Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: James F. Hopkins who wrote (28870)	9/25/1998 1:00:00 AM
From: Brinks	Read Replies (2) \| Respond to of 94695

Open Letter to the Fed September 24, 1998 Messrs. Alan Greenspan and William McDonough Board of Governors Federal Reserve System Washington, DC 20551 Gentlemen: It was with great pleasure that we read in this morning's Wall Street Journal of your decision to help alleviate the unfortunate and unnecessary loss incurred by the investors and creditors of Long Term Capital Management LP. The rapid and unforeseen decline in global markets has made it hard for all of us to master this universe. Your decision to intervene yesterday will certainly help Long Term Capital raise the funds necessary to buy into this unusually large dip. Americans everywhere are thankful for having such a thoughtful and forward-looking Federal Reserve System. We are writing you to inform you of our own investment losses of late (though, most unfairly, our losses have not been on the cover of BusinessWeek). The following is a list of reasons for this loss, which, we think, is not unlike that of Long Term's: •We owned a large sum of derivatives, fully convinced of the smooth and continuous pricing of the markets. Our blind faith in Black Scholes models remains intact. Our models are perfect. It is the market's fault for not following them, not ours. •We were clueless regarding the nature of gamma risk. We are still a little fuzzy on this. •We have never lived through a bear market, nor do we think we need one now. •We have never read anything written by Nicolai Kondratieff, Sidney Homer, Benjamin Graham, Alexander Dana Noyes, Robert Rhea, Ralph Elliott, or anyone else with a sense of history. History is a waste of time. •We invested heavily in junk bonds, especially those issued by countries which cannot be located on a map by our crack research department. We never understood why people called them junk to begin with. •We think you're doing a great job, and we think you'll cut rates (wink, wink, nudge, nudge). We think this will be pure gravy for all of us, and we can't wait to buy more junk bonds on margin. Enclosed you will find a more detailed list of our losses since mid-summer. Please enclose your check (payable to TheGreaterFool.com LLC) in the self-addressed stamped envelope provided. Sincerely, TheGreaterFools P.S. Do you have the IMF's address? Enclosures Cc: Mr. David Komansky, chairman, Merrill Lynch & Co. Mr. Sanford I. Weill, chairman, Travelers Group Mr. Jon Corzine, senior partner, Goldman Sachs & Co. Mr. Douglas Warner, chairman, J. P. Morgan & Co. Mr. John Merriwether, general partner, Long Term Capital Management LP Welcome to The Greater Fool! thegreaterfool.com Links Outside the Bubble Fiend's SuperBear Page fiendbear.com The Contrarian The Prudent Bear Grant's Online Elliott Wave International Dow Theory Forecasts Yardeni's Economics Network Asia Crisis Home Page Stock Market Cycles Value Investor's Workshop Links Inside the Bubble The Motley Fool The Raging Bull StockFever.com

To: James F. Hopkins who wrote (28870)	9/25/1998 1:16:00 AM
From: Elllk	Read Replies (1) \| Respond to of 94695

Jim Re: <<The bright boys at Harvard University lose money and scratch their a*s and saying golly people don't invest in value anymore, Mean while a high school drop out like my self can pick stocks all around them, and see the big screw up which the Index Funds and the stupid way McGraw hill has arranged the index that forces, Market cap to get bought no matter what until a total collapse comes. But this stupidity will be blamed on something else. What the hell justifies calling them educated beats the crap out of me. Jim Graduate of FFM ( Fultons Fish Market)>> There is a great story, which sounds true to me, about Groucho Marx who lost a ton of money in 1929 when he was living in Hollywood. By the time he got up in the am on most days in CA the NYSE was into the pm and he already had big losses. A few years later when he was in NYC he insisted on going to the NYSE observers gallery. He got there around the opening and it was a very slow start. He watched for awhile with a somewhat perplexed expression and then cupped his hands around his mouth and shouted down to the floor "Why are you guys just standing around when you could be screwing someone in California?" Fortunately for you, at FFM you were trained to get up before all of them. Larry