A post today on Business Insider has part of Dan Loeb’s recent letter to his investors on the recent market turmoil.  Loeb is the founder of Third Point LLC.  From the linked post:

From Loeb’s letter:

Before October, both market corrections and rallies back had been quick and dramatic this year. We feared that there had been a paradigm shift until the last few days, but it now seems the market may be continuing this established pattern. Pinpointing the cause of the initial sharp market movement downward is conjecture at best. Daniel Kahneman, the Nobel Laureate Economist and expert in heuristics, has written extensively about the dangers of our tendency to attribute causation to associated events. Keeping his research in mind, we caveat our explanations for October’s correction and volatility.

In early October, a confluence of events transpired in relatively short order, including weaker economic data, political uncertainty, a potential global plague, and bureaucratic meddling, which caused fear to spike, sentiment to decline, and investors to de-leverage. The month got off to an especially rocky start for hedge funds when a court dismissed a claim in connection with the Fannie Mae/Freddie Mac GSE complex. Many investors were oversized in this trade and their forced selling kicked off the “de-risking” cycle. Next, oil prices declined sharply and many funds who had large positions in E&P companies suffered enormous losses. Then last week, AbbVie halted its announced inversion transaction with Shire, inflicting great pain on the arbitrage community. Opaquely blaming mysterious “meetings with the Treasury Department,” AbbVie walked away from an entirely lawful deal that had been touted as enormously accretive and strategic as recently as two weeks ago, incurring a substantial $1.6 billion break-up fee. A rational conclusion is that instead of a legislative solution that might require comprehensive tax reform, this Administration has decided to unilaterally curb inversions using whatever means are available. Needless to say, this regulatory uncertainty (along with prior detours from the rule of law) will be a wet blanket on top of investors until transparency and a level playing field are restored to the markets.


China Grows at Slowest Rate in Five Years

by Marilou Long on October 21, 2014 in Foreign Markets

China has been trying to slow down their growth rate to a sustainable level in order to prevent a boom and bust cycle, and it is a very delicate balancing act.  Their rate of growth for the third quarter came in at 7.3%, the slowest rate in five years.  From the linked WSJ article: Navigating [...]

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Enlightening Commentary from a Trader at National Alliance

by Laura Ehrenberg-Chesler on October 16, 2014 in Energy

My partners and I thought this was very helpful and insightful commentary on what is causing the action we are seeing in the markets. “So what is going on???? The way we see it, the margin clerks are in charge…this is liquidation, not orderly unwinds…It may have started in the oil space, but it is long term [...]

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The Ruble is Collapsing – courtesy of BusinessInsider

by Marilou Long on October 8, 2014 in currencies

The recent economic data out of Europe shows that the sanctions against Russia are impacting the EU as well as Russia.  The chart from this linked BusinessInsider article shows how much the sanctions are hitting Russia’s currency. The Russian ruble has collapsed to a record low against a basket of  dollars and euros despite intervention by the [...]

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Words of Wisdom from Thomas Jefferson

by Laura Ehrenberg-Chesler on October 8, 2014 in Tribute

My post today is one of my favorite quotes from Thomas Jefferson: “I am a great believer in luck, and I find the harder I work, the more I have of it.” Words of wisdom from one of our Founding Fathers.

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The Inevitable Student Loan Mess

by Laura Ehrenberg-Chesler on October 2, 2014 in Debt

There has been some mention both in our blog and the financial press about the looming crisis in student loans in the U.S.  This opinion piece from the “Wall Street Journal” certainly puts the matter in a stark, and ominous light.  This is a matter that deserves attention from the general, voting public. http://online.wsj.com/articles/joel-best-and-eric-best-student-loan-debta-federal-toxic-asset-1412204612?mod=trending_now_5

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Unrest in Hong Kong

by Marilou Long on September 30, 2014 in Foreign Markets

Tens of thousands of protestors have been filling the streets of Hong Kong the last several days.  The protests started out very peacefully, and then the Chinese government began to use tear gas and force on the protestors.  This editorial from the New York Times today is a good explanation of what’s at stake for Hong Kong.  From the linked article: If [...]

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A Good Explanation of the Jewish High Holy Days

by Laura Ehrenberg-Chesler on September 24, 2014 in Education

My partner Marilou suggested I post this brief summary of Rosh Hashana and Yom Kippur.  Happy New Year to all of our clients who are observing the Jewish New Year. “As the sun sets tonight, Jews around the world begin the most intense period of the Jewish year. The Ten Days of Repentance, sometimes called [...]

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iPhone 6 Review Round Up

by Marilou Long on September 17, 2014 in lifestyle

I have linked several reviews for the new iPhone 6 that I found useful.  There is also an article at the end about upgrading your existing phone to iOS 8. From the Wall Street Journal: After using both the iPhone 6 and iPhone 6 Plus for a week, I can report that Apple has successfully [...]

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The U.S. Consumer vs. The Thrifty Scots

by Marilou Long on September 9, 2014 in currencies

The U.S. markets remain near record levels due to decent domestic economic data and geopolitical uncertainty abroad.  Consumer borrowing in July rose $26 billion, the most since November 2001. On the other side of the pond, the pound sterling and the euro have been falling due to both weaker economic activity and the upcoming vote on Scottish [...]

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