|
| Posted by: nerveclinic
- [105222] Sun, Feb 10, 2008, 14:31
Sorry with all the cut internet cables in my neck of the woods that last thread was taking too long to load.
My bet is this is an article that both Bili and B7 will appreciate.
Bubble Economy
kinda creepy...
|
| | | 1 | nerveclinic
ID: 105222
Tue, Feb 12, 2008, 08:29
|
Here is Brinker's new message on the market in a nut shell. Again copyright, subscriber info so I don't want to copy word for word just the general view.
He is taking the position we have seen the near term market bottom on January 22nd when the Dow completed an almost 600 point swing and the SP 500 closed at 1310.
My mistake earlier calling the low 1270, that was an intraday low. By definition we only use the market closing low.
He believes we are now forming a near term bottom (1310 SP 500) and that this number is at least very close to the bottom we will have in near future.
"This process involves the initial establishment of a closing S&P 500 Index low (SP 1310 closing), followed by a short rally, followed by a test of the area of the previously established low on reduced trading volume."
He believes we are in the process of retesting those lows now. Recent drops have been on greatly reduced volume which is another strong historical indicator of a bottom forming.
Understand we are discussing a "near term" bottom. While I don't know the definition of it I do know it's minimum several months, that's not to say we won't see more downside further out.
He is advising subscribers to put money to work anywhere in the low 1300's or even dipping below that and he refers to this area as "bargain prices".
He posted this on Feb 10th.
I can add to this based on having listened to the show for 10+ years that he would also make the following points (these are mine not his).
1) While a mild to medium recession is still a possibility if not already happening, a lot of the stock pricing has already taken this into account.
2) We must look at this market (Near term) in the context of an easing Fed policy that has dramatically cut rates the last month and that is ready to cut rates more if needed, with a stimulus package just passed by congress and an election year in front of us.
3) Given the above points, and given historical precedence, it's reasonable to assume, that near term risk has now been greatly reduced with the upside reward (Near term) out weighing that risk.
While he hasn't said this, and I am not making excuses for him, I think much of the forecasting he made mid summer to early fall assumed given economic circumstances quicker easing by the Fed.
What we "think or believe" is the right thing for the Fed to do in this context isn't important, what's important is that we have to make trades on assumptions about expected Fed behavior.
If 1310 remains the market bottom we will not have reached a bear market in the SP500 (1310 low/1575 high = 16.8% which is not a level Brinker would advise removing money from the market at, particularly with 15% Capital gains taxes... although the NASDAQ did hit 20% drop.)
Following his advice subscribers haven't added new money since mid summer unless the market dropped below 1450 which is less then 8% from where we sit today.
I am hearing a similar sentiment to the views above on various other sites around the interent. It still is easy to go out and read how many experts are still holding cash, are still bearish and still see greater down side. (This is a bullish contrarian indicator)
All bets are off if the Fed doesn't cut 1/4 point in March.
This doesn't mean that long term there are not some VERY serious problems in the system as Bili and B7 have illustrated. Not the least of which is built up excess liquidity in the system, huge deficits, concerns about inflation, devaluation of the dollar etc.
At some point this has to correct and it will be painful. The assumption has always been the Fed wouldn't let it happen in an election year. If this had not been an election year the Fed and government sentiment may have been more laise (?) faire and just let the whole thing collapse to wring out the garbage currently in the system.
|
|
| | | 2 | Boxman
ID: 337352111
Wed, Feb 20, 2008, 13:37
|
I have a question about corporate capital allocation structure.
I'm increasing my position in Exxon Mobil (XOM) over the next month with a buy this week and another a month from now and I'm looking over their financials.
As of 9/07 they have:
36 billion in cash
190 million in short term investments
32.3 billion in long term investments
which is around 70 billion in cash give or take.
So then why would they have 6.9 billion in long term debt?
From their cash and cash equivalents of 36 billion, they could wipe that out and have 29 billion to spare without touching short term or long term investments. I'm sure the folks at Exxon Mobil know how to manage money, but I don't follow their logic.
