I know that yesterday’s blog entry on Morgan Stanley is doing the rounds, not least because I got a phone call from within Morgan Stanley telling me so. (They weren’t very happy about it, needless to say.) But I also know because the comments just keep on coming, both here and at Seeking Alpha, blaming me for the fall in the MS stock price, saying that I want Morgan Stanley to fail, and calling me a "financial terrorist".
I can assure everybody who accused me of being short Morgan Stanley that I’m not, in any shape or form. In fact, I’m long, thanks to the index funds in my retirement account. I also wasn’t passing on any rumors. But there’s no denying the existence of some serious bears out there:
The Jan-2010 7.5-Put options are trading above $5: people are willing to pay $5 for the right to sell MS at $7.50, translating to a market sentiment of about 65% that the stock will become worthless.
Jessica Pressler picked up some typical MS comments from around the blogosphere and collected them for her own blog entry about John Mack:
His fingernails are bitten down so far that his fingers are bloody stumps. There is only one thing bringing him joy right now.
The silver lining on the cloud is that he knows that someone is looking after him. An army of commenters, like a band of guardian angels, have risen up to wage battle against Websites that have reported on such rumors. Who knew he had so many friends?
And then, wonderfully, a commenter on that blog entry came up with the best name yet for the G7 ministers meeting today in Washington: the "Coalition of the Ailing".
Which is really the perfect name also for the army of comenters attacking anybody who dares to question Morgan Stanley’s viability.
Morgan Stanley closed at $9.68 per share, down 22% on the day and 60% on the week: it’s now trading at just over 30% of its stated book value. Has any bank recently traded at a price-to-book ratio of 30% and still had any chance of surviving as an independent entity?