As we predicted, the massively CNBC-hyped “Ambac bailout” has been revealed to be nothing but smoke and mirrors. Kudos to whomever duped Charlie Gasparino of CNBC so that the HF manager could slough his garbage upon credulous speculators. Barry Ritholtz gloats:
Riddle Me this Batman: Over the past 2 months, we have seen at least 3 rallies predicated on the rumor of an Ambac (ABK) rescue — either through a capital infusion, or a direct purchase of the company.
Let me remind you that just a week ago their triple-A rating was confirmed by the (choose one a. criminally negligent; b. technically incompetent) organizations known as Moody’s and S&P.
To you can imagine my surprise when the stock was halted today. WSJ Marketbeat announced “Ambac Bailout Imminent! Maybe! Possibly!“
Then we learn that the deal was dead, and that Ambac needs to raise $1.5 billion dollars. Thus, all of those rumors and CNBC appear to have been patently false.
But here’s the question that keeps coming up: Who are the people leaking this information? And, is this legal? Now, we have learned that all of these attempts at manipulating the market were based on rumors that proved to be false.
I think that a lot of trading isn’t an issue of “genius” so much as detachment your thinking from the herd, and diversifying your sources of information away from it. This wasn’t that tough to figure out …
$1.5 Billion? Are you sure they can add numbers correctly?
In B-school, I had a course in which we studied about the Credit Rating Agencies. My professor always used to talk about how the ratings by these agencies were irrelevant. What he forgot to mention that these agencies themselves are irrelevant.
This whole thing was a big (sad) joke.