As a cash or cash equivalent, I'm taking that as monies that are tied up for the short term in checking, sweep accounts, or money markets. Those couldn't possibly be earning a higher return than the long term debt. Unless if the LTD is held in Japan where interest rates are/were miniscule?
|
|
| | | 3 | nerveclinic
ID: 105222
Thu, Feb 21, 2008, 18:29
|
Box you may want to wait at least a few days before you pull the trigger on XOM.
Crude supplies just came in high for 6th week in a row.
Crude is peaking at 101, and fell back to 98+ today.
Could be time for a small correction, XOM has gone up almost 10% the last 2 weeks. It's riding the top of it's bollinger band.
I'm not telling you what to do, just points to do research on. This was based on a quick look not due diligence.
|
|
| | | 4 | Boxman
ID: 571114225
Thu, Feb 21, 2008, 18:42
|
Nerve, I always appreciate your feedback. I also probably should have declared my intentions with my increasing my position in XOM. I'm not looking to flip it like I did with P&G.
I'm looking to add to existing holdings for the long run and increasing that position over the next month thru dollar cost averaging the shares I'm buying.
It's down 1.18 (1.34%) today. I may pull the trigger tomorrow or Monday on the first piece of shares.
Exxon's 5 Year Chart
Referencing this chart, Exxon has historically experienced a dip in Q1 or Q2 of the year and then continues going up which is why I'm choosing this time of the year to buy. Depending on share price movement, market conditions, and overall analyst opinions, I'll hold off on the second installment of purchases.
I don't have a link, but I specifically recall an article I read citing the Department of Energy stating that spring gasoline will peak at $3.40 per gallon. I would prefer to add to Exxon before they report financials with those figures on them.
I haven't seen a lot of insider activity (per Yahoo! Finance) that would scare me off a buy or get me all fired up either.
Again, thank you for the feedback. I do appreciate it because it makes me rethink my position and do a little more research. Whenever someone whose investing opinions I respect chimes in on something I'm planning to do, I take it into account.
|
|
| | | 5 | nerveclinic
ID: 105222
Fri, Feb 22, 2008, 08:32
|
Yeah I am actually talking about waiting a few days.
Gasoline inventories came in very high yesterday.
Lots of chatter that crude oil and energy stocks are in a very short term over bought level. My thinking was, no matter what the reason you are buying, odds are decent you would get a better price in a few days.
I actually bought DUG yesterday, something I almost never do, ultra short oil and gas, because with the $101 a barrel peak, high prices are already priced into the oil shares.
Then the Philadelphia manufacturing report came out a few days ago and it was dismal, combine that with the high gas inventories and it just stands to reason in the short term we are coming down from $100 a barrel.
As a general rule, the gas and oil stocks drop in price as the price of a barrel of oil drops. I'm sure the $3.40 a gallon price is factored into XOM's share price already.
I fully agree though it's a good long term hold but I would rather buy it at $80 where it was just 10 days ago.
Of course my opinion and a buck will buy you a short cup a joe at Starbucks.
I'm trying to tell you how to make this trade but thought I would throw that out there.
Good Luck, it's ugly out there right now.
|
|
| | | 6 | nerveclinic
ID: 105222
Fri, Feb 22, 2008, 10:24
|
I actually bought DUG yesterday, something I almost never do, ultra short oil and gas, because with the $101 a barrel peak, high prices are already priced into the oil shares.
Great...and then this happens...
Turkey lauched its incursion into northern Iraq on Thursday evening, according to the BBC, citing the Turkish military. Thousands of soldiers have crossed from Turkey in an operation aimed at fighting Kurdish rebels, the BBC said.
In the past, Turkey has carried out at least one, smaller-scale ground incursion across the Iraqi frontier, in addition to frequent air and artillery strikes against Kurdish rebels, the BBC said.
Still, "we haven't lost a single drop of oil because of those incursions, but it is a concern and it is a rally," Flynn said.
