But making the wrong call is different from making the wrong marks on a trading book, which is what the unnamed trader is accused of doing.
The WestLB rogue traders' positions were thus valued and logged at the end of each day in the bank's official trading book, along with the closing prices from the stock exchanges.
Weighed down first by huge write-downs in its trading book and now by mounting loan losses, the bank is set to announce a fifth consecutive quarter of losses on January 22nd.
BMW's ordinary shares, and big long positions in their preference shares, will hinge on whether they were kept in the trading book or the so-called banking book, where WestLB makes strategic investments.
As Citigroup faces another massive quarterly write-down of credit derivative assets, questions remain about other banks' exposures, and when the crisis goes from a trading book issue into an industrywide credit quality problem.
Mr. Madoff's investors will in retrospect kick themselves for not asking more questions, especially about the remarkable consistency of his returns over the years, his apparently fly-by-night auditing shop, and his small trading book despite having so much money under management.
So, as one senior international regulator said to me, the debacle should reinforce his and his colleagues attempts to force banks to hold vastly more capital as a protection against losses on banks' trading activities (the Basel Committee's " fundamental review of trading book capital requirements").
The huge writedowns on trading-book assets that defined the first phase of the crisis were horribly unpredictable.
Bloomberg points out that the stock is now trading below book value for the first time in nine years.
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With many of its rivals trading below book, Chubb, at 1.16 times book value, stands out from the crowd.
Most of these troubled energy stocks are trading below book value.
For now, among the top four banks JPMorgan Chase (JPM), Bank of America, Citigroup (C) and Wells Fargo (WFC) only Wells Fargo is trading above book value.
Bank of America is trading today at 50% to its book value, Citigroup at 65% and JP Morgan Chase is trading 94% below book value, according to a note from analyst Justin Hoogendoorn at BMO Capital Markets today.
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His 1988 book Trading Places was one of the all-time classics on the Japanese economy.
Japan may be a basket case, but the Nikkei Index is trading at its book value!
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So there it is, a great Apple trade staring me in the face, so here you go folks, a copy book trading opportunity.
But the Financial Times reported that financial stocks are trading above the book value (assets, including cash, minus liabilities) of the companies for the first time since July.
With major bank stocks trading at below book value today, the deal offers some questions about the ability of lending institutions to find earnings value in the near term, with the federal funds interest rate still near zero.
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Greenhill shares in particular are trading at 5.8x book value, while those for Evercore are trading at 2.4x.
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Other mortgage REITs include American Capital Agency (AGNC) which is trading at a 22% premium to the third quarter book value and Chimera Investment Corporation (CIM) which is trading at a 23% premium to third quarter book value.
That has left U.K. banks among the most lowly valued in Europe, trading at fractions of book value.
And with many stocks trading at or below book value, analysts say there are bargains to be found.
Morgan is trading above its tangible book value, indicating investors doubt the value carried in the balance sheets of the other four.
In my view, investors should avoid those companies especially those like GHL and EVR that are currently trading well north of book value.
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Whenever a company trading at a premium to book value issues new shares, whether from a secondary offering or in the course of an acquisition, the book value per share goes up.
The company is trading at slightly under its book value, or the surplus of what it owns over what it owes, and at four times its cash flow making it statistically cheap on two key measures.
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If you have been trading them long, I would book some profits but keep some if you have a longer term approach.
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