Everything anyone ever needed to know about trading

Rudyard Kipling

If

If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or, being lied about, don't deal in lies,
Or, being hated, don't give way to hating,
And yet don't look too good, nor talk too wise;

If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with triumph and disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to broken,
And stoop and build 'em up with wornout tools;

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on";

If you can talk with crowds and keep your virtue,
Or walk with kings - nor lose the common touch;
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run -
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man my son!

Economy so bad divorce market is drying up

Divorce Gets Harder as Recession Ends Jobs, Cuts Asset Values

By Patricia Hurtado and Laurel Brubaker Calkins

Jan. 23 (Bloomberg) -- Irene Georgakis, a housewife in Queens, New York, thought she’d hit bottom on Valentine’s Day 2007 when she learned her husband of 24 years had a girlfriend, a discovery that led to her filing for divorce.

Then the economy nosedived, and things got worse. Georgakis, 54, said her husband, George, 64, owner of five New-York-based companies, is balking at paying support and using the recession to claim poverty after making millions during their marriage.

“He’s the ultimate stonewaller,” Georgakis said in an interview. “It’s galling.”

The Georgakises are among couples in broken marriages fighting the economy in addition to each other as they try to divvy up assets from homes to artworks that have plunged in value. Couples bent on splitting estates have had to redo the math when asset values proved less than they had counted on to split up.

AXP: Update

AXP Dynamically hedging their credit exposure. Capital One claims do be doing the same. I'm still not convinced. As deflation persists nominal consumers debts will grow in real terms as unemployment rises bankruptcy will prove a better option for many than paying back Ken.

AXP since I got long vol last week





Your Money - American Express Watched Where You Shopped - NYTimes.com

American Express Kept a (Very) Watchful Eye on Charges

By RON LIEBER

You probably know that credit card companies have been scrutinizing every charge on your account in recent years, searching for purchases that thieves may have made. Turns out, though, that some of the companies have been suspicious of your own spending, too.

In recent months, American Express has gone far beyond simply checking your credit score and making sure you pay on time. The company has been looking at home prices in your area, the type of mortgage lender you’re using and whether small-business card customers work in an industry under siege. It has also been looking at how you spend your money, searching for patterns or similarities to other customers who have trouble paying their bills.

In some instances, if it didn’t like what it was seeing, the company has cut customer credit lines. It laid out this logic in letters that infuriated many of the cardholders who received them. “Other customers who have used their card at establishments where you recently shopped,” one of those letters said, “have a poor repayment history with American Express.”

It sure sounded as if American Express had developed a blacklist of merchants patronized by troubled cardholders. But late this week, American Express told me that wasn’t the case. The company said it had also decided to stop using what it has called “spending patterns” as a criteria in its credit line reductions.

“The letters were wrong to imply we were looking at specific merchants,” said Susan Korchak, a company spokeswoman. The company uses hundreds of data points in making its decisions, she said, adding that the main factor in determining credit lines “has always been and still is the overall level of debt, relative to the card member’s financial resources.”

The company will still have plenty of other data to judge your creditworthiness, though. American Express executives have spoken candidly to investors and analysts about its deep dives into your data.

A spokesman for Citigroup says that it is using some mortgage data to help it make credit decisions, but it is not using specific store data or looking at types of merchandise purchased. A spokeswoman for Capital One said that geography was one of many factors it considered and that it, too, did not make decisions based on where people shop.

Bank of America and Chase declined to comment on precisely how their underwriting works, though it’s safe to assume that they and other companies are looking at more data more carefully than they ever have before.

In the grave new world of the ever-worsening economy, lenders of all sorts are grasping for any sort of information that may shield them from ruin. In recent investor presentations, American Express executives have noted how much better the company’s data-mining capabilities are than they were during the last two downturns.

As technological advances give banks better tools and exponentially more information on who their customers are and what they do all day, they no longer have to wait long to tweak their formulas. “We have clients changing risk policies daily, depending on what they see in the marketplace,” said Dennis Dixon, the president of Zoot, a technology company in Four Corners, Mont., that helps banks and others make credit decisions.