Oh well I bought a stop loss right where I bought this and if it drives the price of crude back up it will be even a better short game after the "skirmish" is over.
|
|
| | | 7 | Building 7
ID: 471052128
Tue, Feb 26, 2008, 09:39
|
Wholesale Inflation Rate Soars
Tuesday February 26, 9:09 am ET
By Martin Crutsinger, AP Economics Writer
Higher Costs for Food, Energy and Medicine Push Wholesale Prices Up Sharply
WASHINGTON (AP) -- Inflation at the wholesale level soared in January, pushed higher by rising costs for food, energy and medicine.
The Labor Department said Tuesday that wholesale prices rose 1 percent last month, more than double the 0.4 percent increase that economists had been expecting.
The January surge left wholesale prices rising by 7.5 percent over the past 12 months, the fastest pace in more than 26 years, since prices had risen at a 7.5 percent pace in the 12 months ending in October 1981.
The worse-than-expected performance was certain to capture attention at the Federal Reserve, which has chosen to combat a threatened recession by aggressively cutting interest rates in the belief that weaker economic growth will keep a lid on prices
Me: I had read that a 50 point cut was a 100% chance at the next meeting of the Fed. They will probably still do it. 7.5% wholsale inflation. Highest since 1981. That was an interesting year. The real number is probably double if they calculated it the same way as before Clinton.
Bernanke is screwed. I don't think these rate cuts have been lowering mortgage rates that much anyways.
|
|
| | | 8 | Boxman
ID: 337352111
Tue, Feb 26, 2008, 13:15
|
Bernanke is screwed. I don't think these rate cuts have been lowering mortgage rates that much anyways.
You are correct.
I spoke with a banker friend of mine recently and we got on the topic of mortgages. The banks have tightened the noose of who gets the juicy rates nowadays. If there's even a pimple on your credit report, expect a high interest rate even with 20-30% down and that's even if that pimple didn't have a huge effect on your FICO. Interest rates at 9% or higher are not uncommon if there is a slight blemmish on your credit report.
If your FICO is not at least in the low 700s forget it, you won't get a prime rate unless you put massive bling bling down.
His biggest concern is that there may be an overcorrection on first time homebuyers because they don't have the track record of second/third time ones.
What the market needs is to go thru the pain of lending to people who had no business getting those loans in the first place and then dealing with the housing glut. Cutting interest rates to keep people in their homes won't fix the root cause of over lending and the consumer's mindset that they "deserve" a home they own. I never figured out how having a home where you're in 100s of thousands of dollars of debt could be part of any positive dream let alone The American Dream, but that's how it's sold.
|
|
| | | 9 | nerveclinic
ID: 105222
Tue, Feb 26, 2008, 14:13
|
I don't think these rate cuts have been lowering mortgage rates that much anyways.
Again, that is not why the Fed is lowering interest rates. In fact, since the summer, Bernake has said he will not lower interest rates to help individuals and companies that made bad real estate loans.
There are 2 primary reasons the Fed lowers interest rates. 1) To maintian an acceptable employement level and 2) to encourage economic growth during times of slow to no growth relative to keeping inflation in check.
Growth relative to inflation is the main balance that is always examined.
The third reason they are dropping rates right now, the crazy aunt in the basement that isn't really discussed, is to help the banks that are hanging on for their life.
The credit crisis is so dire they have to throw this life line to the banks. Every percentage they lower the lending rate is an extra profit the banks make on their already fixed loans.
if things weren't so bad in the economy they would be just as worried about inflation as B7 and Bili has been, but the logic is they have no choice but to let it go up for the moment to save the banks and the economy.
This isn't just America, inflation is going up all over the world, we have an acknowledged 9.5% here in the UAE. The world is expanding at a dramatic rate.
No the rates the bank charge aren't going down, they need the extra help just to survive.
Just look at Norhern Rock in England if you want to see how bad things are.
There are aspects of inflation at the moment that have not much to do with the Fed. The main drivers of inflation at the moment are still oil and food. This was happening before the Fed cut rates. The dramatic growth of China and India mean that no matter what the Fed does, oil and food are going to inflate.
|
|
| | | 10 | nerveclinic
ID: 105222
Tue, Feb 26, 2008, 14:16
|
By the way Box, every point I made about XOM went out the window when, after my post when A) Turkey invaded Iraq and B) Iran threatened to cut off oil to western countries because of sanctions on their nuclear program.
