I participated in a very interesting debate in the NY Times regarding how to fix the rating agencies. 

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I end my contribution to the debate as follows:

How do you fix this (if it’s not obvious already)?

Eliminate perverse incentives. Whoever wants to buy an asset should have to pay to have it rated. Credit agencies shouldn’t be paid by the same entities they might have to chastise.

It would also help if agencies could no longer hide behind the excuse that their rating was only an opinion, rather than empirical research they must stand behind. There's no need to do a reliable job if you face no credible legal liability, and the government essentially limits the competition you face.

For six years, I have run circles around the three major agencies with timely and accurate predictions of where regional banks, commercial/investment banks (Bear Stearns collapse, Lehman Brothers), insurers, commercial real estate, residential real estate, US home builders (Lennar), and the pan-European sovereign debt crisis participants were heading. If I can do it, the agencies can too.

One thing many commenters seem to be confused about is the ability for investors to pay for ratings. You don't get anything for free. Never does something emanate from nothing. Any credible advice HAS to be paid for, period! S&P actually sells equity research to the end user, yet gives away fixed income research. Which do you think is the most credible? Most fized income investors are institutions, who are more than capable of paying for advice, and regularly do so anyway. 

We can fix the problems we have with rating agencies as end users, but you have to realize that the agencies themselves are not broken. It appears as if the agencies are broken only if you don't understand their business model...

This clip is an excerpt from the VPRO documentary on rating agencies, a worthwhile view. In the meantime, let's revisit my historical viewpoints on the topic:

The Embarrassingly Ugly Truth About Spain: The IMF, EC and ALL Major Rating Agencies Are LYING!!!

Rating Agencies vs Reggie Middleton, Part 3

Maurice Greenberg, the ousted CEO, Chairman, and founder of AIG who remains a major investor in the company, filed suit in 2011 on behalf of fellow shareholders against the government. He has urged A.I.G. to enjoin which should pressure the government into settlement talks - that is if the powers that be don't start distending the law. NY Times Dealbook looks at it this way:

Should Mr. Greenberg snare a major settlement without A.I.G., the company could face additional lawsuits from other shareholders. Suing the government would not only placate the 87-year-old former chief, but would put A.I.G. in line for a potential payout.

Yet such a move would almost certainly be widely seen as an audacious display of ingratitude. The action would also threaten to inflame tensions in Washington, where the company has become a byword for excessive risk-taking on Wall Street.

Some government officials are already upset with the company for even seriously entertaining the lawsuit, people briefed on the matter said. The people, who spoke on the condition of anonymity, noted that without the bailout, A.I.G. shareholders would have fared far worse in bankruptcy.

“On the one hand, from a corporate governance perspective, it appears they’re being extra cautious and careful,” said Frank Partnoy, a former banker who is now a professor of law and finance at the University of San Diego School of Law. “On the other hand, it’s a slap in the face to the taxpayer and the government.”

AIG has every right and responsibility to sue the US for excessive interest payments on it's bailout! Yes, the company failed in execution. Yes, the company would have went bust if the government didn't rescue it. But that is besides the point. If the government wanted market forces to reign supreme they would have let AIG collapse. The fact is they didn't. The reason is because the government was bailing out the banks, namely the most politically connected publicly traded entity in the entire world. The Vampire Squid! Goldman Sachs! As excerpted from the NY Times:

At the end of the American International Group’s annual meeting last month, a shareholder approached the microphone with a question for Robert Benmosche, the insurer’s chief executive. “I’d like to know, what does A.I.G. plan to do with Goldman Sachs?” he asked. “Are you going to get — recoup — some of our money that was given to them?

As a condition of AIG's bailout, the government "insisted" on paying Goldman et. al. 100 cents on the dollar of its CDS written with AIG, something that wouldn't have been necessary if Goldman had prudently underwritten counterparty and credit risks that it was taking. Apparently, the US government believes that it didn't. In addition, it's somethng that wouldn't have been possible if the government didn't intervene on behalf of the banks, forcing the AIG shareholders to take a hit, but shielding the Goldman, et. al. shareholders. As my grandma used to tell me, what's good for the goose is good for the gander! It's not as if these credit/counterparty risks were invisible, I saw them as far back as early 2008 - reference I won't say I told you so, again. This page also happened to of shown the credit risk concentration of every bank granted a reprieve by the government after the fact. As a matter of fact, there's still more than a modicum of risk present, as clearly illustrated in...

Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?

Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored? Welcome to part two of my series on Hunting the Squid, the overvaluation and under-appreciation of the risks that is Goldman Sachs. Since this highly analytical, but poignant diatribe covers a lot of material, it's imperative that those who have not done so review part 1 of this series, I'm Hunting Big Game Today:The Squid On The Spear Tip, Part...

Hunting the Squid, part 4: So, What Else Can Go Wrong With The Squid? Plenty!!!Hunting the Squid, part 4: So, What Else Can Go Wrong With The Squid? Plenty!!!

Hunting the Squid, part 4: So, What Else Can Go Wrong With Goldman Sachs? Plenty! Yes, this more of the hardest hitting investment banking research available focusing on Goldman Sachs (the Squid), but before you go on, be sure you have read parts 1.2. and 3:  I'm Hunting Big Game Today:The Squid On A Spear Tip, Part 1 & Introduction Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To...

Now, AIG's shareholders are being forced to finance the bailout of Goldman Sachs. To not combat that should open AIG management up to shareholder lawsuits, for they are not acting as a fiduciary of the shareholder capital if they let this slide. It's one thing to pay for the AIG bailout, but its another to pay for the Goldman bailout. In addition, this forced bailout that refused to force AIG creditors not to take haircuts runs counter to the ideology the government used when it forced the Chrysler's creditor's to take massive haircuts.

When the government began rescuing it from collapse in the fall of 2008 with what has become a $182 billion lifeline, A.I.G. was required to forfeit its right to sue several banks — including Goldman, Société Générale, Deutsche Bank and Merrill Lynch — over any irregularities with most of the mortgage securities it insured in the precrisis years.

But after the Securities and Exchange Commission’s civil fraud suit filed in April against Goldman for possibly misrepresenting a mortgage deal to investors, A.I.G. executives and shareholders are asking whether A.I.G. may have been misled by Goldman into insuring mortgage deals that the bank and others may have known were flawed.

