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

To: Spekulatius who wrote (33036)	12/14/2008 1:10:26 AM
From: Paul Senior	Read Replies (3) \| Respond to of 78763

Madoff. "...a stark reminder of not investing in embattled business when the balance sheet cannot be understood." I can be oh-so-smug and condescendingly clucking about the rich folks and smart guys who invested in or with Madoff. I just wonder though... how similarly sucked in and suckered am I with some/much of the stuff I am buying? How much do I or any other outsider really know for example about bond fund LSBRX in which I continue building a position, or with any or all of the bdc's which have high distribution yields but where I (and everybody else too maybe) can't really be assured of their business models in this environment, or with any of the stocks like STT where I really don't know all the details of their balance sheet, but where I am willing to bet on reversion-to-mean? I would like to believe that if I were my normal suspicious self and if I had gazillions of dollars, in normal times if somebody showed me where a company delivered 12% steady returns but couldn't explain how, except by saying something about it's due to some arcane financial transactions that no normal person understands, that I would sneer and pass on the investment opportunity. More likely, based on what I do, I might try to look at the history, assume future would be similar, and invest with the guy. I would like to believe there as here, only a small $ amount though. This time of financial/economic distress is the Warren Buffett tide running out, and as the tide recedes, as he says we see who's swimming without swimsuits. I just wonder how many are out there and if I'm in the water with them. So many people were apparently duped by this guy either directly or through funds tied into him, that there is going to be a lot of pain for many. Not all these folks are going to be rich people only losing a fraction of their wealth. Very sad. nytimes.com news.yahoo.com

To: Spekulatius who wrote (33036)	1/17/2009 1:10:11 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78763

STT - STT posted an shocking (IMO) 8k today: the unrealized market to market losses are 5.5B$ as of 12/31/08. Tangible equity is about 6B$ as of 9/30/08 so theoretically that is all gone. Now unrealized losses due not need to acknowledged if management does not assume them to be other then temporary. Great! But 3.6B$ of those unrealized losses sit in this infamous conduit. If this conduit needs to be consolidated on STT's balance sheet those losses need to be realized - so this even would reduce STT tangible value to about 2B$. Then on the other hands I read about the high tier 1 leverage ratios of STT (8.4%, 16% risk based). It seems that my simple math would indicate that STT is almost illiquid (tangible equity depleted by market to market losses) while their regulatory capital is just fine. Well STT is supposed to be one of the stronger banks.FWI i don't own STT right now but i think given the choice I would sleep better being short than long the shares. As of December 31, 2008, there were $5.5 billion of after-tax net unrealized losses associated with our portfolio of investment securities available for sale and held to maturity. idea.sec.gov