My whole premise for a correction in a few days went out the window.
Who knew?
|
|
| | | 11 | Boxman
ID: 571114225
Tue, Feb 26, 2008, 18:25
|
I wound up buying the first piece of my new position this past Friday in the low 87s high 86s IIRC. I will be adding another piece in a month to average out the shares in case there is a correction or more bad economic indicators that could drive oil down. Now if Turkey and Iraq start a full blown conflict, XOM could be at 100 and I'll be kicking myself for waiting.
There is a fed meeting scheduled for March 18th. I believe they'll announce a 1/2 point rate cut just like how B7 stated. I'm weighing on whether or not to pull the trigger before or after the rate cut announcement. Part of me thinks a 3/18 rate cut is already partially if not fully priced in.
What's your take?
|
|
| | | 12 | The Beezer
Dude
ID: 191202817
Tue, Feb 26, 2008, 20:28
|
50 basis points looks like a lock to me too, and I don't think that will be the last cut even if the PPI is looking dour.
I'm just glad that my favorite company managed to deliver a decent Q4 performance yesterday. I'm not sure why the stock was up yesterday with how much they lowered FY08 guidance, but I'll take it.
|
|
| | | 13 | nerveclinic
ID: 105222
Wed, Feb 27, 2008, 01:16
|
I think 50 points is locked in also but it's hard to know until a few days before the meeting because the Fed will examine the most current economic conditions. (In theory)
I think the biggest issue with oil and oil stock prices is this. Do you think we are headed for a recession? Do you think it will carry over to other parts of the world? Do you think the markets will retest the Jan 22nd lows?
Look at a chart of XOM on Jan 22nd, it spiked below 80 that day. So if we retest the lows, and it's because of new concerns about the economy, its likely that crude oil will come down and so will the price of XOM.
If you think that s all in the rear view mirror, that the market is going up from here, that the economy is basically OK, then you probably got it at a good price with the Fed lowering rates further and oil inflation news.
I don't think the incursion into Iraq by the Turks is a big deal. Even the Iraqi Kurdish government is playing it down and the Turks are on a pretty tight leash with the USA there.
|
|
| | | 14 | Boxman
ID: 571114225
Fri, Feb 29, 2008, 20:01
|
What a bloodbath today. Whoa.
|
|
| | | 15 | sarge33rd
ID: 99331714
Tue, Mar 04, 2008, 18:49
|
NC...when I had posted previously re our company sponsored retirement plan, you had asked for Symbols and I have been neglectful in getting you those. Finally today, I remembered to bring them in so I could post.
The Fund is a managed one, where we could choose from several within the group of funds. I contribute 12% of my gross, pre-tax, and my employer then kicks in another 3% of my gross. The unique thing in this plan, from my experience any way, is that I am immediately 100% vested in my employers matching funds. This means that with every payday, I get an instant one time 25% return. (Yes, there are penalties if I take the funds out pre retirement, but that isnt the intent of a plan like this.)
Stated as a percentage of MY contribution, (employer matching funds are distributed the same.)
6% to NEWFX New World Fund
7% ea to AEPGX and CWGIX Euro-Pacific Growth and Capital World Growth and Income Fund respectively.
15% ea to CAIBX and SMCWX; Capital Income Builder and Small Cap World Fund respectively.
25% ea to AGTHX and ANEFX Growth Fund of America and New Economy Fund respectively.
I'm allowed to put 10,500 in the program annually, plus an additional 2500.yr "catch up" since I am over 50.
There were a variety of funds to chooce from, butr all are under the umbrella of the American Funds group.
American Funds
|
|
| | | 16 | Boxman
ID: 571114225
Tue, Mar 04, 2008, 18:58
|
Sarge: I'm trying to foot out your numbers to 50% and 6,7,15, and 25 comes up as 53. Am I missing something?
Also, do you have an index fund (S&P preferably) that you can choose? The management fees are significantly less in index funds which translates to a lot of savings over the life of your retirement fund. It also gives you a good foundation for your portfolio.
