SIRI Intraday Thread: Thursday, March 26th

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03-26-2009, 12:38 PM
mogami

Quote:

Originally Posted by winagain35

If you sell for a loss remember you have to wait thirty days to buy back or it's a wash sale and you can't claim a capital loss.

You can't claim the loss till you sell the new shares. Since you can only claim 3k loss per year you may not want to claim all of them anyway
03-26-2009, 12:39 PM
relmor2003

Quote:

Originally Posted by Newman

No no no. You are completely wrong and in fact, have it backwards.

We will use another analogy. It is like you own Sirius XM debt. Back a month or so ago, it was valued at 10-20 cents on the dollar, yet Sirius is still making it's payments. Your earnings show a "value" of 10 cents on the dollar, but Sirius has not defaulted yet and probably never wil. You will make all of your money back and more, yet your "value" of that is 10 cents on the dollar.

These banks are still getting paid on almost EVERY SINGLE PENNY of debt they own, yet they are cutting their book value based on what they could sell it for today.

Pure number terms: You bought your house for 500k dollars. Your loan is for 500k dollars. The house, as of today, is only worth 300k dollars. Did they change the terms of your loan? Of course not. You still owe 500k, but in their earnings, they are writing down 200k in value. There is a 95% chance that you will continue to make every single payment and fully pay off that 500k. But when they report earnings, they announce that they lost 200k on your loan. They have not "lost" a penny, except on paper. Multiply that by 1 million lenders, and all of a sudden you have a 2 billion dollar "loss" for the quarter. Nothing but paper.

So you think 95% of all current bank loans will be paid in full? Your optomistic too arent ya!!
Sounds like you should buy some bank debt then. I understand how writedowns work. They dont do them for "fun". They do them to save their butts later. They are projecting forward.
Forget the SiriusXM stock analogy. It would be like me saying my house is worth what I paid for it, in 2006, lets say 200k. Its current market price says it would sell for 100k. Thats a "paper loss" of 100k, Yes its not realized yet, sure. But your missing the point. The point is, your "debt" as a bank is only worth what someone is willing to pay for it. Right now thats around 0(no buyers, because they dont want to sell it more than they cant. It could be 60 cents, 80 cents, maybe. But you see, its not 100 or .95 cents. And most of their loans are currently valued there. Huge writedowns coming still, or they sell it and take the "real" loss.
03-26-2009, 12:40 PM
JohnnyIrishXM

Quote:

Originally Posted by Newman

No no no. You are completely wrong and in fact, have it backwards.

We will use another analogy. It is like you own Sirius XM debt. Back a month or so ago, it was valued at 10-20 cents on the dollar, yet Sirius is still making it's payments. Your earnings show a "value" of 10 cents on the dollar, but Sirius has not defaulted yet and probably never wil. You will make all of your money back and more, yet your "value" of that is 10 cents on the dollar.

These banks are still getting paid on almost EVERY SINGLE PENNY of debt they own, yet they are cutting their book value based on what they could sell it for today.

Pure number terms: You bought your house for 500k dollars. Your loan is for 500k dollars. The house, as of today, is only worth 300k dollars. Did they change the terms of your loan? Of course not. You still owe 500k, but in their earnings, they are writing down 200k in value. There is a 95% chance that you will continue to make every single payment and fully pay off that 500k. But when they report earnings, they announce that they lost 200k on your loan. They have not "lost" a penny, except on paper. Multiply that by 1 million lenders, and all of a sudden you have a 2 billion dollar "loss" for the quarter. Nothing but paper.

Yes this is correct Newman!And the bank must then set aside 2Bil in fresh cash available to lend to cover their liability on that loss(multiply by 1 Trillion and you have your bailout figure)......The bonds were traded like trading cards in a game of musical chairs and the music stopped and they were left holding what they couldn't sell...Aig got caught cover the insurance for these bonds or actually securities(credit default swaps) which incidentally is what caught Warren Buffet also...
03-26-2009, 12:43 PM
choirgirl

One way to put it. But what about the million who stopped payments and returned the keys? Their loans aren't worth 500k or 300k but Zero, because there is no buyer for the home out there. But as soon the economy is back on track you are right, but what if not.

Quote:

Originally Posted by Newman

No no no. You are completely wrong and in fact, have it backwards.

We will use another analogy. It is like you own Sirius XM debt. Back a month or so ago, it was valued at 10-20 cents on the dollar, yet Sirius is still making it's payments. Your earnings show a "value" of 10 cents on the dollar, but Sirius has not defaulted yet and probably never wil. You will make all of your money back and more, yet your "value" of that is 10 cents on the dollar.

