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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Michael Bakunin who wrote (95781)	5/2/2002 4:16:58 PM
From: Tommaso	Read Replies (2) \| Respond to of 132070

It's very hard to see what could go wrong shorting BHY. I just wonder how it ever got to be valued like that. Closed-end funds generally don't show the kind of volitility that can wipe you out on a short. If I did it, I wouldn't try to hedge. Instead, I would just short less, and keep a cash reserve in case margin calls came in. Please post if you are able to borrow the shares. I might try shorting a modest position on the Internet to see what happened (whether my broker could handle it). Just looked--How can they be paying a 12% yield? That must mean some of their holdings are paying 20%. That must mean some are close to bankruptcy. But I know less about this than you do, of course. I guess it's the yield that pumps the stock up. I awouldn't call it a Ponzi scheme, but it sure sounds like one of those mules in the Faulkner story that got pumped up with a bicyle pump to make it look fat and healthy.

To: Michael Bakunin who wrote (95781)	5/3/2002 8:04:19 AM
From: Joan Osland Graffius	Read Replies (1) \| Respond to of 132070

Michael, >> I'd planned to hedge it with yield calls What instrument are you planing on using for this? Joan

To: Michael Bakunin who wrote (95781)	5/3/2002 8:34:17 AM
From: Joan Osland Graffius	Read Replies (1) \| Respond to of 132070

Michael, Re: your BHY play. I have no idea how long people will keep the price of these leveraged junk bond CEF's at huge premiums. I had sold most of my junk bond position in Merrill Lynch's high yield fund during the 90's and kept a very small position. A few months ago the yield fell off a cliff as it went from 14% to 8.7% and I dumped it immediately. One of my friends had lost a large portion of her assets in the market. Her money managers had been able to keep her in stock funds by convincing her everyone was in the same boat. I had talked to her about risk management and she went to talk to them. Their reaction was to rolled some equity fund capital into junk bonds and corporate bonds. Ho Ho great risk management strategy. <g> I don't know if put under pressure this is what most of the money managers are doing and if it is evidence there will continue to be a high demand for higher yields. Joan

To: Michael Bakunin who wrote (95781)	5/3/2002 10:52:59 AM
From: Tommaso	Read Replies (1) \| Respond to of 132070

I was thinking some more about BHY. I bet that there are some people who think they are as smart as hell holding that stock with maximum margin, raking off the 12% dividend, and paying --what is now? --4%, 5% in margin interest, maybe less? It's a sort of spontaneous, self-operating, Ponzi scheme. I think I am going to enter a short order just to see what happens. Just put it in. Will report. Maybe will wait to send this message for a few minutes. "Rejected" Waiting for an explanatory email.