Also, since your dividends won't be taxed, do you have any high yielding funds? Think of it as free money reinvested for free.
I thought the 50+ catchup was 15,500 total including the standard 10,500. Are you sure about the 2500?
For my 401(k), I am heavily in an S&P 500 index fund, then a mid cap, small cap, international, and then 10% to bonds.
Best of luck.
|
|
| | | 17 | sarge33rd
ID: 99331714
Tue, Mar 04, 2008, 19:04
|
6 + 7x2 + 15x2 + 25x2 = 100% of my contribution.
To be honest, I know diddly about investing.
|
|
| | | 18 | sarge33rd
ID: 99331714
Tue, Mar 04, 2008, 19:12
|
re my contirbution:
assume my gross for the pay period is 4k. 12% of that is 480.
6% of 480 = 28.80
7% of 480 = 33.60 into ea of two different funds
15% of 480 = 72.00 into ea of 2 different funds
25% of 480 = 120 into ea of 2 different funds.
My employer kicks in 3% of my gross, so thats another 120. That 120 is divided between the funds, using the same assignment ratios as for my own contributions.
7.20 into one fund
8.40 into 2
18.00 into 2
30 into 2
re the catchup:
I'll ask again, but I recall specifically (since it appleid to me) that the rep said the annual limit for employee contributions is 10,500 plus 2,500 catchup IF the employer is over 50.
|
|
| | | 19 | Boxman
ID: 571114225
Tue, Mar 04, 2008, 19:14
|
To be honest, I know diddly about investing.
A lot of people don't. I learn something every week and I'm sure Nerveclinic would second that statement.
For a 401k, you can contribute 15,500 plus an extra 5,000 if you're above 50. Those numbers normally increase this year although there was no change from '07 to '08. I believe it is indexed to inflation. Don't quote me on that piece.
What year do you plan on retiring?
|
|
| | | 20 | sarge33rd
ID: 99331714
Tue, Mar 04, 2008, 19:20
|
This isnt under Section 401(k). I asked about that and was told it works LIKE a 401(k), but is under a different section/chapter. WHICH, I dont know.
|
|
| | | 21 | nerveclinic
ID: 105222
Wed, Mar 05, 2008, 04:17
|
Sarge, while American Funds have a good reputation for performance, I couldn't stomach the 5.75% fee they charge every time you hand them money.
See below...
NEWFX 1 out of 5 stars on morningstar 5.75% front LOAD That is borderline criminal. Every-time you put money in this fund they are going to take 5.75% off the top.
AEPGX 5 out of 5 stars measures performance but again a 5.75% front LOAD
CWGIX 5 star again but also 5.75% front LOAD
CAIBX 3 star also 5.75% front LOAD
SMCWX 4 star also 5.75% front LOAD
AGTHX 4 star also 5.75% front LOAD
You get the idea Sarge.
Every-time you put money in, the salesman is taking 5.75% in commission. So just to break even this fund has to make 5.75%, until then you don't make money.
Now these funds have performed well, don't get me wrong.
Personally I don't own any funds with a front or back load on them This is called oddly enough, a "no load" mutual fund. There are many excellent ones out there including Vanguard and Fidelity.
One of two things is happening in my opinion. Your boss is not sophisticated about investing and got hood winked by a shark salesman, or, worse, he's getting something under the table out of your load fee. Hopefully it's just the first possibility.
Sarge this isn't just a "big fee" it's one of the biggest front loads I have ever seen.
I don't know what your relationship is like with the person at your company responsible for this, but I would point it out to him and see how he reacts. Honestly this is way out of line in my opinion.
There is no way I would invest in these funds with that high a load.
Of course this leaves you with no other option but to invest in a self directed IRA (Over 50 $5,000 a year)
You also might say well my boss is matching 3% so this only leaves a 2.75% commission. I would have nightmares thinking about handing over those big commissions personally.
Is this all you were offered or are there other ones you didn't mention that don't have this front load? You can look up the load on morningstar.com
If you feel like you have to do this, I would start by maxing out your own IRA at $5,000, then whatever else you have to invest use this company plan.