The question, then, is how much of the data they can use before spooking their customers. Kevin D. Johnson, a 29-year-old Atlanta resident who runs a marketing and communications firm, received a letter from American Express last October saying that his credit limit was being lowered. One reason was that other customers who had used their cards at places where he had shopped were late in paying their bills.

The company couldn’t — or wouldn’t — tell him which charges had met with its disapproval. Frustrated, he told his story to the local newspaper and on “Good Morning America.” He also began documenting his experience on newcreditrules.com, where he posted the names of all the merchants he patronized, in the hope that other American Express customers would cross-check his list with theirs and solve the mystery.

When I queried the company this week, before it changed its policy, I noted that if it wouldn’t tell people which establishments were suspect, people would have no choice but to guess. The truly paranoid, presumably, would stop using American Express cards altogether.

But American Express couldn’t possibly go public with such a list. If it did, the merchants on the list, who generally pay the company a lot of money to accept its cards, would have a fit and hurl their Amex terminals into the nearest body of water.

Now, the company says that there never was such a list. So what about the language in its letters to cardholders, which calls out particular “establishments” where cardholders had shopped, I asked. Well, apparently that was all just a big misunderstanding, despite the number of people who must have been in on drafting the notes in the first place.

American Express wouldn’t have been the first company to try cordoning off certain industries. Last year, CompuCredit, a subprime lender, got in trouble with the Federal Trade Commission for failing to disclose that it could reduce customers’ credit lines for using their cards at various establishments.

What was on CompuCredit’s no-go list? Marriage counselors, tire retreading and repair shops, bars and nightclubs, pool halls, pawnshops and massage parlors, among others.

Robert Manning, a longtime critic of the industry and the author of “Credit Card Nation,” also pointed out that American Express ran the risk of discouraging a lot of virtuous behavior. “If someone shops at the Dollar Store, he’s a prudent steward of his financial resources, but the blunt instruments at Amex suggest that he’s changing his financial behavior,” he said. “There’s this ecological fallacy that if I suddenly make a charge at Wal-Mart, my line of credit would get bumped down.”

But while American Express has pulled back from snooping on your shopping, it’s still paying attention to other ways you spend. In one presentation to analysts, it noted that people with multiple residences and multiple mortgages used to be a good bet. Now, the reverse is true.

The company is also using credit reports to identify your mortgage lender. If it’s a subprime lender or one that has gone bankrupt, that could affect the size of your credit line. Borrowers do not necessarily have a say in determining who ends up owning or servicing their mortgage, though. Ms. Korchak, the American Express spokeswoman, said that customers should call the company if they think there is any confusion about the identity of their original lender.

American Express has also been looking at the health of the industries where its small-business cardholders work. If you’re a dentist, say, you may have less trouble with the card company than if you work in construction or finance. Al Kelly, the company’s president, said in a presentation in August that it had made changes in credit limits “by looking at industries that are facing, or might face, incremental stress.” The “might face” could encompass all sorts of industries of the company’s choosing.

So if you want to keep your credit unchanged, it now makes sense to actively manage your credit portfolio and look at it even more frequently than you do your investments.

If a card company lowers your credit limit, for instance, it can hurt your credit score, since one factor in your creditworthiness is how much of your available credit you’re using at any given time. You want that percentage to be as low as possible, so you may have to pay down debt or use your cards less.

That said, if you have a high credit limit, that may make you a target, too. American Express has said it is keeping a particularly close eye on those customers.

If it feels as if you simply can’t win here, remember that you do have choices. You can avoid credit cards in most instances. Or you can join a credit union or look to smaller banks, where better deals may be available.

Card companies presume that you’ll suck it up and pay more or adjust your spending if they change their terms on you. But because they deploy such different tactics, you have the opportunity to leave one company and patronize another.

What reason has your card company given for changing your credit terms? Write to rlieber@nytimes.com.

BXP next FAIL first?

