tag:blogger.com,1999:blog-7905515.post3483583045599719899..comments2024-03-14T11:09:32.759-05:00Comments on Falkenblog: Hedges Don't Lose Money?Eric Falkensteinhttp://www.blogger.com/profile/07243687157322033496noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-7905515.post-16133405244199313472012-05-16T11:01:19.168-05:002012-05-16T11:01:19.168-05:00Jamie Dimon is Simply Too Big to Fail.
http://thi...Jamie Dimon is Simply Too Big to Fail.<br /><br />http://thinkbillions.blogspot.com/bloggerhttps://www.blogger.com/profile/16411001816392118550noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-32210793217377180402012-05-16T07:49:23.241-05:002012-05-16T07:49:23.241-05:00Yeah, Eric, I have to say I don't "get it...Yeah, Eric, I have to say I don't "get it". I can't understand why Dimon didn't say "we got a hedge very wrong-- and the buck here stops with me because we should have nipped it in the bud even earlier-- but thanks to our excellent risk management process, it <i>won't even come close</i> to putting us in the red <i>for even one quarter</i>, and we're taking some management action to prevent mistakes even this small from recurring."<br /><br />The fact that he didn't say that--he went on <i>Meet the Press</i> to eat some crow, ferchrissakes-- especially given where regulations and the markets stand currently, suggests that there's something more troubling afoot. Or that a realisitc worst-case outcome from getting out from under this position is much bigger than he is letting on.Bob Dobalinahttps://www.blogger.com/profile/07252594548091291101noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-71298699929003667722012-05-14T17:08:34.764-05:002012-05-14T17:08:34.764-05:00the accounting is asymmetrical, mtm for derivative...the accounting is asymmetrical, mtm for derivatives and accrual for the assets, explained there:<br />http://alea.tumblr.com/post/22806939247/the-credit-derivatives-used-by-jpmorgan-chase-forjckhttp://alea.tumblr.comnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-75582797194273462472012-05-14T12:43:28.641-05:002012-05-14T12:43:28.641-05:00According to this it was just a
hedging strategy...According to this it was just a <a href="http://soberlook.com/2012/05/jpmorgans-var-model-did-not-capture.html" rel="nofollow"><br />hedging strategy that backfired</a>. They were long investment grade credit, short high yield, and others figured out what they were doing;<br /><br />'But now that the market participants got a rough idea of what JPMorgan's exposures are, they started putting on the opposite trades in anticipation of JPMorgan unwinding this book (which may already be taking place).'Patrick Sullivanhttps://www.blogger.com/profile/14948365865741313524noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-37145156475139330822012-05-14T10:59:17.757-05:002012-05-14T10:59:17.757-05:00yeah. It's simply too common for these to bec...yeah. It's simply too common for these to become clusterpucks of opportunism and incompetence. It's too easy to claim these as pure profit when they work, which inflates insider bonuses, and basically expropriates from shareholders.Eric Falkensteinhttps://www.blogger.com/profile/07243687157322033496noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-25010951750510012782012-05-14T10:26:53.438-05:002012-05-14T10:26:53.438-05:00Are you saying that it might be a good idea to not...Are you saying that it might be a good idea to not have to mark-to-market hedging positions if they are hedging things that aren’t mark-to-market (what JPM appears to have been doing with these CDS index trades)? Shouldn’t that be only if the hedge has an identified, max liability (like being long a plain vanilla put)?Mercurynoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-86427590824471965092012-05-14T02:58:43.353-05:002012-05-14T02:58:43.353-05:00After reading your article, i am hesitating to inv...After reading your article, i am hesitating to invest my money anywhere and i think that bank RD nad FD are best.Commodities Tipshttp://www.profit.biz/noreply@blogger.com