Tuesday, February 20, 2007

The Paulsen Put

Can the US Secretary of Treasury prevent markets from fluctuating? And why are speculators acting as if Mr. Paulsen has single-handedly provided every one of them a free at-the-money put, backed by the full faith and credit of the US? (Or if not the US, then at least Goldman Sachs?).

Someone once asked Bernard M. Baruch what the market would do and he famously answered: "It will fluctuate". I never thought I would see the day when that is considered a wrong answer.

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