The anger here should be directed at Goldman, et. al., and not AIG. AIG's management is doing its job, something that our government officials failed to do in making Goldman, et. al. whole during the bailout. Can anyone say regulatory capture?  Goldman et. al.'s transgressions against its clients and counterparties in terms of misrepresentation and what appears to this lay person as outright fraud have been downright egregious, as clearly articulated in Goldman Sachs Executive Director Corroborates Reggie Middleton's Stance: Business Model Designed To Walk Over Clients, it's just that this time, the US taxpayer AND the AIG shareholders are the "Muppets"! The Abacus deal was particularly atrocious, Paulson, Abacus and Goldman Sachs Lawsuit. How about Morgan Stanley's CRE deals on behalf of their so-called clients? Wall Street Real Estate Funds Lose Between 61% to 98% for Their Investors as They Rake in Fees!

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 If Goldman, et. al. were allowed to swim solely at the mercy of the free markets, it (they) would be sinking, Goldman Sachs Latest: Vindicates BoomBustBlog Research ...

... documents also indicate that regulators ignored recommendations from their own advisers to force the banks to accept losses on their A.I.G. deals and instead paid the banks in full for the contracts. That decision, say critics of the A.I.G. bailout, has cost taxpayers billions of extra dollars in payments to the banks. It also contrasts with the hard line the White House took in 2009 when it forced Chrysler’s lenders to take losses when the government bailed out the auto giant.

Regulatory capture! Banks simply lobby harder and pay more to the government than auto companies. How many auto company execs are embedded in government leadership seats worldwide?

As a Congressional commission convenes hearings Wednesday exploring the A.I.G. bailout and Goldman’s relationship with the insurer, analysts say that the documents suggest that regulators were overly punitive toward A.I.G. and overly forgiving of banks during the bailout — signified, they say, by the fact that the legal waiver undermined A.I.G. and its shareholders’ ability to recover damages.

“Even if it turns out that it would be a hard suit to win, just the gesture of requiring A.I.G. to scrap its ability to sue is outrageous,” said David Skeel, a law professor at the University of Pennsylvania. “The defense may be that the banking system was in trouble, and we couldn’t afford to destabilize it anymore, but that just strikes me as really going overboard.”

“This really suggests they had myopia and they were looking at it entirely through the perspective of the banks,” Mr. Skeel said.

Nahh? It's called the Federal Reserve Bank, not the Federal Reserve Insurer, nor the Federal Reserve Taxpayer! Who the hell do you think they will back in a crunch?

About $46 billion of the taxpayer money in the A.I.G. bailout was used to pay to mortgage trading partners like Goldman and Société Générale, a French bank, to make good on their claims. The banks are not expected to return any of that money, leading the Congressional Research Service to say in March that much of the taxpayer money ultimately bailed out the banks, not A.I.G.

Of which the interest of about 50% of which should be refunded to AIG shareholders. Without the AIG bailout, these banks would have recieved ZILCH, NOTHING, NADA, Bull Sh1t!

While perusing the news today, I came across this most interesting article in Bloomberg, Swaps ‘Armageddon’ Lingers as New Rules Concentrate Risk'. Before we delve into it, I want to review how vehemently I've sounded the alarm on this topic over the last 6 years. Let's start with So, When Does 3+5=4? When You Aggregate A Bunch Of Risky Banks & Then Pretend That You Didn't?, where I've aggregated my warnings into a single article. In a nutshell, 5 banks bear 96% of the global derivatives risk. The argument to defend such ass backwards risk concentration is "but it's mostly hedged, offset and netted out". Right! You know that old trader's saying about liquidity? It's always available, that is until you need it!

Even though I've made this point of netting = nonsense multiple times, I must admit, ZH did a more loquacious job, as follows:

..Wrong. The problem with bilateral netting is that it is based on one massively flawed assumption, namely that in an orderly collapse all derivative contracts will be honored by the issuing bank (in this case the company that has sold the protection, and which the buyer of protection hopes will offset the protection it in turn has sold). The best example of how the flaw behind bilateral netting almost destroyed the system is AIG: the insurance company was hours away from making trillions of derivative contracts worthless if it were to implode, leaving all those who had bought protection from the firm worthless, a contingency only Goldman hedged by buying protection on AIG. And while the argument can further be extended that in bankruptcy a perfectly netted bankrupt entity would make someone else who on claims they have written, this is not true, as the bankrupt estate will pursue 100 cent recovery on its claims even under Chapter 11, while claims the estate had written end up as General Unsecured Claims which as Lehman has demonstrated will collect 20 cents on the dollar if they are lucky.

The point of this detour being that if any of these four banks fails, the repercussions would be disastrous. And no, Frank Dodd's bank "resolution" provision would do absolutely nothing to prevent an epic systemic collapse. 

Hey, there ain't no concentration risk in US banks, and any blogger with two synapses to spark together should know this... From An Independent Look into JP Morgan.

Click graph to enlarge

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Cute graphic above, eh? There is plenty of this in the public preview. When considering the staggering level of derivatives employed by JPM, it is frightening to even consider the fact that the quality of JPM's derivative exposure is even worse than Bear Stearns and Lehman‘s derivative portfolio just prior to their fall. Total net derivative exposure rated below BBB and below for JP Morgan currently stands at 35.4% while the same stood at 17.0% for Bear Stearns (February 2008) and 9.2% for Lehman (May 2008). We all know what happened to Bear Stearns and Lehman Brothers, don't we??? I warned all about Bear Stearns (Is this the Breaking of the Bear?: On Sunday, 27 January 2008) and Lehman ("Is Lehman really a lemming in disguise?": On February 20th, 2008) months before their collapse by taking a close, unbiased look at their balance sheet. Both of these companies were rated investment grade at the time, just like "you know who".

So, the Bloomberg article that got this rant started basically says that the risk is being shifted from the banks to clearing houses, who demand above board, translucent collateral for transactions. This should solve the problem, right? Hardly! You see, the Fed and US banking regulators have made it legal and acceptable for banks to outright lie about the qualit of their collateral and the condition of their finances. It all came to light with my research on Lehman (and Bear Stearns, amonst others). These mistakes are so repetitive of the ones made in the past, I literally do not have to right any new material, let's just re-read what was written several years ago:

Lehman Brothers and Its Regulators Deal the Ultimate Blow to Mark to Market Opponents

Let's get something straight right off the bat. We all know there is a certain level of fraud sleight of hand in the financial industry. I have called many banks insolvent in the past. Some have pooh-poohed these proclamations, while others have looked in wonder, saying "How the hell did he know that?"

