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Jan 08, 2013

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Peggy Hickle

As the adage goes -- everyone will describe an elephant differently depending on where they are standing. I'm loving seeing George from the opposite end from the one he frequently shows in this forum.

You did good, George.

Ed Cone

Give Taibbi credit for getting George to articulate a version of the story that he was previously unable or unwilling to share.

I do think there are questions about the degree of blame placed on the bailouts for Hartzman's poor performance, which might be seen as a case of a salesman starting to believe his own patter. Plenty of people made money in that market.

Thomas

I wish G H posted here in the same style he used when talking to Taibbi. That was much clearer than I'm used to seeing from him.

Hartzman

The link illustrates some of the best un-audited Asset Advisor performance reports in my book of business, as of June end, 2010.

The solid lines on the following pages show how much more these clients made or lost compared to the dotted lines which represent selected financial markets.

https://www.dropbox.com/sh/9ma6lp3kcllv46n/DSe-nziGHG/George%20Hartzman%20Asset%20Advisor%20Performance%20Reviews.pdf

Joe Killian

Definitely give Taibbi his due.

As someone who has talked to George about a lot of things he wanted me to write about -- some of which I did, some of which I didn't -- I can tell you that getting him to explain himself in a way that is understandable, finding a narrative through-line, making sense of it all and then boiling it down to something people can easily understand on first reading -- all while avoiding libel -- is not easy.

Taibbi seems to have done the smart thing and used some of the more relatable, human stuff for this blog post. That's not the stuff George is usually trying to get people to write about -- or it's a very small part. Taibbi's larger piece in the latest issue of Rolling Stone is also well worth reading for a broader look.

Brian Clarey

Hartzman's story hinges on the secret bailouts Taibbi uncovered in this month's RS, which thwarted his short bets against the market on behalf of his clients.
Still and all, very good coverage of what Hartzman has been screaming about for months.
I feel like we at YES! Weekly have a bit of egg on our faces — though we do not pretend to provide exhaustive business and financial coverage, and have no one on staff with the kind of expertise necessary to make sense of this crazy stuff.
That being said, I'm probably gonna write something about it for next week. I doubt I'm alone.
Congrats George. Enjoy your moment. It's been a long time coming, and paid for with great sacrifice.

Joe Killian

Brian:

I wouldn't be too hard on yourself. If you could give Jordan a month or so to concentrate on just this story with the resources Taibbi has, I'm sure he could have gotten the job done.

Hartzman's story fit nicely into a much larger and more complicated national story he was working on for what looks like a very long time.

That's not egg on your faces. That a reality about modern local media and the allocation of resources.

Brian Clarey

Exactly, Joe.
I just don't have the resources to commit to something like this, though I sure wish I did. I haven't spent a month on a story in years.

Joe Killian

You and me both.

Andrew Brod

When I read Taibbi's column, my first thought was, "So that's what George has been trying to tell us for months."

Hartzman

"That a reality about modern local media and the allocation of resources."

Agreed.

michele

What AB said.

hartzman

exhausted

Ed Cone

George, how does the strong performance shown in your Dropbox link square with this: "He and his clients started taking a beating in early 2009 as the stock market crept upward."

Hartzman

I am ok with it as long as the message about the fraud gets out.

What Matt mostly saw in detail was the beating I gave to myself.

I like to think I kept as many clients as I could out of it
which is kind of proved by the how much I lost personally,
relative to the "68 year olds", in this case who was a CPA/CFO.

I wasn't running discretionary money at the time,
so all the moves etc..., were made by individual phone call.

What I really ended up doing was going flat to some down from the top values, as the fall in my income came from "what have you done lately" meme, after I took most accounts discretionary and about ranked the same as some hedge funds doing the same kind of portfolio composition.

Though some of what happened kind of worked like a mutual fund that does great, and then many flock to the over performance, and then got the downside with none of the upside that had already happened.