These banks are still getting paid on almost EVERY SINGLE PENNY of debt they own, yet they are cutting their book value based on what they could sell it for today.

Pure number terms: You bought your house for 500k dollars. Your loan is for 500k dollars. The house, as of today, is only worth 300k dollars. Did they change the terms of your loan? Of course not. You still owe 500k, but in their earnings, they are writing down 200k in value. There is a 95% chance that you will continue to make every single payment and fully pay off that 500k. But when they report earnings, they announce that they lost 200k on your loan. They have not "lost" a penny, except on paper. Multiply that by 1 million lenders, and all of a sudden you have a 2 billion dollar "loss" for the quarter. Nothing but paper.
03-26-2009, 12:44 PM
Brandon Matthews

Quote:

Originally Posted by Paratrooper_Rick

Glad you're out there - was hoping you were lurking....

I am glad I upped the anty to LVL 2 access in my TDA account... it's taking a little time to get used to having so much info.

now I understand why my quotescope wasn't working for SIRI before - since it was nasdaq stock - only non-nasdaq was working before my upgrade...

I think we'll have a good EOD rise.... I can feel it.... now if I can just will it to happen...

I can't see them now, but there were some very big orders at .39 and .41. Unfortunately, the mm's are letting anyone who wants to buy in below .40 to do so. They have us rangebound today at what started at 36-38 to 36-37. This tightening is just waiting to erupt.

Economics teaches us that anything (including stocks) is only worth what someone is willing to pay. In this case, .36 seems to be the going rate. Not sure it will move anywhere today. My guess at this point would be a .3750 close...the midpoint between the .36 and .39
03-26-2009, 12:45 PM
relmor2003

Quote:

Originally Posted by choirgirl

One way to put it. But what about the million who stopped payments and returned the keys? Their loans aren't worth 500k or 300k but Zero, because there is no buyer for the home out there. But as soon the economy is back on track you are right, but what if not.

Exactly choir girl. No ones really knows what the banks are worth right now. Not even the banks. If they had a crystal ball, then they would know. But to still value most loans at full value is ludicrious, and could cause another market crash if they start writing down billions again.
03-26-2009, 12:47 PM
relmor2003

Quote:

Originally Posted by Brandon Matthews

I can't see them now, but there were some very big orders at .39 and .41. Unfortunately, the mm's are letting anyone who wants to buy in below .40 to do so. They have us rangebound today at what started at 36-38 to 36-37. This tightening is just waiting to erupt.

Economics teaches us that anything (including stocks) is only worth what someone is willing to pay. In this case, .36 seems to be the going rate. Not sure it will move anywhere today. My guess at this point would be a .3750 close...the midpoint between the .36 and .39

Brandon, I agree. We should close between .36 and .38 cents today. If we close over .39 its extremely bullish. Low volume once again, lets all pray for it.
03-26-2009, 12:47 PM
relmor2003

Quote:

Originally Posted by JohnnyIrishXM

Yes this is correct Newman!And the bank must then set aside 2Bil in fresh cash available to lend to cover their liability on that loss(multiply by 1 Trillion and you have your bailout figure)......The bonds were traded like trading cards in a game of musical chairs and the music stopped and they were left holding what they couldn't sell...Aig got caught cover the insurance for these bonds or actually securities(credit default swaps) which incidentally is what caught Warren Buffet also...

Bonds are toast.
03-26-2009, 12:48 PM
Paratrooper_Rick

Quote:

Originally Posted by Brandon Matthews

I can't see them now, but there were some very big orders at .39 and .41. Unfortunately, the mm's are letting anyone who wants to buy in below .40 to do so. They have us rangebound today at what started at 36-38 to 36-37. This tightening is just waiting to erupt.

Economics teaches us that anything (including stocks) is only worth what someone is willing to pay. In this case, .36 seems to be the going rate. Not sure it will move anywhere today. My guess at this point would be a .3750 close...the midpoint between the .36 and .39

Thanks for the analysis.... and I'm thinking this sideways movement is a really good set up for tomorrow....

Although I'm hoping davis is on the money with the end of day being up a slight bit leading into AH...
03-26-2009, 12:50 PM
JohnnyIrishXM

Quote:

Originally Posted by relmor2003

Exactly choir girl. No ones really knows what the banks are worth right now. Not even the banks. If they had a crystal ball, then they would know. But to still value most loans at full value is ludicrious, and could cause another market crash if they start writing down billions again.

No,the loans have stopped being traded,that is reason for toxic plan,they are mark to market at last trade,hence you see they want to change it for banks so they can account it as 500mil in loans is 500mil on books,so they don't have to capitalize their books with lendable cash,(our bailout money)...

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