• Is this the Breaking of the Bear? It wasn't hard to see Bear Stearns collapsing 3 month before bankruptcy. Why didn't our regulators see what I saw?
• As I see it, 32 commercial banks and thrifts may see the feces hit the fan blades It wasn't hard to see that nearly all of these 32 banks would be facing the threat of insolvency. Why didn't our regulators see what I saw?
• The Commercial Real Estate Crash Cometh, and I know who is leading the way! It wasn't hard to see that commercial real estate was ready to implode and that GGP was about to collapse under its own weight. Why didn't our regulators see what I saw?
• Yeah, Countrywide is pretty bad, but it ain’t the only one at the subprime party… Comparing Countrywide Countrywide and Washington Mutual's collapse were visible AT LEAST a year in advance!
• The Next Shoe to Drop: Credit Default Swaps (CDS) and Counterparty Risk - Beware what lies beneath! 'Nuff said...
• ... and even Lehman Brothers: Is Lehman a Lying Lemming?

The list above is a small, relevant sampling of at least dozens of similar calls. Trust me, dear reader, what some may see as divine premonition is nothing of the sort. It is definitely not a sign of superior ability, insider info, or heavenly intellect. I would love to consider myself a hyper-intellectual, but alas, it just ain't so and I'm not going to lie to you. The truth of the matter is I sniffed these incongruencies out because 2+2 never did equal 46, and it probably never will either. An objective look at each and every one of these situations shows that none of them added up. In each case, there was someone (or a lot of people) trying to get you to believe that 2=2=46.xxx. They justified it with theses that they alleged were too complicated for the average man to understand (and in business, if that is true, then it is probably just too complicated to work in the long run as well). They pronounced bold new eras, stating "This time is different", "There is a new math" (as if there was something wrong with the old math), etc. and so on and associated bullshit.

Well, I'm sure many are saying that this couldn't happen in this day and age, post Lehman debacle, right? Well, it happened in 2007 with GGP and I called it -  The Commercial Real Estate Crash Cometh, and I know who is leading the way! As a matter of fact, we all know it happened many times throughout that period. Wait a minute, it's now nearly 2013, and lo and behold.... When A REIT Trading Over $15 A Share Is Shown To Have Nearly All Of Its Properties UNDERWATER!!!

Paid subscribers are welcome to download the corporate level valuation of PEI as well as all of the summary stats of our findings on its various properties. The spreadsheet can be found here -  Results of Properties Analysis, Valuation of PEI with Lenders' Names. In putting a realistic valuation on PEI, we independently valued a sampling of 27 of its properties. We found that many if not most of those properties were actually underwater. Most of those that weren't underwater were mortgaged under a separate credit facility.   

PEI Underwater Overly Encumbered Properties

What are the chances that the properties, whole loans and MBS being pledged by PEI's creditors are being pledged at par? Back to the future, it's the same old thing all over again. Like those banks, PEI is trading higher with its public equity despite the fact that its private equity values are clearly underwater - all part of the perks of not having to truly mark assets to market prices.  

 From Bloomberg: Swaps ‘Armageddon’ Lingers as New Rules Concentrate Risk

Clearinghouses cut risk by collecting collateral at the start of each transaction, monitoring daily price moves and making traders put up more cash as losses occur. Traders have to deal through clearing members, typically the biggest banks and brokerages. Unlike privately traded derivatives, prices for cleared trades are set every day and publicly disclosed.

And what happens when everybody lies about said prices? Is PEI's debt really looking any better than GGP's debt of 2007?

GGP Leverage Summary 2007

PEI Summary 2012

PEI Underwater Overly Encumbered Properties

Both of these companies have debt that have been pledged by banks as collateral. Would you trust either of them? The banks then use the collateral to do other deals leading to more bubbles. What's next up in bubble land? I warned of it in 2009...

Check this out, from "On Morgan Stanley's Latest Quarterly Earnings - More Than Meets the Eye???" Monday, 24 May 2010:

Those who don't subscribe should reference my warnings of the concentration and reliance on FICC revenues (foreign exchange, currencies, and fixed income trading).  Morgan Stanley's exposure to this as well as what I have illustrated in full detail via the  the Pan-European Sovereign Debt Crisis series, has increased materially. As excerpted from "The Next Step in the Bank Implosion Cycle???":

The amount of bubbliciousness, overvaluation and risk in the market is outrageous, particularly considering the fact that we haven't even come close to deflating the bubble from earlier this year and last year! Even more alarming is some of the largest banks in the world, and some of the most respected (and disrespected) banks are heavily leveraged into this trade one way or the other. The alleged swap hedges that these guys allegedly have will be put to the test, and put to the test relatively soon. As I have alleged in previous posts (As the markets climb on top of one big, incestuous pool of concentrated risk... ), you cannot truly hedge multi-billion risks in a closed circle of only 4 counterparties, all of whom are in the same businesses taking the same risks.

Click to expand!

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So, How are Banks Entangled in the Mother of All Carry Trades?

Trading revenues for U.S Commercial banks have witnessed robust growth since 4Q08 on back of higher (although of late declining) bid-ask spreads and fewer write-downs on investment portfolios. According to the Office of the Comptroller of the Currency, commercial banks' reported trading revenues rose to a record $5.2 bn in 2Q09, which is extreme (to say the least) compared to $1.6 bn in 2Q08 and average of $802 mn in past 8 quarters.

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High dependency on Forex and interest rate contracts

Continued growth in trading revenues on back of growth in overall derivative contracts, (especially for interest rate and foreign exchange contracts) has raised doubt on the sustainability of revenues over hear at the BoomBustBlog analyst lab. According to the Office of the Comptroller of the Currency, notional amount of derivatives contracts of U.S Commercial banks grew at a CAGR of 20.5% to $203 trillion by 2Q-09 from $87.9 trillion in 2004 with interest rate contracts and foreign exchange contracts comprising a substantial 84.5% and 7.5% of total notional value of derivatives, respectively. Interest rate contracts have grown at a CAGR of 20.1% to $171.9 trillion between 4Q-04 to 2Q-09 while Forex contracts have grown at a CAGR of 13.4% to $15.2 trillion between 4Q-04 to 2Q-09.

