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  SubPrime Woes and it's relation to price drop
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mkcool  
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 More options Aug 2 2007, 3:14 pm
From: mkcool <mohit.kesw...@gmail.com>
Date: Thu, 02 Aug 2007 12:14:31 -0700
Local: Thurs, Aug 2 2007 3:14 pm
Subject: SubPrime Woes and it's relation to price drop
Financial company stocks are going down but no one has a clear picture
on the percentages of investment in subprime. If the percentage of
investment in subprime is not more than 10% then the question arises
why the stock prices of financial companies going down when the
company is more likely to show profit at the end of the quarter

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ak  
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 More options Aug 3 2007, 4:10 pm
From: ak <kapoor.ar...@gmail.com>
Date: Fri, 03 Aug 2007 13:10:36 -0700
Local: Fri, Aug 3 2007 4:10 pm
Subject: Re: SubPrime Woes and it's relation to price drop
Because if there are no takers of debt, then the investment banking
side gets hit as deals are choked

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zsche...@gmail.com  
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 More options Aug 14 2007, 9:55 pm
From: zsche...@gmail.com
Date: Wed, 15 Aug 2007 01:55:19 -0000
Local: Tues, Aug 14 2007 9:55 pm
Subject: Re: SubPrime Woes and it's relation to price drop
there is also the issue of margin loans to some of the larger hedge
funds that may not be liquid enough to meet these calls.  If it turns
out that stocks like MER, GS and LEH are on the hook for lending the
money for the funds to increase leverage, this could be a huge hit to
the financial stocks.  Investment banking is huge as AK mentioned.
Deal flow has dried up considerably and this is the bread and butter
of many firms.

I recently penned an article on how the sub-prime issue has caused a
ripple effect on the overall market.  the post is here if you're
interested. -> http://zachstocks.com/2007/08/global-liquidity/


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bookr...@yahoo.com  
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 More options Aug 15 2007, 8:21 pm
From: bookr...@yahoo.com
Date: Wed, 15 Aug 2007 17:21:33 -0700
Local: Wed, Aug 15 2007 8:21 pm
Subject: Re: SubPrime Woes and it's relation to price drop

mkcool wrote:
> If the percentage of
> investment in subprime is not more than 10% then the question arises
> why the stock prices of financial companies going down when the
> company is more likely to show profit at the end of the quarter

If the percentage of investment in subprime is 10% and you're working
at a 20:1 leverage, then 50% losses in subprime are enough to wipe you
out completely.  That's why, in a nutshell.

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« Newer discussion  -  leverage and disaster   LEH was the first to come up with the worst of the worst subprimt product  -  Older discussion »




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