JPM betting against JPM!

The short answer is "who knows?". They claim is accounting alchemy, not insider trading. Should "investors" be satisfied with that answer?

The issue is broader that the question you raise. Lack of transparency in financial statements is the major issue. The lessons of Enron seem to have been long forgotten, and in some sense when it comes to the insolvent financial institutions intentionally ignored, often with a wink and a nod from the same people who are empowered to ensure the integrity of the system.

Dexia passed stress tests with flying colours just a few short weeks before blowing up. All under the supposedly watchful eye of the banking Regulators. How is that not an indictable offense in misleading the investment community, both against the bank and the Regulators. In a world where the banking system is insolvent, rules and regulations and the letter of the law are the first to get thrown out the window.

The lesson: THERE.IS.NO.PRICE.DISCOVERY.ANYMORE. invest in equities at your own peril, or better yet DON'T. Buy and hold as an investment strategy died on Sept. 2008.

Markets are a joke indeed, my stops got taken out yesterday when many of my stocks dropped 10% only to rise back up 10% in a couple of hours, i came out in profit of course but it really is quite sickening how these markets are manipulated up and down. It all deserves to die a painful death, im out for now, waiting for another inevitable attack on gold and silver.

After writing this i looked at the markets, 11600 dow, thats very high really considering, gone short, one bad day and could easily go to 10500 again or collapse completely.

Excellent post.

Constant central bank interventions and manipulations (both directly and through proxy) have totally destroyed the concept of a "free market", whether it be in equities, bonds, f/x, commodities or PMs. Perhaps we never had free markets and it's just now that the interventions are so massive and blatant that it's easier to see.

Only speculative leveraged ETF plays for me and I never hold overnight. It's pure cr@p shoot though, more based on anticipating what the central banks might do or what new grand plan to save the world may come out of a politician's mouth than any technicals or fundamentals. The prudent thing to do would be to get out and keep your powder dry for now but the gambler in my can't resist those 10pc up or down moves trying to outwit the policy makers. Besides, it's only fiat

You are buying leveraged ETFs and you are criticising equities as an investment



Think you should actually spend some time reading about how leveraged ETFs work as if the system fails which you predict it to, leveraged ETFs will be the first to go.

I think you missed the "I never hold overnight" part.

I can't put my finger on it, is it because you just didn't take the time to read thoroughly what I posted, is it because you are massively ignorant, is it because that you prefer trolling to contributing, or is it something totally different.

Don't bother answering, it will only confirm the worse.

you do realise that ETFs are traded live don't you?

holding overnight doesnt really apply here

I just get sick of the ETF crowd trying to make a play on the market when they don't actually understand that they are investing in.

You have indeed confirmed the worse. I have news for you. EVERYTHING on the markets is trading live.

If "holding overnight doesn't really apply here", then you must be expecting the markets to go to *ZERO* in one trading session.

Let me know if you think this is happening any time soon.

Just to be clear....*NOT* holding overnight is the key here.

It's obvious, but judging by the quality of your responses I thought I would point it out. Nothing is too obvious.

No

I am just expecting an event to cause some  ETF holders to ask for their money back (sell) and realise that their money isn't where they thought it would be.

It is instead in some punting fund held by an investment bank that pays them a chunk of money to the ETF provider to keep the margins low.  Why else do you think the cost of these things are tiny.

If you don't know this then look at the prospectus and you will see what the maximum they can loan out is.

I can get as technical as you want about this kind of thing but I try to dumb it down so that it is easy for people like you to understand.

Look I can be ignorant too.

You don't have to be ignorant, you're responses are doing that for you.

If you are being serious, you are misguided. If you are confused, I'd be more than happy to explain.

Trying to comment on your response, especially with assumptions like an "event" taking place and then it appears all ETF holders will be liquidating at the same time but the money is not there because some investment bank who doesn't have really the money can't pay the ETF provider, is like trying to comment on fantasy. Pure fiction.

I don't thing you know how ETFs work, or what they really are for that matter. The ONLY thing someone investing in them has to worry about is DECAY. Nothing else.

*think*

duh !!!!

oh dear,

You my friend are so far up your own arse it is not even worth bothering.

You are also clearly clueless about ETFs so i wish you well.  You will need it.

Do not worry, you are not alone in this respect.

I remember someone else posting this Mark Twain quote on this forum a while ago, I think it's worth repeating:

“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.”

Time for you to go back to school on ETFs me thinks. Obviously those investing trillions in these instruments as a way of playing the market don't share your misguided views. But then again, there's always some chap like you who thinks he's got it all figured out and the rest of the entire investment community is wrong.

