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« Simple Models and Housing Prices | Main | Understanding Counter Party Risk »

September 12, 2008


gaius marius

risk off the table in this environment, with this kind of event speed, is just smart. good trade.

it was pointed out to me that BAC will probably make first priority of sweeping MER brokerage cash into deposits. it's not the most stable cash in the world, but i think you have to take it where you can get it when you're digesting CFC!


Gaius -- Anyone buying Merrill last week had to watch carefully this morning. Since it was a stock deal, the actual price represents a ratio to B of A minus an arbitrage spread. (I'm sure that YOU know this, but other readers may not). I never expected to see 29, but the AIG circumstances created even more pressure. When I saw what was happening, I sold at about 21 to lock in 3 1/2 points or so. Not close to the top, but better than holding.

Will B of A be unmanageable? Time will tell. As you know, I think they got a good price, and a lot of the pieces seem to fit.

Thanks for commenting.


gaius marius

looks like you got rewarded, prof! $29/sh from ken lewis' new and revised unmanageably-large superbank.


MER doesnt have a viable way to make money. It cant fail but it doesnt have a business model.


insiders need to start buying.

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