[DebtAndDelusion]

Have not seen this posted anywhere despite being the lead business news story today. In 1997 LTCM's four billion dollar loss required the sixteen largest US banks to ante up 250 million each to keep the system from imploding.

Paulson must walk a delicate tightrope to enable these hedge funds to unwind in an orderly fashion. Much pressure now.

HG

[BipolarBob]

Well now the shoe is on the other foot. Hedge funds under the gun.

[CzarNicky]

is $oro$ invested in this I hope.

[Enterprise]

I was listening to a business channel today. It seems that this was the fault of a 32 year old in the company. Last year he made 800 million for the company and received 75 million dollars in commissions. This year, he didn't do so well.

[icwhatudo]

For the "little less educated" lol, can someone explain what they were doing?

I understand they were betting on higher prices but how?

Is it something like: they "gained control" of ten dollar stock with paymet due in a year at a price of $40 (And they thought it would be worth $80 by then?)

Simple explanations welcomed-thanks!

[Proud_USA_Republican]

It depends what kind of investing in NG they were doing. If it was heavy into options or futures with set experation dates, and they were betting on it going up, kiss that 4 billion goodbye.

I'm sure the news that it looks like a El Nino winter is going to occur this winter where things are warmer and dryer being annouced this week was the last blow to their hedge.

I'd actually be investing in NG companies at these prices right now. Longterm, its a solid play. But if you were betting shortterm on NG prices going up, your in the house of pain.

[Fido969]

We anticipate our year-to-date losses might be in excess of 35 per cent

Bet it's a LOT more than that when they get it figured out.

[MaxMax]

Hedging is a very dangerous sport and I can only hope
most of those losses are out of Soros' fat pockets.

[djf]

Is it really at a two year low? I got some tanks I should fill.
It was way up last year.

[tiki]

Ooops!

[Tennessean4Bush]

Some reports said the fund's losses could amount to $4 billion US.

Good.

[Moonman62]

I believe LTCM was trading in currencies, and thus threatened the global economy.

[greasepaint]

this is great news.

NG in storage is at an all time September high.
no hurricanes in sight for the gulf.

[conservative in nyc]

I can't say that I'm crying over Amaranth Advisors' losses. (Nor do I think there will need to be a LTCM-type bail out this time - so far, they have met all margin calls). Amaranth Advisors are big boys who should have known the risk of taking highly leveraged natural gas positions. Sure, they may have made hundreds of millions of dollars last year by doing that. But there's often a lot of risk involved when there are potentially high rewards. Caveat emptor. If things look too good to be true, they probably are.

Sounds like Amaranth Advisors bet wrongly this year.

[mysterio]

I feel so sorry for the speculators who have been pushing the price of natural gas so high that I have to pay $200 a month to keep my house as warm as an Alaskan crypt.

Oh, wait. No, I don't.

[Asclepius]

Most hedge funds are just noise traders. They buy, sell, and option their holdings either randomly or in ways that cancel each other out when averaged over them. But these people had a plan, a very very bad plan, a very, a hugely expensive plan. Before you mourn the hedge funders and their investors, take a moment to share the joy of those who profited from their aggressive stupidity.

[TheLion]

Pension funds have billions invested in oil futures. Maybe when these unwind, there will be less incentive to run up the prices for awhile.

[anymouse]

Maybe this is why oil prices are falling. The speculators lost their shirts in the natural gas futures market and either don't have liquidity or nerve to keep playing the oil futures market.

[what's up]

Sounds like someone was betting against George W. Bush's Mid-East policy.

Too bad for them.

[Cold Heat]

Snicker.....

Live/die by the option.

[Chances Are]

This is a prime example of why, if you play the commodities game, you should never try to outguess the market. You ride it instead.

Sure, maybe this guy got lucky last year and made a boatload of bucks for the firm, but the market always balances you out. Always.

If you're looking for investment advice, the best advice I can give anyone is to beware of those "bright young tigers". The real world eats them up and spits them out mercilessly. Rather, find yourself a "doddering old idiot", the kind who has seem everything.

I think that's always your best bet.