In Times Like These Read The Blogs
I wrote a short post yesterday wondering what was in store for the financial markets in the wake of the Fed and JP Morgan bailing out Bear Stearns. This is what’s been on my mind the past week for the most part. Sure, we’ve been thinking a lot about what’s now possible with all the new platforms that are emerging (iPhone SDK, YouTube, myspace, etc), and there are plenty of interesting things going on in techland and in our portfolio. But we’ve got a full blown financial panic playing out on Wall Street and doing venture capital from NYC somehow makes us more cognizant of what’s going on. We’ve got friends working at places like Bear, we’ve got friends working at hedge funds that are trying to stay afloat. It’s brutal on wall street right now.
I read the twin articles on the mess on the front page of the NY Times today, but honestly, I am finding way better stuff in the blogs.
Here’s Roger Ehrenberg on why Bear is toast and who’s likely to end up picking up the pieces. That’s good stuff. I am going to surf around the financial blogs this weekend and I’ll post again with other interesting views that turn up. Please feel free to leave links on the comments.
Times story is embarrassing – Felix Salmon is pretty good.http://www.portfolio.com/ne…the firm that took theglobe.com and Earthweb public is not as smart as everyone thought…who’da thunk it.
What could this possibly mean to the web industry ?I’ve read some blogs saying the web and videogames industries have been largely unaffected by the current developments.Can this be believed after BSC goes down (as it seems it will likely be the case) ?
Roger’s posts are always execellent because he has been on th field. Blodget’s link ws a good one too.Here is my input. it’s a tough week for too many innocent people.http://howardlindzon.com/?p…
thanks for your insight, Howard
Wow. I never knew that howard. Thanks for sharing it with usFred
This recession (and yes I think it will / does qualify as a full blown recession) will be like no other the US has ever seen. The internet and the (semi) global economy it has created coupled with the dirt cheap cost of entry and operating costs I believe will make for an interesting counter balance to the downward term.
I love this. For people like me, who have only a dim, shallow understanding of this kind of finance, it’s akin to finding yourself at a dinner party, next to a super-smart expert in something you’ve always wanted to know about but never quite grasped. One of the great things about the social web is that it rewards curiosity, and when stuff hits the fan, or there’s a big, seminal event (a Wall Street collapse; a Hollywood writers strike in my case) the web just crackles like a Fourth of July sparkler with smart insight. I’ve bookmarked Roger Ehrenberg’s blog; I’ll go back, probably more than a few times while this current meltdown keeps melting (it can’t last forever. Can it?) but I probably won’t make it a regular stop, like Fred’s or Marc’s blog. But how cool that it’s there, ready, waiting. Faster, more personal, more real somehow than a newspaper.
I posted Bear’s monthly stock chart since it went public in 1985 … gives some long-term perspective on its collapse:http://maoxian.com/archive/…
Ehrenberg’s post is great, but I disagree with your implication that blogs get it right more often than professional news organizations. I’m tired of NYTimes bashing. They’re not perfect, but they get it right more consistently than anyone else, and their long term investigative stories stories are more valuable than ever in an increasingly reactive, ADD media world.The rise of the blogosphere has been game changing, mostly in a good way. But the blogosphere is complimentary to, rather than at at odds with, the Times, in which I continue to place more trust than the any other source.
The Times Bear story was embarrassing… “By late Thursday, Bear Stearns’s top lenders and its hedge fund clients were calling the firm and demanding their cash back, perhaps encouraged by Mr. Schwartz’s comments that the firm’s capital and liquidity were strong.” (rather because they didn’t believe him) “shied away from trendy markets like Internet stocks in the 1990s.” (more like shut out of the GS/MS/Frank Quattrone deals so chased the crappiest of the crappy)One expects a lot of the Times and sometimes they don’t deliver. Sometimes, their power handcuffs them because they can’t call a spade a spade and say the Bear might be done, sometimes their breadth handcuffs them and they have to cover something where the reporter is out of his depth. And in most of the business section, sadly they’re pretty overmatched.On these controversial/specialist topics the blogs are a bit more than just complementary. What happened to that long bet between Winer and Nisenholtz?http://www.longbets.org/2
The people who write the stories in the Times are very unlikely to have been running a large hedge fund or trading desk when LTCM happened. Its a lot more likely to find a blogger who was (like Roger)I didn’t mean to imply that The NY Times is bad. I read it. I just think they don’t have and can’t give me the experienced perspective I want in times like thisFred
Fred, I agree with you and druce. Just feels like there has been an inordinate amount of criticism of the Times lately, not all of it deserved.In addition to their own coverage the Times should itself be pointing readers to outside experts. They’re doing this in the technology section via blogrunner, why not extend that to business and other sections. Invite the best bloggers into the cathedral. It would help the Times maintain their status as go-to news source, even in a world that demands multiple sources.
Roger is one of those people whom, if he agrees with something you say, your immediate next thought is “wow, i must be right!”. Of course, maybe that’s just me.
I don’t think the Fed is bailing anyone out. You could read the story as “Bernanke confirms that Bear is toast — gives partners 28 days to find replacement.”The big problem is that highly leveraged funds that invested in sub-prime also invested in other stuff. To cover their positions, they’ve got to sell the other stuff. Which forces other leveraged investors to sell, even if they never went near mortgages. You might think your assets have nothing to do with sub-prime. But if any sub-prime investor also invested in your asset, you’re at risk of seeing it go down in price, rapidly and somewhat mysteriously.Smart investors will be ready to double down on positions they believe in. But it could get very painful before things hit bottom.
In times like these some people are accountable (i.e. Eliot Spitzer…about to be) and others aren’t (i.e. who has gone to jail for the subprime mess)? With so many smart people on Wall Street how could these big banks get in so much trouble? Greed?
Indeed, things have been interesting on the financial blogs. So, if it is links you want, here are several links to browse.First, the always excellent and highly relevant posts by Chris Whalen – the Institutional Risk Analyst at http://us1.institutionalris… posts his Interview with Bob Feinberg.on Bear Stearns, FNM, FRE, and much much more. This should be considered a must read for those wishing a deeper understanding of the crises that confront us.Also, there were several noteworthy guest bloggling posts at TradingGoddess.com’s blog this weekend beginning with a very lively discussion in the comment section on whether or not the market is broken. at http://tradinggoddess.blogs…That discussion led to a post by SuccessfulTradingTips.com author John Bougearel on “what is a Mandelbrot Moment, elaborates on those moments when all financial models (be they quant, technical, or fundamental) fail to adequately quantify market risks and behaviors. http://tradinggoddess.blogs…Right after that post, Bob, author of StockPicksBob’sAdvice.com elaborated on the share price destruction not just of Bear Stearns, but C, WM, MER, ABK, MBI etc…http://tradinggoddess.blogs…
Hi Fred,I have just received this link through a friend: http://www.fnarena.com/inde…On why Citi could be the next Wall Street giant to fall. It’s interesting though I don’t totally agree with the analysis.Benjamin