Plus ca change ...

As I have been saying for some time now, I expect next year to be more like 1996 than 2006.  This theme is explained in more detail in a Bloomberg story today quoting people who really know what they are talking about:

Paul Tudor Jones:   “Those of you who have visited recently have heard me refer to this return to our roots as back to the future,”
Brad Balter: “The industry lost its way, and this is a reset.”
Louis Bacon:  Bloomberg describes how he has concentrated his equity investments among a smaller number of in-house stock-pickers with proven records of generating a return when prices fall or rise.

The article also makes reference to new funds that are launching to take advantage of heavily price-distressed assets.  This reminds me of a former colleague in the early/mid  1990s who had experienced a great year with convertible bonds, only to be followed by a terrible year and he was sacked.  The negative price movement was a function of the markets, not his choices.  He was quickly picked up by a hedge fund, and his first action was to buy the really cheap CB’s from his former employer at knock-down prices.  Not surprisingly, his first year at the new firm was a very good one as well. 

The more things change, the more they stay the same.

The big news across all the markets today is the failure of the US Senate to agree a $14 billion short-term rescue plan for the big 3 American automakers.  I won’t go into it as you can read more on the story elsewhere.  However, it has set off another day of markets tumbling around the world.  Will the car companies go bankrupt?  Who knows, but we can see the doom and gloom that has returned to the markets today. 

I have been relatively sanguine about the IOSCO Task Force on short selling that is due to report in a couple of months.  However, there is also a regime change coming in the US when President-elect Obama and his team fully take over.   Roel Campos, a member  of the Obama transition team made a few comments earlier in the week that I find confusing and disturbing.   The article is from MarketWatch, and since I wasn’t there when Mr Campos made the remarks I can’t judge for myself what his intentions really are.

First he is quoted as saying: 

"We're looking for disclosure of positions, with a small delay, after a short sale is made,"

Then the article goes on to say:

“Campos is seeking to have the next SEC chairman introduce new rules requiring short sellers to publicly disclose their positions in a manner that is similar to how equity investors are required to reveal their equity stakes. "

The story reminds us that:

“For example, to comply with the SEC's 13F rule, investors with $100 million in capital or more are required to publicly disclose their positions 45 days after every calendar quarter.”

Then having said the rules should be similar, it carries on with: 

“But Campos argues that four-times-a-year public disclosure of short sell positions isn't enough.”

And closes with comments from Obama’s advisor as follows:  

“Campos said the delay in public disclosure is intended to protect some proprietary strategies, but that there should be some parity with equity disclosure requirements.”

Are the politicos looking for similarity, parity or different standards?  Your guess is as good as mine.  What did I say above about the more things change … ?

Have a great weekend!