Do the new margin requirements affect JPM as well?

CaptHenway

Do the new, higher margin requirements affect the massive short sellers as well? Do the JPM's of the world have to come up with more front money in order to game the system?

IF so, will this be the incentive for them to wind down their shorts, so to speak???????

TD

RedTiger

Skillful manipulators have a wide array of tools. Overall, yes, they are effected by the higher margin requirements on futures. However, with create use of derivatives, leverage can be as high as a firm wants it to be.

I see you are buying into the story that JPM and friends have been short and continue to be short. Again, skillful manipulators tend to make money on both the long and short side. They manipulate the information flow as well as the price, so the little fish can only guess which side the big fish is on. Usually follow the price, and that is the side the big fish is on, so odds are the big fish were heavy long during most of the rocket rally. They will leave false information on the trail to distract the little fish. The little fish see the disinformation morsel and bite, and pay.

Again for those interested in the mechanics of manipulation, the classic book "Reminisciences of a Stock Operator," gives old time examples. The book is available as a PDF online via a search. Again, in one chapter the main character manipulates a stock both long and short. The press reports that he lost millions on his short when he had actually reversed to the long side by then and made millions with the press and the little fish helping him in the task. Sound familiar? Don't believe the big fish are so easily tracked. They are in it to make money, so showing their cards, and making their positions public isn't something they do. Any news that does get out, tends to be news that the big fish wants out. The book is from the old days before derivatives, so manipulation was in many ways more difficult.

BigRick

Simple answer is yes - margins are the same for everyone - unless they are bona fide hedgers, then it is less but still the sama as OTHER bana fide hedgers.

derryb

They are probably using bailout tax dollars to pay the margin requirement, so they really don't have any skin in the game. If they are shorting on behalf of FED or TREASURY, I'm sure it is arranged so that it is worthwhile for them.

storm888

<< <i>Again for those interested in the mechanics of manipulation, the classic book "Reminisciences of a Stock Operator," gives old time examples. >>




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Learn Now, Trade Later



It's a fast/fun read.

NOBODY who has not read it at least a dozen times should
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jmski52

I note that the dollar is up smartly today. It's a good thing, too - since QE2 is going to be winding down. I wonder what kinds of great economic news is going to be revealed in order to keep the stock market pumping? Bin Laden can't be killed more than once. I wonder how low gas prices will actually go, or whether this is all a diversion? Nah, the government wouldn't play those kinds of games.

Would they?