In terms of absolute dollar exposure, JP Morgan has the largest exposure towards both Interest rate and Forex contracts with notional value of interest rate contracts at $64.6 trillion and Forex contracts at $6.2 trillion exposing itself to volatile changes in both interest rates and currency movements (non-subscribers should reference An Independent Look into JP Morgan, while subscribers should reference JPM Report (Subscription-only) Final - Professional, and  JPM Forensic Report (Subscription-only) Final- Retail). However, Goldman Sachs with interest rate contracts to total assets at 318.x and Forex contracts to total assets at 11.2x has the largest relative exposure (see  Goldman Sachs Q2 2009 Pre-announcement opinion 2009-07-13 00:08:57 920.92 Kb,  Goldman Sachs Stress Test Professional 2009-04-20 10:06:45 4.04 Mb,  Goldman Sachs Stress Test Retail 2009-04-20 10:08:06 720.25 Kb,). As subscribers can see from the afore-linked analysis, Goldman is trading at an extreme premium from a risk adjusted book value perspective.

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Back to the Bloomberg article:

Disaster Scenario

The need for a Fed rescue isn’t out of the question, said Satyajit Das, a former Citicorp and Merrill Lynch & Co. executive who has written books on derivatives. Das sketched a scenario where a large trader fails to make a margin call. This kindles rumors that a bank handling the trader’s transactions -- a clearing member -- is short on cash.

Remaining clients rush to pull their trading accounts and cash, forcing the lender into bankruptcy. Questions begin to swirl about whether the remaining clearing members can absorb billions in losses, spurring more runs.

“Bank customers panic, and they start to withdraw money,” he said. “The amount of money needed starts to become problematic. None of this is quantifiable in advance.” The collateral put up by traders and default fund sizes are calculated using data that might not hold up, he said.

The collateral varies by product and clearinghouse. At CME, the collateral or “margin” for a 10-year interest-rate swap ranges between 2.89 percent and 4.06 percent of the trade’s notional value, according to Morgan Stanley. At LCH, it’s 3.2 percent to 3.41 percent, the bank said in a November note.

How Much?

The number typically is based on “value-at-risk,” and is calculated to cover the losses a trader might suffer with a 99 percent level of confidence. That means the biggest losses might not be fully covered.

It’s a formula like the one JPMorgan used and botched earlier this year in the so-called London Whale episode, when it miscalculated how much risk its chief investment office was taking and lost at least $6.2 billion on credit-default swaps. Clearinghouses may fall into a similar trap in their margin calculations, the University of Houston’s Pirrong wrote in a research paper in May 2011.

“Levels of margin that appear prudent in normal times may become severely insufficient during periods of market stress,” wrote Pirrong, whose paper was commissioned by an industry trade group.

Oh, but wait a minute? Didn't I clearly outline such a scenario in 2010 for French banks overlevered on Greek and Italian Debt (currently trading at a fractiono of par)? See The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!

The problem then is the same as the European problem now, leveraging up to buy assets that have dropped precipitously in value and then lying about it until you cannot lie anymore. You see, the lies work on everybody but your counterparties - who actually want to see cash!

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Using this European bank as a proxy for Bear Stearns in January of 2008, the tall stalk represents the liabilities behind Bear's illiquid level 2 and level 3 assets (including the ill fated mortgage products). Equity is destroyed as the assets leveraged through the use of these liabilities are nearly halved in value, leaving mostly liabilities. The maroon stalk represents the extreme risk displayed in the first chart in this missive, and that is the excessive reliance on very short term liabilities to fund very long term and illiquid assets that have depreciated in price. Wait, there's more!

The green represents the unseen canary in the coal mine, and the reason why Bear Stearns and Lehman ultimately collapsed. As excerpted from "The Fuel Behind Institutional “Runs on the Bank" Burns Through Europe, Lehman-Style":

The modern central banking system has proven resilient enough to fortify banks against depositor runs, as was recently exemplified in the recent depositor runs on UK, Irish, Portuguese and Greek banks – most of which received relatively little fanfare. Where the risk truly lies in today’s fiat/fractional reserve banking system is the run on counterparties. Today’s global fractional reserve bank get’s more financing from institutional counterparties than any other source save its short term depositors.  In cases of the perception of extreme risk, these counterparties are prone to pull funding are request overcollateralization for said funding. This is what precipitated the collapse of Bear Stearns and Lehman Brothers, the pulling of liquidity by skittish counterparties, and the excessive capital/collateralization calls by other counterparties. Keep in mind that as some counterparties and/or depositors pull liquidity, covenants are tripped that often demand additional capital/collateral/ liquidity be put up by the remaining counterparties, thus daisy-chaining into a modern day run on the bank!

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I'm sure many of you may be asking yourselves, "Well, how likely is this counterparty run to happen today? You know, with the full, unbridled printing press power of the ECB, and all..." Well, don't bet the farm on overconfidence. The risk of a capital haircut for European banks with exposure to sovereign debt of fiscally challenged nations is inevitable.

You see, the risk is all about velocity and confidence. If the market moves gradually, the clearing house system is ok. If it moves violently and all participants move for cash at the same time against bogus collateral... BOOMMMM!!!!!!!

Back to the Bloomberg article...

Stress Levels

What’s more, clearinghouses can’t use their entire hoard of collateral to extinguish a crisis because it’s not a general emergency fund. The sum represents cash posted by investors to cover their own trades and can’t be used to cover defaults of other people.

Clearinghouses can turn to default funds to cover the collapse of the two largest banks or securities firms with which they do business. They have the power to assess the remaining solvent members for billions more, enough to cover the demise of their third- and fourth-largest members.

But wait a minute, the other members are only solvent because they have hedges against the insolvency of the insolvent members. If those hedges fail, then the so-called solvent members are insolvent too! Or did nobody else think of that?

After all, this circular reasoning worked out very well for Greece, didn't it? See Greece's Circular Reasoning Challenge Moves From BoomBustBlog to the Mainstream...

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WSJ.com reports: The Financial Industry Regulatory Authority is investigating alleged unauthorized trading at Rochdale Securities LLC

Daniel Crowley, Rochdale's president, said Finra, a Wall Street self-regulator, was investigating trading that has put the company in a precarious financial position, adding, "The firm is recapitalizing and should be talking to the market shortly." He declined to offer more details on the trading or the investigation.