Ed Cone

So Taibbi is incorrect to state that "[Hartzman's] clients started taking a beating in early 2009"?

The document Hartzman provided certainly makes it look like he had a good year in 2009.

What's the real story here, George?

How many clients took a beating, and how much did they lose, % wise, and how much of your client base did this involve? What % of your clients were mostly or completely invested in the portfolio you linked?

David Hoggard

I, too, ditto Brod's comment.

How can a man come off as intelligent and pleasantly conversant (as the article demonstrates) also be the author of such voluminous cut-n-paste, who-gives-crap, blather that, most here, routinely skip over? It is all quite curious.

In any case: Congrats to George for standing up for what he thought was right; and on his 15 minutes. And a thank you to Taibbi for bringing me clarity regarding George's crusade; the details of which I couldn't make ANY sense of before. (Could be because I skipped over it all).

Hartzman

After the first quarter of 2009, I went to cash/money market, and then went a little long, especially with some closed end funds that were trading at pretty big discounts.

Then shorted again in some more aggressive accounts
while staying in cash or short term stuff in the more moderate accounts, as the performance reports show.

The accounts where I went short again fell after June 2009,
but most stayed above where they started if invested before 2008.

I did relatively well by my clients.

In early December 2011, when my anonymity got blown, is when it got scary.

As posted in the comments of the story;

This began by providing an external email address and phone number to Wells Fargo's confidential ethics hot line, after which I was contacted on multiple occasions by investigators on my company email and phone. Realizing my anonymity was compromised and my family’s safety at risk after the first internal ‘investigation’ was ‘closed’ in the first week of January, 2012, I took the issues to my local manager, after which Wells Fargo's executive management enlisted an outside ‘independent’ investigator who promptly found no merit to my assertions. Thinking I could mitigate personal risk by contacting regulatory authorities, I filed with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) DC Office of the Whistleblower which went nowhere. I then filed with the NC Secretary of State Securities Division, who investigated and referred files to Atlanta's SEC and FINRA offices. And then nothing. American regulatory authorities will not say whether a case exists or if a case is opened or closed, even though I contacted the government during and after interactions with Wells Fargo management, leaving myself and loved ones at risk of reprisal.
.
.
.
The scariest part was between when the regulators blew me off to when I went public in June.

Hartzman

I also got in touch with the NC Commissioner of Banks via Don Vaughan.

That's where BB&T entered the picture.

Ed Cone

So the crux of Taibbi's post -- that Hartzman's clients suffered great harm because of the bailout -- turns out to be untrue.

And that's according to Hartzman himself.

It doesn't mean keeping the bailout details secret was right, but it's a very different story than the one RS just published.

Andrew Brod

Maybe that's why many of us couldn't see what the big deal was in real time.

Ed Cone

George always focused on the bigger-picture stuff (see my link at "Previously" in the post), and I think that stuff matters.

The client story was new to me. As my first comment in this thread said, I didn't find it that compelling to argue that the bailout hurt his clients, given the fact that a lot of other people made out quite well in 2009, but it did humanize the story. Or, would have, if it was true.

Hartzman

"One of those victims was a southern investment broker who lost lots of his own money, lost money for family members who'd invested with him, and (maybe worst of all) lost plenty of his clients' money, when he made investment decisions based on what turned out to be incomplete information."

Matt Taibbi

This is true.

"George Hartzman and his clients got creamed."

I got creamed and so did "some" of my clients.

"given that the vast federal bailouts were what ultimately sank George's career as a broker"

Having my anonymity blown and standing up for my clients got be fired for Whistleblowing.

"In early 2009, he placed a series of short bets against the market, among other things betting against an index of real estate trusts and the S&P 500."

April and May in my own and other aggressive accounts, after June in many others.

"As well as he'd done shorting Wall Street in 2007 and 2008, he did just as badly in the years afterward."

I lost more than I made in 2009 in my personal account.

