meyer countered that just six months ago, he too would have agreed with that statement. But recently, he noted, all the major players and institutions have begun to re-leverage themselves to pre-Russian default ratios because quote 'the pressures on the industry to maximize returns are too great'. That statement is quite chilling! I urge all to check out the show. While I dont usually catch it, the quality of the debates are frequently excellent. Another program they aired (about 6 to 9 months back) was a debate on whether Argentina should dollarize their economy, though I don't think that was the actual title of the debate. p.s. I noticed recently that since interest rate spreads around the turn of the millenium are so wide, many fixed income risk arb firms are obviously drooling over the opportunities here to position themselves for post 12/31/99 spread-narrowing (if they forsee little Y2K disruption). My question is this - how attractive do these opportunities look to you? I find it mind-boggling that a long-time pro trader such as yourself would be able to resist such a savory feast - surely this must've crossed your mind before you decided to 'hang it up'.... so why didnt you postpone the retirment until after Y2K? my best always, Paul