by Gavin M.
November 4, 2013 - A date which will live in infamy. Let's look at this date as objectively as we can. This is the deadline set by BlackBerry for Fairfax Financial's purchase of the company. Please do remember that this is a LBO using BMO and BofA to pony up the cash to buy BlackBerry. Fairfax does not have the cash to pay for an all-cash deal.
Let's look at the possible scenarios:
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BlackBerry Gets Sold for $9/share
Everyone except the sheep who bought above $9 celebrates and everyone congratulates themselves for buying such a wonderful stock at $8 or below. BlackBerry goes into acquisition mode and will be under FairFax's mercy for staff changes and operational directions. Thorsten Heins will be laughing so hard since he will make $55M for the company's purchase. Again, the CEO wins, everyone else loses.
BlackBerry Does NOT Get Sold
There will be an expected price drop. How far? That is anybody's guess. BlackBerry will be back in buyout limbo all the while burning through they available cash > $2Bn or so. By March of 2014, they will start to contemplate breakup or the other B word - Bankruptcy.
BlackBerry Gets an Extension
This is one of the few things that may not get mentioned. This is also what I'm afraid of. If they get an extension to God knows when, any directional bet you make just turned into a major jedi mind-meld. You will have to be waiting awhile to see what happens.
In the end, you either love or hate BlackBerry. The investment and trading community is so polarized, no one is on the fence. Whichever side you pick, just be ready for November 4th. It could be something or it could be nothing...
I will short on or before November 4th. This is my plan. Plain and simple.
by Gavin M.
The forex, bond and futures markets are cautious. The stock market? HECK NO. They just rallied and eliminated the losses over the last week or so. Why? HOPE. Hope that something will actually be right. Historically, the bond market has always been smarter than the stock market. I will always trust the bond market before the stock market. The stock market is full of ignorant people.
I'm not angry at the rally - however I'm also not a robot where I can just reset my brain from Sell mode to buy mode in a blink of an eye. I am calling Washington's bluff but we'll see what happens. Sometimes, it's really better to just not trade when your trading theses need to be reset. Sometimes when your gut tells you something's wrong, it's better to just lay off on things for awhile.
If you have been consistently buying the dip, then congrats to you. When headlines swing the markets 10-20 points within day with no clear trends, it's usually a red flag for us traders to just be safe and let things settle. Your risk premium rises and it's not worth it to gamble.
In any case, who truly knows when or what will happen. Judging from Obama's statements, he did say he will not negotiate until the republicans reopen the government. But, we all know politicians are known to renege anything they say. So going forward, who really knows. In the end, just BTFD.
by Gavin M.
Opulence. Wealth. Affluence. Power. These are the things that go hand in hand with the rich. In a world where we sometimes like to vilify the successful and the rich, we really end up just hurting ourselves.
The rich have a responsibility to society. Society looks up to the rich to get a glimpse of what they could achieve if they work really hard and achieve their goals. This is fact. However, the rich do tend to flaunt it in ways that are more appropriate.
The rich need to set an example. It's good to enjoy your money, your success but don't suddenly do things that make society go, "huh??" That is quite an important point there. However, when you rub it in the poor people's faces, you are bound to get a lot of backlash.
In our current global state where the rich continue to get richer and the poor get even more punished, it won't take long for a big movement to happen. Movements such as OWS (Occupy Wall Street) are there to try to raise awareness of the increasing social and wealth polarization not only in the USA but all over the world.
When the world's rich controls almost all of the global resources, there is always bound to be a problem. Take America for example, a staggering 1-2% of the extremely rich control > 49% of America's wealth. How does that even give the rest of the middle class and other echelons of society a chance to ever get up in the world?
Traders from Equity Sense will be writing on this blog on positions and other market-related things.