Registered Rep. Broker Forums

Originally posted by Primo

I agree this has spun out of control. You missed my original point. You made a blanket statement, I refuted it. The comments (pathetic specifically) in my first post were directed at the broker in my office. Read the post again.

What spun this thread so far off track was all the comments after that. I realize Bull that you are a trainee and this isn't really a fair fight. Your problem is that you assume too much. You make assumptions about brokers across the country when you know very little about their individual situation. You also assume that since I am a trainee that this isn't a fair fight. Some advice, quit making generic assumptions about people you know nothing about. Let me point out a few mistakes.

You said I didn't understand the ARS market, while I clearly do.

Your under the impression that rates and yields are the main reason why ARS failed. While it is a small part it's missing the big picture about what truly happened and that's why I said I don't think you fully understand ARS. That is not what I said at all. Elevated rates indicate a risk, unable to determine the risk on my own or find someone who could give me a plausible explanation, I avoided ARS. Your reading comprehension is poor.

Original Statement that started it all "I told him that the rates seemed quite high (4.75%, 7 day, AAA) for such a "safe" investment and that something (did not know what) was going on. "

Looks like a bunch of backtracking to me. You stated that you thought the rates were "quite high" and something was going on. We ALL KNOW BY NOW that is not why the ARS failed.

Left Hook BullBroker

You said if I didn't short the market I should shut up, which you (unless you working at the institutional trading desk) nor I can do.

Let me correct you, I never once said you could or should short ARS. I said Goldman was on the other side of the trade meaning they were making a market in the ARS and making profit on the spread. If you need me to explain how market makers make money on the spread I will. You said if I didn't short the market I should quit thumping my chest. It is right there in black and white. This implies that I somehow had the ability to, otherwise why would you have said it?

Went back and read every post I never once said anyone had to short the market I said Goldman was on the other side making a market, and making a spread/profit off of it. Never said anything about shorting anything, it's not in black and white because it was never said.

Right Jab BullBroker

You said no one is losing money. To this point you are correct, although Jefferson County AL is very close to default and others will follow. More on this later. This is not a secret, in fact if you are following the ARS market, this is quite prominent news. Why no comment?

Dodge punch and back peddle Primo

You said no one had lost a dime of interest. Thousands of holders of students loan ARS are getting 0%. Back to losing money. Stop thinking like an investor and start thinking like and investment professional. 0% interest on illiquid money is losing purchasing power. This is what an investment professional is concerned about, not volatility.

I didn't realize the student loan ARS's stopped paying interest. We didn't have the ability to ticket the student loan backed ARS's in our system. So if this is true I was wrong, and should have done my research before stating otherwise. There are many facts about this issue that you do not realize, it is plastered over each of your posts, yet you continue to plow ahead.

Right Hook Primo

ARS=car. ARPS=Chevy. MARPS= Ford. You keep talking about a Ford and calling it a Chevy. At the very least refer to it as a car. Again no comment?

Nothing to really comment about you are just stating what is obvious to everyone.

Back peddle Primo

You refuse to acknowledge that rates on fixed income are a measure of risk, perceived or real. This is not based on historical data, this is fixed income 101, very basic stuff.

Never once stated that rate, was not a measure of risk. I just stated that the rate was not the reason why the ARS failed, which you are barking like it's the only reason and that is just plain wrong. In your world if ARS had a lower yield (less risky) this would have never happened, and that would be wrong. Why you claim to understand the ARS market but can't grasp this point is beyond me. There you go making connections that do not exist. I did not nor do I now feel the ARS market failed because of rates, I stated that elevated rates denote risk, and that I avoided the market for this reason.

Primo running for the ropes turns argument completely around, now states that he does not feel ARS failed because of rates, but still stands at the position that he avoided them because of rates. Compeletely contridicting his entire argument about how rates somehow was the cause of the ARS collapse.

You state that the defaulted rates are higher. Another blanket statement. Many funds have max rates based on a benchmark, the S&P/Kenny AA for example. Many (not all) ARS are back to paying market rates. Not such a good deal for an illiquid investment.

There are many if not more that are paying failed rates, I read the prospectus for the one I held, they don't have a choice they must pay the failed rate. Thanks for restating my post. Point was, you said everyone was clipping higher rates, and there are thousands that are not.

I never said everyone was clipping higher rates, I stated that when the ARS failed people were getting higher rates. I didn't say everyone, and it's obvious to anyone involved that there are people getting higher rates because of the failure.

You said that what was going on with ARS had nothing to do with rates. Thats like saying your cough has nothing to do with your lung cancer because you have a cold.

I stated that it had very little to do with rates, and you can't bring proof that it was based on rates because that is just wrong. Again, rates did not cause the failure of the market, they just predicted a risk in an efficient market. If ARS were paying the historical 50 bps over the market when it failed you would be right. However they were paying 200 bps over the market at the time of failure. Why? Could it be an efficient market pricing risk correctly? Funny thing is, you will never know if a market if pricing any instrument correctly until some point in the future. If you took the information you had at the time and participated or chose to not participate and your decision turns out to be correct, is that not a good

thing?

Primo backs away from his original statement that he saw high rates and avoided them. Running for the ropes waiting for the bell to save him.

It all started when a market maker decided not to make a market in the other side of the trade hence a ripple effect through the entire market. The market maker didn't come and say "ya know these rates are just too high I don't think I want to participate today". At least I can admit when I was wrong about the student loans not paying interest rates.

BullBroker takes a jab to the jaw admits he was wrong and is a better man for it.

Prato, you get my point. I don't have a problem with anyone who did their due diligence and bought an investment that turned sour. My issue is those who buy an investment based on Mr. Producer is doing it so should I, then crying afterwards. Again I was referring specifically to the broker in my own office, although I am sure he is not the only one. No reply? It's funny that you only reply to half my posts.

Primo spends the first 12 rounds arguing about how he saw the high rates and that is why he avoided the ARS. Comes in the 13 round and claims that he never said it and aknowledged what BullBroker has been saying all along, high rates didn't cause failure in ARS.

Refs decision...................................clear win for the challenger BB, hope you all placed your paypal bets for the underdog/trainee, snaggle will deposit your winnings within 24hours.