I just heard Mort Zuckerman say on Bloomberg Radio that Manhattan was a supply constrained real estate market and that being focused on the high end of the market they should insulated. I am not sure if Mr. Zuckerman was just putting on a a brave face or if he really believes this, either way, i'll be putting on a net long volatility position in BXP to compliment one I already have in Simons Property Group. With bank bonuses a thing of the past Manhattan real estate is going down, hard.

Bloomberg.com: News

Zuckerman Loss Makes Sam Zell Master of Real Estate (Update2)

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By Bob Ivry

Jan. 30 (Bloomberg) -- Billionaire Mortimer Zuckerman just learned a hard lesson from billionaire Sam Zell.

Zuckerman’s Boston Properties Inc. said this week that three Manhattan skyscrapers it bought in May lost about $165 million of value in seven months. Zell exited the office property market in February 2007, selling Equity Office Properties Trust and its more than 500 buildings to Blackstone Group LP for $39 billion in debt and equity, the largest leveraged buyout at the time. It was the peak of the market.

“After that, the world changed,” said Dan Fasulo, managing director at real estate data provider Real Capital Analytics.

Boston Properties disclosed the writedowns as it reported its first quarterly net loss in at least eight years. Zuckerman bought the three office towers from developer Harry Macklowe, who was forced to sell because he had to repay short-term loans he used to buy eight buildings from Zell in February 2007.

Financial companies, battered by more than $1 trillion of writedowns and credit-market losses since 2007, have tightened commercial real estate lending. U.S. sales of office buildings plunged 88 percent since the second quarter of 2007, according to New York-based Real Capital Analytics. In midtown Manhattan, the location of the three buildings, 6.7 percent of commercial space was vacant in February 2007, according to data from Colliers ABR. In December, vacancies climbed to 10.2 percent.

General Motors Building

Blackstone wrote down the value of its real estate by 10 percent in the third quarter of 2008, according to a filing with the U.S. Securities and Exchange Commission. The value will be updated when the New York-based investment firm announces fourth-quarter results next month. Blackstone spokesman Peter Rose said he had no further comment.

Boston Properties took impairment charges on 540 Madison Avenue, 2 Grand Central Tower and 125 West 55th Street. The shares fell 96 cents, or 2.2 percent, to $43.30 at 4 p.m. in New York Stock Exchange composite trading. The stock dropped 51 percent in the past 12 months.

The tower that Boston Properties bought in May that kept its value was the General Motors Building, the $2.8 billion skyscraper on Fifth Avenue adjacent to Central Park.

“You can’t fault Mort Zuckerman for buying the single best property in the U.S., the GM Building,” New York real estate billionaire Richard LeFrak said in an interview. “If you’re going to overpay for something, you overpay for that. Today it sounds like a high price, but 10 years from now they’ll be yelling, ‘Maestro! Genius! Take a bow!’”

‘Smart Guy’

Lawrence Fiedler, president of JRM Development Enterprises Inc. in New York and a real estate professor at New York University, said he thought a $165 million writedown didn’t sound like a lot of money. He praised Zell and Zuckerman.

“Mort Zuckerman is a smart guy,” Fiedler said. “Did he pay too much? Everybody who bought property when he bought property paid too much.”

Zuckerman, in an interview, blamed mark-to-market accounting rules that require publicly traded companies to declare the value of their assets every three months.

“We do expect to get somewhat less rent in those buildings than we thought we would, but it doesn’t mean the buildings are worth less,” said Zuckerman, who’s chairman of Boston Properties. “There are a whole set of assumptions that has to meet the standards of your public accountant. We wouldn’t sell these buildings for this price. We would buy them.”

In a February 2007 interview, Zuckerman called Zell “one of the authentic geniuses of real estate.”

Terry Holt, a spokeswoman for Zell, said he declined comment.

“Zell sold the buildings at the right price at the right time,” Zuckerman said yesterday in the interview. “Nobody’s ever perfect, though. You end up buying a newspaper business.” Zuckerman owns the New York Daily News tabloid newspaper.

Last month, less than a year after Zell bought Tribune Co., owner of the Chicago Tribune, and took it private, the media company sought bankruptcy protection with $13 billion of debt.

To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net.