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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (29755)	1/17/2008 3:04:19 PM
From: Paul Senior	Respond to of 78655

Possibly no riskier now than shorting at $40's. Different risk maybe. ABK could get an angel investor which might suddenly pop up the stock a bunch of points. At $40, seemed - to me - it was very hard to see the stock suffering too badly -- lots of assurances by the sector that things weren't as bad as the short-sellers were saying. Now we know things are very, very bad and it might not take much to drop ABK from $5 to $2. That is a good percentage gain for the shorter. --- The thing for me though is why short at all? I understand one places one's money in what one knows or is following or is interested in. Just that to me, it seems there are so many attractive buys available now, I don't see the attractiveness in taking a short position in ABK. (Talking about risks I mean. Somebody wanting to know quickly if they're right or wrong in their short ABK bet, well they likely will know in a few days about ABK. Some/many?/most? stocks otoh that are dropping to value levels could take years to work out/recover.)

To: Jurgis Bekepuris who wrote (29755)	1/19/2008 1:14:20 PM
From: E_K_S	Read Replies (2) \| Respond to of 78655

Hi Jurgis - Not good for ABK or the Muni market. RE:ABK - Insurer Of Bonds Loses Top Rating washingtonpost.com From the article:"...NEW YORK, Jan. 18 -- Ambac Financial Group, the nation's second largest insurer of bonds, lost its precious AAA rating from Fitch Ratings on Friday over concerns that the company no longer had enough capital to guarantee billions of dollars in debt now imperiled by the subprime mortgage crisis...." It look's like management was spinning out of control and had no exit plan in place . . . "...Ambac had said Wednesday it would strengthen its capital base by issuing at least $1 billion in securities. A day later, however, the company said it expected to report a loss of $5.4 billion on its portfolio of credit derivatives and losses of another $1.1 billion on subprime mortgage securities. Ambac also announced its chief executive, Robert J. Genader, had resigned. That same day, Moody's Investor Service signaled it was also considering whether to downgrade Ambac's ratings. Ambac stock plunged 52 percent. On Friday, the company did an about-face, announcing that "market conditions and other factors" had made raising capital "not an attractive option at this time." ..." ========================================================= This is going to trickle down to the municipal bond market that provides financing to the state and city municipalities. Cities will have a hard time refinancing their current debt or issuing any kind of new debt unless they can get "quality" insurance coverage on their debt. To further compound their financial problems, many of these municipalities are set up to fail as their current tax revenues are falling due to a much lower tax base from decreased property values. Therefore, it is possible we may begin to see some defaults in many of the municipalities. This could lead to a round of significant government layoffs and deferred infrastructure and support service spending, that will ultimately accelerate and deepen any recession we may already be in. It does not look too promising unless somehow the spiral down in the "debt quality" issue is nipped in the bud...quickly! The only possible bright side I see is that we should see quite a few "value" bargains in stocks as more blood hits the streets. EKS P.S. This Moody's statement last week does not help the problem either. Moody's says overspending threatens U.S. debt rating gata.org The United States is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and Social Security spending, Moody's, the credit rating agency, said on Thursday. The warning over the future of the triple-A rating -- granted to US government debt since it was first assessed in 1917 -- reflects growing concerns over the country's ability to retain its financial and economic supremacy. ...