Most of my clients lost, but most didn't give up most of the gains from 2007-8.

Some who came in on referral after the crash to go aggressive
got creamed,
because most lost money in the crash
and then lost more with me.

"It wasn't until August of 2011 that George saw a partial explanation."

It was the first explanation reported in the news about the fraud.

The clues from 2009 was money coming out of mutual funds while the market was going up.

http://www.zerohedge.com/article/over-7-billion-domestic-equity-mutual-fund-outflows-september-2-billion-outflows-last-week

And from 2010;

“We cannot identify the source of the new money that pushed stock prices up so far so fast,"
[TrimTabs Investment Research CEO] Charles Biderman said…

The source of approximately $600 billion net new cash
necessary to lift the market's overall capitalization by $6 trillion last year,
could not be identified by TrimTabs…

The money, he said, didn't come from traditional players
such as companies, retail investors, foreign investors, hedge funds or pension funds."

Nick Godt
MarketWatch, January 5, 2010


Hartzman

http://www.zerohedge.com/article/here-are-biggest-fund-losers-retail-stock-market-boycott

Look at the ICI chart.

The markets went up as money was being pulled out by retail investors.

Seen studies with ETFs saying the same.

These are the loans to Wachovia and Wells.

http://www.bloomberg.com/data-visualization/federal-reserve-emergency-lending/#/compare/?comparelist=Wachovia_Corp-Wells_Fargo_%2526_Co

Ed Cone

Right -- a broker with an aggressive strategy bet against a rising market and lost money for himself and some similarly aggressive clients. Meanwhile, a lot of people -- including most of the broker's own clients -- were making money.

Not as sexy as story as "Feds hose small-town broker and his roster of grannies and honest tradespeople." Which is the version told by Taibbi.

I think the withholding of bailout info was seriously wrong, but it was no secret that the government plan was to prop up the banks and pretend everything was OK until reality caught up to the fiction. That's what this blog has called the clap-your-hands-if-you-believe strategy.

Blaming your losses on a bet against that obvious strategy seems iffy to me, even if you lacked some important details. An article saying that your bets harmed the decent townsfolk of Mayberry, rather than you and a handful of aggressive investors, is false.

As you say, George: "I am ok with it as long as the message about the fraud gets out."

But that doesn't make it accurate.

Hartzman

"Meanwhile, a lot of people -- including most of the broker's own clients -- were making money."

Incorrect.

Most of my clients made money in the fall, and gave back/lost in the run up, or were in cash/money market accounts, because I couldn't tell what was actually happening.

"Feds hose small-town broker and his roster of grannies and honest tradespeople."

This is the case Ed.

We did get hosed.

The Fed, the SEC, the OCC and the Auditors lied.

They shoved the markets up with funny money.

"I think the withholding of bailout info was seriously wrong, but it was no secret that the government plan was to prop up the banks and pretend everything was OK until reality caught up to the fiction."

Incorrect.

That's not what we were told.

We were told to "pretend"?

"Blaming your losses on a bet against that obvious strategy seems iffy to me"

Obvious strategy in hindsight. I realize you are playing devil's advocate, but as someone who received the benefits of the government's lying...

I am not blaming all my losses on getting lied to repeatedly.

But I sure am blaming some of them on the folks I worked for lying to me, Wachovia Shareholders, my clients, Congress and the markets.

"An article saying that your bets harmed the decent townsfolk of Mayberry, rather than you and a handful of aggressive investors, is false."

The more aggressive got in earlier and lost more than the less aggressive who got in later and lost less.

They still lost Ed.

They lost while the Regulators told the biggest banks in the country they could lie about material insider information and let their executives profit from information very few outside the connected world knew.

If I made you $100,000 in one year and lost $25,000 of it the next,
what happened last year?

You lost $25,000.

You want to meet some of the investors Ed?

You chose not to last summer, so consider this a re-offer.

I'll sit down with whoever wants to and go through the whole thing.

g

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