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Could Morgan Stanley Go Belly Up?

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Pale Blue Dot Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-03-11 12:25 PM
Original message
Could Morgan Stanley Go Belly Up?
Edited on Mon Oct-03-11 12:31 PM by Pale Blue Dot
The short answerYes. Unfortunately, the long answer is also Yes,' but lets delve in a bit further.

Despite disclosure regulations, no one really knows the extent of the exposure to Greek and other European (potential) defaults. You do not have to be a historian to remember what happen last time a major default happened that did nto have quantifiable risk exposures.

So, could Morgan Stanly (NYSE: MS) be up on the chopping block, like Lehman was only a few years ago? It is certainly possible. Perhaps what is most important, though, (even more important than the actual exposure on MS's books) is the fact that people are starting to believe that it is possible.

Take a look at January 2012 LEAP options The lowest available strike is the $3.00 put, which is actually bid! Currently at $0.15/0.17, the strike is running at 183% volatility. Overall historical and implied volatilities for Morgan Stanley are trading at 86% and 97%, respectively. This is also up dramatically from only a few months ago, when HV and IV were averaging 22% and 24%, respectively, despite a continuously declining stock price.

Ignore this at your own peril. Events are becoming eerily reminiscent of 2007-2008. Today the stock market is currently down another 2%, despite some not-terrible economic news, mostly due to a slow-spreading panic.

I post this not to garner sympathy for Morgan Stanley (I have none), but to start a wider discussion about what this means realistically for the near and long term future.
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marmar Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-03-11 12:26 PM
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1. What you hear is the sound of inevitability.


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no_hypocrisy Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-03-11 12:33 PM
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2. Somehow I think the CEOs and majority shareholders are Zen with it as
they've already taken their chips and cashed them in.
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banned from Kos Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-03-11 01:16 PM
Response to Original message
3. There is no doubt a short attack and smear campaign agianst MS
But MS will not fail unless credit dies again like in 2008.

Fairfax sued the famous short Jim Chanos for launching a whisper campaign against them several years ago.

And Fairfax extremely highly regarded. Wall St is sleazy for sure.
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