A person familiar with the thinking of Rochdale executives said a trader at the firm received an order for stock in Apple Inc. AAPL +0.63% but bought 1,000 times the number of shares requested. The trader is saying the extra shares were ordered by mistake, the person said, but the firm is alleging the actions were intentional. The company suspects the trader was working with an outside party to execute the trade and profit at the firm's expense, according to this person.

This is bullshit no matter which way you look at it. If you can mistakenly place an order for 1,000 times your intended purchases, then the risk management systems of this so-called institutional brokerage is less robust than grandma's retail web page at E-trade! If the trader did it on purpose, then he likely did it with management's consent and they didn't subscribe to BoomBustBlog - travesty within itself since all who subscribed knew it was time to short Apple! See The Blog That Could Have Saved Institutional Broker - Or - Beware Of Those Poison Apples!!

aapl research accuracy copy

Rochdale, based in Stamford, Conn., is an institutional broker and equity-research firm that employs prominent bank analyst Richard Bove. As of the end of 2011, Rochdale had $3.4 million in capital, according to a filing with the Securities and Exchange Commission. On Saturday, Mr. Crowley said the errant trading had left the company with a "negative capital position."

Amazingly enough, very few (if any) queried as to why Rochdale, with a capital base of $3.4 million dollars could execute a trade worth a billion dollars. Let's take an off the cuff measure of the leverage involved here... $1,000,000,000/$3,400,000 = roughly 294x the trader levered up the firms capital base, give or take. Who was the idiot(s) on the other side of the trade and more importantly where the hell was FINRA before this tiny bank had the nerve to go against BoomBustBlog research with a 294x levered trade? Methinks FINRA was a little less than effective here, no? Dick Bove, the rosk star bank analysts paid by Rochdale Securities (and probably paid nearly as much as Rochdale's capital base), should have alerted Rochdale to the risks therein, no?

Dick seems like a nice guy, but we don't always see eye to eye, reference CNBC Favorite Dick Bove Admits To Being Wrong On Banks, But For The Right Reasons, But Those Reasons Are Still Wrong!!!:

Last week I posted a rather scathing diatribe, basically ridiculing the fact that Dick Bove get's so much MSM airtime for his virtually consistently wrong calls and analysis:, as excerpted: A BoomBustBlog Deep Dive on Dick

Okay, I admit I was a bit harsh, and it appears as if Mr. Bove may have read said diatribe and used his cache with the MSM to post a response - very professional one at that - and one to which I must give him credit - alas, he was still wrong! To wit:

Bove: Why I Was Wrong on Bank Stocks

With a month left in 2011 and—barring a miracle—bank stocks headed for a negative year, Dick Bove is admitting he was wrong.

This is both commendable and respectable. It is honorable and healthy to admit when you are wrong, and we all have the opportunity to do so since nobody is right all of the time!...

It is my belief that this country idolizes Wall Street, and does so foolishly. Attempting a trade on Apple which is obviously on decline at 294 times leverage with no apparent risk management mechanisms rivaling that of a mere eTrade account is silly, and does not connote "Masters of the Universe" status. In closing, keep in mind that as I drove from my apartment shortly after the Sandy storm, I noticed that the Goldman Sachs HQ had lights and electricity almost immediately. Why? Because it was triple sandbagged against the elements with underground vents properly sealed. Notice that the surrounding hospitals and schools failed to receive similar attention. Where exactly are our resourced flowing and for what reason. Happy voting on this historical election day.

Subscribers expect fresh research and content later this week.

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Several months ago I posted a mail from a reader's rant on FICO (see Fair  Isaac May Get Treated Unfairly When…), along with our own take on the on the situation (subscribers see FICO Note, click here to subscribe). Here's an excerpt from the said reader's take: 

Short FICO. This company engineered a stock-back program in Nov 2011. The Stock buy-back was equivalent to 20% of its market cap at the time. The three executives left the company and cash in their stock options. The company had 3 CEOs in 4 years. The Company latest quarter was slightly down, without the massive buy-back the share count would have meant that the stock had lower earnings per share YoY. What is staggering is while the company did this massive stock buy-back, some execs (including the 3 execs departing) sold at price sometimes below the price the company was buying back its stock at. If the company was doing such a good deal by buying the stock "cheap" at around 40 USD, why would the execs sell their "cheap" stock at 39 USD?

Now recently the company announced its quarterly earnings, poor data, the stock plunges by 10.5%, next thing you know SECput the Rule 201 alternative uptick rule. The next day the stock is up 10.5%, but of course nothing is done to prevent the stock to move up more than 10% a day. The same happened on the same day with Vulcan Materials which released its earnings, really crappy (a lot more than FICO), Vulcan Materials is a Einhorn short, and yet again you have the rule 201 implemented the next day....

Said BoomBustBlogger returned with some more "unfair" treatment of Fair Isaac, viewable from this link - Fair Isaac May Get Treated Unfairly When The Newest Credit Bubble Bursts. ....And here come's FCO's earnings, as reported at CNBC:

MINNEAPOLIS, Nov. 1, 2012 /PRNewswire via COMTEX/ -- FICO (NYSE: FICO), the leading provider of analytics and decision management technology, today announced financial results for its fourth fiscal quarter ended September 30, 2012. Fourth Quarter Fiscal 2012 Results Net income for the quarter totaled $21.2 million, or $0.60 per share, versus $24.6 million, or $0.64 per share, reported in the prior year period. The current quarter results include $3.3 million, net of tax, or $0.09 per share, in restructuring and acquisition related costs.

Well. guess what happened the following day... NYSE stocks posting largest percentage decreases 02 Nov 2012  -  The Associated Press

Last weak I posted a mail from a reader's rant on FICO (see Fair  Isaac May Get Treated Unfairly When…), along with our own take on the on the situation (subscribers see FICO Note). Well, said BoomBustBlogger is back with some more "unfair" treatment of Fair Isaac!

Dear Reggie,

Did you know it was Fannie who advised other banks to use FICO (back in 1995 I think)? That did not work too well.

I think that the FICO score is actually hollow somewhat, given that in 2006 the Median FICO score was 723 and deteriorating much since 2000 and not signaling an impeding crisis.

