My Fave-

So right after the Bear Stearns funds blew up, I had a thought: This is what happens when you lend money to poor people.

Don’t get me wrong: I have nothing personally against the poor. To my knowledge, I have nothing personally to do with the poor at all. It’s not personal when a guy cuts your grass: that’s business. He does what you say, you pay him. But you don’t pay him in advance: That would be finance. And finance is one thing you should never engage in with the poor. (By poor, I mean anyone who the SEC wouldn’t allow to invest in my hedge fund.)

Also:

There’s a reason the rich aren’t getting richer as fast as they should: they keep getting tangled up with the poor. It’s unrealistic to say that Wall Street should cut itself off entirely from poor — or, if you will, “mainstream” — culture. As I say, I’ll still do business with the masses. But I’ll only engage in their finances if they can clump themselves together into a semblance of a rich person. I’ll still accept pension fund money, for example. (Nothing under $50 million, please.) And I’m willing to finance the purchase of entire companies staffed basically with poor people. I did deals with Milken, before they broke him. I own some Blackstone. (Hang tough, Steve!)

But never again will I go one-on-one again with poor people. They’re sharks.

UPDATE – FLY chimes in on his stance on the Poor: OY!

So, I understand 7 million people are going to lose their homes this year. Fuck ‘em. I’m sure they can go back to that one bedroom apartment in Brooklyn, effectively alleviating some of the traffic problems in the “well-to-do” area’s.

Fly for President, 2008

An observation:

How does Mozilo view the situation now? “I don’t see a light here at the moment,” he said last week.

My observation…What an old asshole. All the prick had to to in my opinion is stay off tv and keep his mouth shut or be honest on tv. Nope. Guilty in my book. That money should come back to shareholders.

Here is The Fly’s always entertaining angle…a mock letter to shareholders:

Angelo Mozilo, CEO of CountryWide Financial

‘Gelo.”

Today, we got the first ‘give up’ an admission that a lender just can’t make it. I love their name – American Home Lenders (AHM). They sure lent. Like I always quote from Seinfeld – ‘You know how to maaaaake the loan, you just don’t know how to colllllect the loan.”

On Sunday it seemed obvious. I wrote:

For those homebuilder CEO’s that truly can’t manage their business, it’s over and they don’t realize it. I would be amazing to hear of a reorg or failure at this point. That would be something. I also meant the sub primers and banks :) .

Maybe in the next go around, the word ‘discipline’ will appear in lender’s names.

I hate financial companies. Licenses to print money and they still suck at running their businesses. Management should be shackled. Period.

Disclosure – Long MTH, ITB (idiot!)

Looks like a good day for some of Wallstrip’s tech stocks. Apple launches their TV, Nuance climbs above 15 and Adobe is nipping at all-time highs.

I will add more Adobe if it closes at an all-time high.

Elsewhere – SIGM – which is a chip stock I have since the high teens is testing $30 today and looks poised for big gains. I am not adding because it is a component play and these end badly :) .

Best of all is Fremont (FMT), the sub prime lender which is now back above 10.

Disclosure – Long – FMT, ADBE, NUAN, AAPL, SIGM

Fremont gets a big swatch of money and is now $9 pre market.

I suspected New Century (NEW) would be the sacrifice and it is looking more like this now.

I am not interested in seeing who all got sold out and/or panicked off the bottom in all these stocks. Accredited Lenders (LEND) was at $3 a few days ago and is back to $12. As, I suspected, careers were made and busted in the last few weeks in these stocks. Goldman and Merrill just brokered them (weasels).

Disclosure – Long Fremont

Eagerly checking my sources to see if Fremont has ability to do some loans they have in the pipeline. If so, I will sell the rest well above $10.

Disclosure – Long Remont

We have ourselves to blame first and foremost for the mess. Two years ago, I realized I was stressed about our big house. It was not so much the payment, it was the other monthly crap.

The house owned me!

Luckily for us, the market was super hot and we had a buyer the first week. We downsized. Cleared my head and lot’s of good things have hapopened.

The real housing problem is one much worse than stocks. People assume that their home is an APPRECIATING asset – all the time. They will hang on for dear lives. Unlike the stock market where you can ‘hit the bid’, that is not always possible with a home. Lot’s of hidden taxes that have been rising while you bought your home and ‘stretched’ for the financing.

All that said, Doug Kass has a good piece on “The Four to Blame for the Subprime Mess.”

Good, but I still blame the individual. No matter, many will hang.

Today Accredited (more like Discredited) Lenders (LEND) is down another 70 percent. The dips are a black hole. Tom Brown is changing the name of his fund to S.O.S. Capital.

That said, it is a typical Wall Street joke at this point and chaos has taken over.

I am severley tempted engorge myself on Fremont (FMT), but I am a wimp. That said, I am dipping my toes and fully expect to get screwed as should you. I am taking some money and staking a small claim in this pig.

When this unwinds it would be nice to see how the banks screwed EVERYBODY to try and recoup what they could of the big fraud thet have perpetuated once again.

Investing is not a joke and those 100 share dip buyers and value players have been distributed another pile of crap from big brothers Merrill, Morgan and Goldman. Those that trend follow and use discipline have watched this debacle unfold from the sidelines after making a pile on the way up.

Disclosure – Long FMT

PS – Look at this crap from New Century’s Website

UPDATE – I suck at posting pictures and sizing them – Trader Mike does a way better job of nailing the pricks . Thanks Eric for the original find of this.

New Century (NEW) is done and that was a given when it hit $5 a week ago and lot’s of people including me called that (Stock was $60 a year ago)

Tom Brown is a big boy but he is being shellacked here and he is not the only one.

Today they took out and shot (again) his other big holding – Acccredited Lenders (LEND).

If I was a gambling man, I would say it’s liquidation city for him. It may also be worth gambling that First Marblehead (FMD), a recent Wallstrip stock, is in the vultures sites. That has been creamed and could be torched if he liquidates. I don’t think it has any ties to the recent debacles, but the vultures shoot first and ask questions later.

One third of all stocks do the BIG ROUND TRIP to ZERO and that is why I don’t buy falling knives anymore. The few that go to zero that you and your conviction are buying all the way down will leave you broken.

The overall lesson…..Much easier to have conviction with other people’s money :) .