Good luck.

http://www.financialstabilityboard.org/publications/r_110412b.pdf

this is some backgorund reading for you by the way

It's not just me my friend

It's people who actually realise how they work

And your comment regarding "trillions in these instruments"  carries no weight

remember CDO's

how did they pan out?

First of all, don't call me your friend. I'm very particular about who my friends are.

Second, you can stop trading ETFs because some "event" may happen some day that may cause total liquidation......and you are not going to get paid. I think your view is totally misguided but it's entirely your business. At the moment in my view, since buy and hold is dead, gambling on ETFs is the ONLY viable option of trading equities, provided you don't hold long because then that nasty decay thing creeps in. The market going to zero in one trading session is not something I spend a lot of time worrying about.

I was going to read the file you posted until I remembered that the FSB is chaired by Mario Draghi. I think I'll pass.

By event all I mean is a counterparty going into default, which I am sure you will agree is not toof ar fetched

I have not even mentioned the "market going to zero" because that is not what I am referring to.

I do not understand why "buy and hold" is dead.  If I own Tesco shares which I do, then why Can't I hold them for the long term.  This company still exists, it still makes a huge profit and it still has a share price.  I receive dividends every year and I think the share price will be higher in 5-10 years as they take control of other sectors

I think it would be worthwhile you reading that file if you are investing in ETFs because your view is a little misguided comrade.

I do not understand why "buy and hold" is dead

I didn't think you did....but as I've already posted on the other thread since I stopped being in the business of opening eyes that are firmly shut, you are on your own on that one.

Just in case you think I'm running away from the ETF debate, contemplate and answer this, since you read those papers full of wisdom and you are now convinced you know better than the rest of us:

I'm shorting the S&P when I sense the market will move down using ProShares 2X leveraged SDS.

Describe to me a *specific* scenario where when I close (or at least try) my position at the end of the trading day and not getting paid. Not fiction, not fantasy, not 30 sigma hypothetical cr@p, describe an event that you think it's within the realm of possibilities, albeit remote, to happen that would cause me not to get paid. Then describe how that event may impact the rest of the market, other ETF supplier instruments (Barclays, Direxion, etc.) including your "buy & hold" positions. It's myopic to look at such an event in isolation.

Don't waste your time, there is none. What you are describing is a complete market collapse, not just a counterparty going into default. It's not that simple. There would be severe implications and massive contagion emanating from such an event to the entire market. Unless a totally catastrophic event causes the market to go to zero in a single trading session, in which case we are all holding worthless paper, there's absolutely zero chance of not getting paid.

But like I said, if you don't want to trade ETFs because the end of the world is just around the corner, it's your business. But don't try to pass it off as trading savvy.

Come on everybody, it's just stupid of you all to permit Menelaus to slaughter you all so contemptuously in these debates on here.
Now Menelaus is not totally perfectly right in all his opinions about all matters financial ( unless he is God), but he is obviously extremely clued up on the technical workings of the markets.
So to take him on at this technical level is just ridiculous and just plays into his nasty personality to need to assert some form of superiority over all others he deems to be intellectually inferior to him ( which would appear to be pretty much everybody he comes across either here or probably elsewhere).
His real weakness is that he appears to be not only a pure theorist, but also one with a very closed mind.
So the way to approach him is to read what he says in the context of it being just one of the very sound and well argued views out there, but not the only correct one as he seems to believe.
He has value if you approach his views selectively, but only in that sense.
If you trade solely based on his expressed opinions, you will get it just as wrong or right as you are currently  presumably are, just like all of the rest of us are,  whether we be professional investors or amateurs.
So just use him as a good info source, but don't feed the beast in him.

The lunatic Menalaus obviously knows his stuff about the economy whether you agree with him or not but he is clearly wrong on ETFs.  Economists don't get the actual technical aspects of such a product.

I worked in the trading department analysing and designing these things for a year with a big IB(which was hell) so I know exactly what goes on behind the scenes with ETFs.  But I am sure he knows more than me from reading about ETFs in his armchair.  the court case against this chap who lost a boatload for UBs will make very interesting reading if they decide to disclose why he wasn't settling trades. 

I don't wish anyone bad luck because I am not that type of person but I will be back when it all goes t1ts up (and it will) with a quiet "I told you so".

Okay, let me take this debate down a few notches.......

Name one time when an "event" since the inception of ETFs as trading instruments, including the Bear Sterns meltdown, the collapse of AIG and the extinction of Lehman (how's that for counterparties defaulting?) resulted in ETFs NOT PAYING OUT WHEN A HOLDER SOLD.

If the sort of watershed "event" that you are expecting when "it all goes tits up" does indeed happen, it's lights out for all paper trades, not just ETFs. Wasn't that part covered in that paper you read?