According to a Fitch study, the accuracy of FICO in predicting delinquency has diminished in recent years. In 2001 there was an average 31-point difference in the FICO score between borrowers who had defaulted and those who paid on time. By 2006 the difference was only 10 points. The bigger picture is that a massive collapse of lending can occur while all the lenders have used FICO, so what is the value proposition of using the scoring? I am known to ask annoying stupid question in my firm…

I think that FICO wasted cash on the stock buy back, it borrows at 6.1% and bought the stock at around 6 Free Cash Flow yield. Granted the cost of debt is pre-tax, but the arbitrage is poor, I think clearly it was a pump-so-the-management-can-dump scheme. This is the consumer picture in context, FICO was riding the consumer leverage bubble.

credit bubble 07

This is the revenue picture skewed since 2002 because of housing bubble. You can clearly see the take-off in revenues due to the housing bubble starting in 2002.

revenues pumped by real estate bubble

The recent beat of earnings is due the last calendar quarter of 2011 (when the stock buy-back was announced), 7 million of operating profit were due to slashing R&D, so earnings are up but if you slash R&D how do you grow? That should shield a compression of multiple not an expansion of those. Further the tools is more lumpy and not recurring, while the score business (recurring is flat).

So the latest quarter was actually showing EBIT down slightly in nominal dollars (down adjusted to inflation) YoY and EBIT margin down too YoY for same quarter, so the slashing of R&D did not result in higher margins YoY on the quarter. So you have probably 150 EBIT normalized excluding the one time R&D slashing. But the tools sales will bring volatility on teh downside in the downturn, those have been the reason for growing sales a bit, yet lower earnings, in the downturn those lumpy components should shrink. While the last 30 years was consumer leverage. Unlike 1929 where the leverage was on corporation this levered cycled falls squarely on the consumer and the Gov. The company trades at 13 Times EV/ Normalized EBIT which given the headwinds of necessary deleveraging, you might not want to pay more than 6-7 times, and the insiders know it and have sold into the share buyback giving 0 credibility to this buyback.

Now if you do not listen to the Fed which says that credit card conditions are easing (Fed is full of hot air http://www.bloomberg.com/news/2012-08-06/fed-says-banks-ease-standards-o...) and check from creditcards.com here is what they have to say. First the rate has been increasing in the last 2 years, so there is no easier credit for consumers. But then credit card companies are retrenching their offers.

If you read creditcards.com August 1st weekly report, here what they say:  (Would you send me your screen on consumer discretionary as a barter of idea?, even the abbreviate version without analysis that would be a fair trade of idea.)

Issuers also cut back on credit card mailings. The lack of movement comes at a time when issuers have also been pulling back on mailing new credit card offers to consumers. Prior to the recession, issuers flooded consumers' mailboxes with card offers and aggressively sought out new customers with a wide variety of credit scores. However, in 2009, issuers slashed the number of card offers they mailed by nearly two-thirds and primarily concentrated the offers they did send on consumers with excellent credit, say industry analysts. Since then, credit card mailings have yet to bounce back to pre-recession levels, according to data from the market research firm Mintel Comperemedia. Issuers did ramp up the number of card offers they sent in 2010 and 2011 and even began to send more offers to consumers with lower credit scores. However, issuers have since cut back significantly, say analysts at the international financial services firm Credit Suisse.
Citing research from Mintel Comperemedia, Credit Suisse analysts say that the number of credit card offers that consumers received in June is down by 43 percent, compared to the same time last year. June also marks the fourth month since January that the number of credit card mailings sent to consumers has declined.
The lower level of credit card mailings in 2012 contrasts significantly with 2011. Then, issuers sought out new customers aggressively, mailing out a total of 4.8 billion credit card offers throughout the year. By contrast, issuers have sent out just 1.5 billion offers in 2012, and analysts at Credit Suisse estimate that the total number of offers sent out by the end of the year will total just 3.5 billion.
If analysts' estimates hold out, then the number of credit card offers mailed in 2012 will be just slightly more than the number of credit card offers that were mailed in 2010. During that time, issuers were still just shaking off the effects of the recession and contending with new financial regulation, including the Credit CARD Act of 2009. Now, issuers are contending with a series of banking scandals, a financial crisis in Europe and a painfully slow U.S. economic recovery.

Sincerely,

Hope to exchange some more interesting ideas,

BoomBustBlogger!

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In continuing my rant on the state of the US consumer, I present to you this email I received from a reader...

Short FICO. This company engineered a stock-back program in Nov 2011. The Stock buy-back was equivalent to 20% of its market cap at the time. The three executives left the company and cash in their stock options. The company had 3 CEOs in 4 years. The Company latest quarter was slightly down, without the massive buy-back the share count would have meant that the stock had lower earnings per share YoY. What is staggering is while the company did this massive stock buy-back, some execs (including the 3 execs departing) sold at price sometimes below the price the company was buying back its stock at. If the company was doing such a good deal by buying the stock "cheap" at around 40 USD, why would the execs sell their "cheap" stock at 39 USD?

Now recently the company announced its quarterly earnings, poor data, the stock plunges by 10.5%, next thing you know SECput the Rule 201 alternative uptick rule. The next day the stock is up 10.5%, but of course nothing is done to prevent the stock to move up more than 10% a day. The same happened on the same day with Vulcan Materials which released its earnings, really crappy (a lot more than FICO), Vulcan Materials is a Einhorn short, and yet again you have the rule 201 implemented the next day....

Those who have been following me recently know that I have been laying the foundation for a most cogent argument against the US consumer, hence the consumer discretionary and durables sector - as articulated in BS At The BLS Leads To Profitable Short … and Is The New US Consumer Consumption Bubbl…

FICO is a credit data processor and provider. They make money when a lot of people apply for loans, and make less money when less people apply for loans. With that being said...

Credit card usage is dropping...

Mortgage applications are dropping... The two largest uses of consumer credit is falling to the wayside (save the student loans mentioned in the links above). More on FICO...

FICO Note Page 1.1

FICO Note Page 2

We have formed ani internal opinion on FICO that all paying subscribers are invited to download here:  FICO Note.

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Wall_Streets_Chinese_Wall_copy_copy

I will be taking the gloves off and going over this gangster style on Lauren Lyster's Capital Account Show on RT, tomorrow at 4:40pm. In the meantime, let's lay some groundwork.

