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

To: Spekulatius who wrote (44831)	10/5/2011 9:00:48 AM
From: Jurgis Bekepuris	Respond to of 78704

OT? CDS. I don't have a good explanation, just couple of thoughts. CDS's are not accessible to small investors. Possibly the market is quite illiquid in certain issues. The market distribution of risk hedgers vs. speculators probably depends a lot on the issue. The pricing may be based on models, but it's not clear how precise these models are since very few of the companies have actually defaulted. So even a rumor can possibly swing the prices a lot. I am not sure there is a workable way to arbitrage trade the CDS, e.g. go long French bank CDS and short BRK or DOW CDS. There is also counterparty risk. You might make a killing by just going long French bank CDS, but then you can't...

To: Spekulatius who wrote (44831)	10/18/2011 10:49:20 PM
From: Spekulatius	Read Replies (2) \| Respond to of 78704

Re BAC - found a very interesting story on Bloomberg IPAD app that BAC want's to move derivaties from The Holding company to the FDIC regulated banking subsidy, which has a higher credit rating. his occurred after a request by the counter party, which obviously is worried about BAC credit rating (lowered on 9/21). His is very worrisome for BAC because it shows how vulnerable they are to. Slower credit rating. It's also worrisome that BAC can dump stuff into a subsidy that is FDIC insured and guaranteed by the taxpayer. I could not think of a better reason to repeal Glass-Steagal.