Open a Vanguard or Fidelity account for example and like Box said just put money into a index fund, maybe even an ETF.
Vanguard has a total stock market ETF (Exchange Traded Fund) called ticker VTI. It's basically buying 5,000 USA stocks together as a group, weighted by size.
Do you know what the fee on that is Sarge? A transaction fee (maybe $10) and then .10% a year. So save up large amounts so the $10.00 fee is negligible. (Maybe put money in once a month)
Then for foreign exposure ticker EFA which is a broad international index fund also extremely low expense.
If you use these two indexes, you really don't have to now anything about investing except to keep putting money in every month.
Even if you want a managed mutual fund, fund companies like Vanguard have 5 Star funds with no load and very low expense.
I you open a Fidelity account I would be willing to help walk you through it because that is what I use.
Also if you want to learn about investing, Vanguard has a free educational section that will give you easy to understand concepts, and Vanguard isn't out to rip you off.
Good luck.
|
|
| | | 22 | nerveclinic
ID: 105222
Wed, Mar 05, 2008, 04:21
|
The market tested the January 22nd bottom yesterday. You could tell the techies were at work. The index rolled around the Jan 22nd closing low of 1310 for a while and in the last hour of trading started bouncing up.
Good sign, well see if it holds tomorrow.
I dropped a little in to the SP index ETF at 1315.
If this holds up, you may not get the shot at mid 1200's Bili.
The rest of this week is very important to the market direction.
|
|
| | | 23 | nerveclinic
ID: 105222
Wed, Mar 05, 2008, 08:04
|
By the way Box, every point I made about XOM went out the window when, after my post when A) Turkey invaded Iraq and B) Iran threatened to cut off oil to western countries because of sanctions on their nuclear program.
My whole premise for a correction in a few days went out the window.
Now you can add to that Venezuala massing troops on the Columbian border and problems in Nigeria.
|
|
| | | 24 | sarge33rd
ID: 76442923
Wed, Mar 05, 2008, 08:09
|
Yeah, the fees bothered me too; but this was the only option presented. And with the matching 3%, it offsets my costs to a degree. (Though at the cost of the matching funds.)
The IRA is my most likely "next step". Thanks for your input/insight Nerve.
If memory serves, one can out money into an IRA prior to Apr 15, and count it against the previous years income as an IRA contribution/deduction. I'm going to look into that this week, to see if that option still holds true. Even if it doesnt anymore, the IRA is a good idea.
|
|
| | | 25 | sarge33rd
ID: 76442923
Wed, Mar 05, 2008, 08:22
|
Let me add too, that with my employer paying 3% of my gross into the fund, not 3% of my contribution, I am still ahead to take advantage of this venue.
For ex: Lets assume my contribution is an even $1,000. That makes my employers contribution $250. (I kick in 12% so his 3% is 25% of my contribution.)
With a 5.75% load, off 1250 invested, thats a fee of $71.88. I still benefit from a "surplus" of $178.12 from my employer, so my fund balance climbs by $1,178.12.
Would I prefer lower fees? Of course. But with an immediate net gain of 17.8%, +/- the funds performance, I dont see where I can honestly afford to NOT take that money.
Now, I could trim my contributions to 3% and still get my employers 3% matching, then invest the difference elsewhere. Thats an option I'll explore more fully over the coming days.
Using the above ex of $250 as the 3% figure; that makes a total contribution of $500, less 5.75% would leave $471.25 invested off my personal contribution of $250.
|
|
| | | 26 | nerveclinic
ID: 105222
Wed, Mar 05, 2008, 08:23
|
Sarge I am rethinking some of my advice above.
Here's the math on the charges including your employers contribution.
Let's say you put in $1,000 a month, if I am understanding correctly your employer would add $250, so you are investing $1,250.
Now the fund charges a 5.75% front load so 1,250 x .9425% (Amount left after the fee) $1178.12 which means after the front load fee, you still are keeping 178.12 of the employer contribution. So I think my earlier math was incorrect.