As those who follow me reguarly probably already know, BoomBust bests ALL of Wall Street's sell side research. For evidence of such, reference "Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Streets Best of the Best?". For the quick story behind how we are able to do what the lay muppet may consider nigh impossible, reference my piece on the Practitioners Of Muppetology…

For those of you who may have not heard as of yet, Reuters Alistair Barr reported Facebook's lead underwriters Morgan Stanley, JP Morgan, and Goldman Sachs, all cut their earnings forecasts – and did so in the middle of the IPO roadshow. This is a rarity and quite frankly an event that I don’t ever recall happening in the past. Adding fuel to the fire, this downgrade was disseminated only to a select few institutional clients, basically leaving the mom and pop crew (aka, MUPPETS) out to dry.

What makes this such class action fodder (see Why Shouldn't Practitioners Of Muppetology Get Swallowed In A Facebook IPO Class Action Suit?) is that sell side analysts tend to have greater access to corporate management than regular investors or even the better equipped, more experienced guys such as myself. That being the case, the analysts of the actual underwriting companies have an even better position in regards to corporate management - arguably more so than any other financial entity. So, what happens when all of the underwriting companies suddenly downgrade their forecasts simultaneously?

As per Reuters:

The change in Morgan Stanley's estimates came on the heels of a May 9 Facebook filing of an amended prospectus with the U.S. Securities and Exchange Commission, in which the company expressed caution about revenue growth due to a rapid shift by users to mobile devices. Mobile advertising to date has been less lucrative than advertising on desktops.

"This was done during the road show - I've never seen that before in 10 years," said a source at a mutual fund firm who was among those called by Morgan Stanley.

JPMorgan Chase and Goldman Sachs, which were also major underwriters on the IPO but had lesser roles than Morgan Stanley, also revised their estimates in response to Facebook's SEC filing, according to sources familiar with the situation.

Morgan Stanley said in a statement that a "significant number" of analysts in the IPO syndicate reduced estimates after Facebook's May 9 disclosure. The investment bank said its procedures complied with all "applicable regulations."

Where's a damn lawyer when you need one?  Although this has been covered rather heavily in the media, I felt I had to do it again. Why? Because the media didn't cover it properly. As a matter of fact, they missed an entire forest of fraud because of a funny looking piece of tree bark in the way. Let's look at this from the BoomBustBlog perspective, shall we.

Facebook's warning to its analysts came in the form of a revenue slowdown as more and more user move to mobile device interfaces to access Facebook, and mobile revenue has historically lagged desktop revenue in terms of volume. Okay, I get that. Yet, even without that choice bit of news, Facebook's total subscriber growth had slowed substantially! This was made clear to BoomBustBlog subscribers several times, with the first time being about a year ago!

Even if we don't consider the slowing subscriber growth (which we must) there's still the blatant and obvious risks to the weak advertising model, as clearly articulated in our subscriber forensic analysis of way over a year ago -FB note final 01/11/2011, to wit from page 3:

FB_note_final_Page_03

Did I have a valid point 14 months ago that ALL of the underwriters and top Wall Street analysts somehow miss - again? Don't ask my conceited ass, ask General Motors nearly a year and a half later...  

Fri, May 11 2012 WSJ.com and Reuters report GM plans to stop advertising on Facebook:

General Motors Co will stop advertising on Facebook, a move that comes during the same week the social networking website is due to go public.

The U.S. automaker confirmed a report by the Wall Street Journal. A source familiar with the automaker's plans said GM's marketing executives decided Facebook's ads had little impact on consumers.

GM said it will still have Facebook pages marketing its vehicles, but it will drop use of paid ads. Anyone can create a Facebook page at no cost. GM pays no fee to Facebook for its pages, which allow the automaker to reach consumers directly.

... "In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers," GM said.

GM spends about $40 million on its Facebook presence, but only about $10 million of that is paid to Facebook for advertising. The rest covers the creation of content and the agencies involved, The Journal said.

GM, the country's third largest advertiser behind Procter & Gamble Co and AT&T Inc, spent $1.11 billion on U.S. ads last year, according to Kantar Media, an ad-tracking firm owned by WPP PLC. About $271 million of GM's total ad spend last year was for online display and search ads excluding Facebook advertising.

And back to that topic of growth in February of 2012, via the full forensic opinion available to all subscribers here FaceBook IPO & Valuation Note Update, reference page 10 as excerpted...

FB_IPO_Analysis__Valuation_Note_Page_10

This all leads to the topic of valuation. A topic that no legal defense team for banks should want me to broach. As I stated in January of 2011, Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week! 

Reference these two pages from our February FaceBook IPO & Valuation Note Update...

 FB_IPO_Analysis__Valuation_Note_Page_06

FB_IPO_Analysis__Valuation_Note_Page_07

It would seem that Facebook Finally Faces The Fact Of BoomBustBlog Analsysis. The burning question is how did I get this so right yet ALL of those ubersmart analysts get it so wrong? Seriously, ALL of the underwriting analysts had a buy on this obviously and grossly overpriced stock - and that was before the price was increased, BEFORE the supply of stock offered from management and insiders was increased, and BEFORE Goldman decided to increase their cashout - all very negative indications that increase both stocks floated and the distance between price and fundamental valuation.

Well, here's a couple of hints... Is It Now Common Knowledge That Goldman's Investment Advice Sucks?, I've Told You Before, And I'll Tell You Again - Goldman Sachs Investment Advice Sucks, and Goldman Sachs Executive Director Corroborates Reggie Middleton's Stance: Business Model Designed To Walk Over Clients. Of course, this isn't just about Goldman. I mean, we're talking a lot of over well paid analysts! As per Reuters:

The new estimates highlighted a continued slowdown in Facebook's growth, with the banks forecasting 30.4 percent year-on-year 2012 revenue growth on average, instead of the 36.7 percent growth previously expected. In 2011, Facebook's revenue grew 87.9 percent year-on-year to $3.71 billion.

The new numbers were relayed to big investors through phone calls and conference calls, according to investors. Bank of America held a conference call on May 10 with analyst Justin Post, where the underwriter revealed the lowered estimates.

Here are the detailed figures from the four banks, according to one of the investors who received the new numbers.

