Does anybody know what that means? And I’m not talking about the dictionary version. This word came up in relation to the Madoff’s affair. An article I was reading mentioned a possibility of investors being forced into a “clawbacks” situation. Followed by silence. What the hell are(is?) “clawbacks” in context of investment world? I did some digging, well, my assistant did, and found out that “clawbacks” are(is?) a situation in which money received in good faith, but obtained by the party paying you with funds obtained through illicit means, must be returned. For example, investor intrusted money to Madoff. These funds are never really traded, but rather used to keep the scam rolling. Some time later investor receives a dividend payment, supposedly made on initial investment. Unfortunately, these payments came from contributions of other people, rather than any market operations. This would be the “clawbacks” situation. Any money that was distributed to investors as described above, might have to be returned and pooled for redistribution to all victims of the scam. If there is anybody familiar with “clawbacks”, please let me know if this is correct. This would be like adding an insult to injury. Imagine, you lost life savings, but in the process you collected some dividends. Now you have to pay those back. Could this really happen?
Pound hit a new all time low against Yen. This really happened. Of course, by now it seems like a daily occurrence so it lost its edge. Unless you are actively trading it. Then it is always important. Yen was a focus of my trading today, starting with NZD-JPY position I’ve been nursing for couple of days.
Initial buy at 47.75 was my test trade before I committed to entering into other Yen crosses. Price kept drifting lower and last night, when sell off accelerated I closed it for 117 pips loss, only to reenter it few hours later for a good trade. Why? It is easier to see on next chart.
After another sell off price undercut latest low and started to build reversal pattern. This happened after the initial move of European session, when prices often turn, especially on Fridays. Mostly in anticipation of US data coming out over next few hours. For me, who have spent days seeking a good, low risk buying situation, this was it. Very low risk, momentum turning, time of the day… None of the factors alone made for a great reason, but together they made sense to me. So I bought all JPY crosses, including the NZD-JPY above. This is as discretionary as discretionary trading gets. Beast didn’t hit the target of 123.00, but other pairs reached theirs.
Turned out to be a very good day. All other orders mentioned in the blog over last week remain active. For example, AUD-CHF buy from yesterday. Next week I will once again focus on Yen and even more on Pound.
Mike K.
This is good traing. You make it look simple, but it is anything but.
Clawbacks: It looks like it could happen.
The following is from the NY Times:
“Yet even Mr. Madoff’s most fortunate clients may wind up having to give back some of their gains, as investors might have to do in another recent financial fraud, the collapse of the hedge fund Bayou Group in 2005.
In the Bayou case, in which investors lost $400 million, a bankruptcy judge ruled that investors who withdrew money even before Bayou collapsed might have to return their profits, and possibly some of the initial investments, to the bankruptcy trustee overseeing the unwinding of Bayou.
The returned money is to be distributed among all investors, who are expected to receive only about 20 to 40 percent of their original investments.”
I am wondering about those folks that did withdraw some funds and paid taxes….do they get that money back from the IRS???
What a mess.
Thank you, Ollie. Once IRS gets involved I’m sure things will move smoothly for these poor people…
Ollie is right, Mike. This is very likely to happen.
Bizzare situation, that’s for sure. I’m glad it does not involve me. Probably years will pass before there is a conclusion, wth nobody happy at the end
Yes, Michelle….except for the lawyers!
Ah, lawyers…Leeches and vultures.
Vultures? Aren’t you one of them?
Mike, you are so burried in charts that you really need to take a step back. Not paying attention. I’m a senior accountant at a legal department of my compamy, not a lawyer myself.
I see… You just feed the vultures.
Are you this funny in person? Frankly, these people here only do basic legal work, like warning labels, contracts etc. No litigation. For that outsiders are retained, true vultures and leeches.