Lowered full year revenue estimate for 2012

Morgan Stanley -- $4.854 bln (new)from $5.036 bln (old)

Bank of America -- $4.815 bln (new) from $5.040 bln (old)

JPMorgan -- $4.839 bln (new) from $5.044 bln (old)

Goldman Sachs -- $4.852 bln (new) from $5.169 bln (old)

Lowered estimates for second-quarter 2012

Morgan Stanley -- $1.111 bln (new) from $1.175 bln (old)

Bank of America -- $1.100 bln (new) from $1.166 bln (old)

JPMorgan -- $1.096 bln (new) from $1.182 bln (old)

Goldman Sachs -- $1.125 bln (new) from $ 1.207 bln (old)

Lowered 2013 Earnings per share estimate

Morgan Stanley -- 83 cents (new) from 88 cents

Bank of America -- 64 cents (new) from 66 cents

JPMorgan -- 66 cents (new) from 70 cents

Goldman Sachs -- 63 cents (new) from 68 cents

Hey, I'm sure it's just my imagination. After all, there's always that famed Chinese Wall Thingy, right???!!

Wall_Streets_Chinese_Wall_copy_copy

For more on how bankers climb walls, see Why Shouldn't Practitioners Of Muppetology Get Swallowed In A Facebook IPO Class Action Suit?

Professional and institutional BoomBustBlog subscribers have access to a simplified unlocked version of the valuation model used for this report, available for immediate download - Facebook Valuation Model 08Feb2012. It is strongly recommended that said subscribers download and input their own assumptions into said model! The full forensic opinion is available to all subscribers here FaceBook IPO & Valuation Note Update. It is recommended that subscribers (click here to subscribe) also review the original analyses (FB note final 01/11/2011).

Here are the free blog posts on the topic:

1. Shorting Federal Facebook Notes Are Not Allowed Today
2. Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!
3. Facebook Becomes One Of The Most Highly Valued Media Companies In The World Thanks To Goldman, & Its Still Private!
4. Here’s A Look At What The Goldman FaceBook Fund Will Look Like As It Ignores The SEC & Peddles Private Shares To The Public Without Full Disclosure
5. The Anatomy Of The Record Bonus Pool As The Foregone Conclusion: We Plug The Numbers From Goldman’s Facebook Fund Marketing Brochure Into Our Models
6. Did Goldman Just Rip Its HNW and Institutional Clients Once Again? Facebook Growth Slows Pre-IPO, Just As We Warned!
7. The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1
8. The Final Facebook Forensic IPO Analysis: the Good, the Bad & the Ugly

Goldman Sachs Executive Director Corroborates Reggie Middleton's Stance: Business Model Designed To Walk Over Clients

For Those That Want To Take A Peek Inside the Professional BoomBustBlog Paywall, Here's All of My Groupon Research - MUPPETS!!!

Apple's iPad Is Losing Market Share And Profit Margin As Apple Hits All Time High 

The Conundrum of Commercial Real Estate Stocks: In a CRE "Near Depression", Why Are REIT Shares Still So High and Which Ones to Short?

Wall Street Real Estate Funds Lose Between 61% to 98% for Their Investors as They Rake in Fees!

Wall Street is Back to Paying Big Bonuses. Are You Sharing in this New Found Prosperity?

Reggie Middleton vs Goldman Sachs, part 1, For Those Who Chose Not To Heed My Warning About Buying Products From Name Brand Wall Street Banks

Blog vs. Broker, whom do you trust!

Reggie Middleton Personally Congratulates Goldman, but Questions How Much More Can Be Pulled Off

No One Can Say I Didn’t Warn Them About Goldman Sachs, Several Times…

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Reuters reports on Facebook:

"Morgan Stanley unexpectedly delivered some negative news to major clients: The bank's consumer Internet analyst, Scott Devitt, was reducing his revenue forecasts for the company. The sudden caution very close to the huge initial public offering, and while an investor roadshow was underway, was a big shock to some, said two investors who were advised of the revised forecast."

I query, exactly why shouldn't there be class action lawsuits? Seriously! I run a very small operation with a budget smaller than Morgan Stanley’s or Goldman's postage expense. Despite such I have been able to clearly and granularly articulate that Facebook was grossly overvalued a year ago while it was a private company being hawked by Goldman Sachs as a private placement - Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!

As the IPO approached and more specific info available, the overvaluation simply became stronger and more apparent; reference Shorting Federal Facebook Notes Are Not Allowed Today. So is that I and my team are really that smart (and handsome) or are there other factors at play? A little more than a year ago Bloomberg created a list of who they considered the top performing analysts and brokers from the sell side. I was literally offended by how bad the performance actually was, especially when compared to an independent investor/analyst, reference Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Street’s Best of the Best?

Again, miraculously, Reggie Middleton and BoomBustBlog somehow managed to out run ALL of the big boys. As much as I would love to say  I’m simply better than ALL of those big boys, the reality of the matter is that I’m simply significantly less conflicted. The big banks have the resources and intellectual capital to run circles around me if they really wanted to. The problem is that really don’t want to. It is much more profitable to take agency commissions and principal transaction profits (as ZH often identifies as front running) from your clients than it is to wisely counsel them in investments. This is particularly true if they will keep coming back to you after getting raped, again and again.

I have written extensively on this, forming a quasi-scientific discipline of study, colloquially known as Muppetology:-) See the links below for more on this new branch of psychology/social science as it applies to finance and investments...

Goldman Sachs Executive Director Corroborates Reggie Middleton's Stance: Business Model Designed To Walk Over Clients

For Those That Want To Take A Peek Inside the Professional BoomBustBlog Paywall, Here's All of My Groupon Research - MUPPETS!!!

Apple's iPad Is Losing Market Share And Profit Margin As Apple Hits All Time High 

The Conundrum of Commercial Real Estate Stocks: In a CRE "Near Depression", Why Are REIT Shares Still So High and Which Ones to Short?

Wall Street Real Estate Funds Lose Between 61% to 98% for Their Investors as They Rake in Fees!

Wall Street is Back to Paying Big Bonuses. Are You Sharing in this New Found Prosperity?

Reggie Middleton vs Goldman Sachs, part 1, For Those Who Chose Not To Heed My Warning About Buying Products From Name Brand Wall Street Banks

Blog vs. Broker, whom do you trust!

Reggie Middleton Personally Congratulates Goldman, but Questions How Much More Can Be Pulled Off

No One Can Say I Didn’t Warn Them About Goldman Sachs, Several Times…