If so you are keeping all your $1,00 and getting a free $178 from your employer. (There are also yearly expenses with these funds but they are very reasonable.)
First of all does the way I am describing what the employer contributes look right to you Sarge?
Also can any accountant types check the math I just went through? I'm an artist not a mathematician.
If these numbers are right, I would first, max out the company 401K up to the point your company is matching. If there is a cap on what they match I would stop once it's reached and put the rest of the money you have for retirement into the IRA I described above.
When you said above there were "penalties for withdrawing before retirement" did you mean the normal tax penalties all of us would have to pay? Or do you specifically mean, even if you leave this job, you can't roll the money over into your own IRA because the Mutual Fund company would penalize you? (This is known as a back load fee).
I'll look at the specific funds later when I have a little more time, it might not be until the weekend.
Also.
How much risk are you willing to tolerate?
How much time do you have before retirement?
Are you the type who freaks out if your money makes big swings up and down or are you willing to accept volatility?
Do you want any of the money in a bond fund and if so did they offer that?
Nerve
|
|
| | | 27 | sarge33rd
ID: 76442923
Wed, Mar 05, 2008, 08:28
|
The penalty is the tax penalty. I am immediately 100% vested in the money, so yes I can roll it if I leave this job.
As for risk tolerance....I'd have to rate it as high. (Thats a personal level of comfort. In reality, at my age and with my lack of retirement funds, it should be low. But that isnt my nature. lol)
As I said above, I know diddly about investing. But when I look at "the world", I cant help but think that there is HUGE money to be made between China, Asia and Africa, as nations "emerge" from 3rd world status into and toward the modern world. I'd REALLY like to "catch that wave" so to speak.
|
|
| | | 28 | nerveclinic
ID: 105222
Wed, Mar 05, 2008, 08:50
|
But when I look at "the world", I cant help but think that there is HUGE money to be made between China, Asia and Africa, as nations "emerge" from 3rd world status into and toward the modern world. I'd REALLY like to "catch that wave" so to speak.
Well you've missed the first big wave by a few years. Last year the Chinese index was up about 100% compared to the US market that was up, what 8%?
Now the concern is that with a slowing economy here, it will effect China and other emerging markets and it's time for the bubble to burst a bit.
I want to say China has been down as much as 30% this year, while the USA hasn't even hit 20%.
Since you are just starting to stick the money in there, and you plan on doing it every month, you have fairly low risk until you build capital.
I really think you should sign up for a free trial of Morningstar (14 days free) and plug in each fund and read about them. That way you will have a better idea which ones are highly thought of and what the risks are.
Aside from that I will look later and make an educated guess (I don't belong to morningstar and I've already used my free trial)
Nerve
|
|
| | | 29 | nerveclinic
ID: 105222
Wed, Mar 05, 2008, 08:56
|
Marvel part 2.
This stock has really hung in there through all the down turns.
Cramer just said on his show last week it was time to sell, and it took a bit of a hit, but it's still up 11% from where I bought it in this lousy arket... (They had another great earnings report a few weeks ago)
Here's the kicker, the movies they are now making are not factored into future earnings, they are viewed as speculative gravy.
I watched the original trailer, and while it's "not my kind of movie" I was encouraged that it looked decent. Iron Man staring Robert Downy Jr.
Well the new trailer is out and I was blown away.
Check it out and see what you think.
Remember Spiderman they just licensed out, this movie they own completely.
Iron Man HD
|
|
| | | 30 | sarge33rd
ID: 76442923
Wed, Mar 05, 2008, 09:04
|
A few years ago, I was making 40-60% of what I am now. It was pretty much paycheck-to-paycheck and try to cover the bills best I/we could. *shrug* Such is life.
I just turned 51 yesterday, and I have no intention of working 55 hrs/wk after 62. Maybe, MAYBE 40, but not 50+. So I have 11 years, to accumulate my target of high 6 figures in retirement investments. (By high, I mean over 750)
At 13k yr into the co fund, and if I can do 5k in an IRA, then maybe 15k elsewhere in mid-term investments (I'd think of long-term as 15+ yrs, mid as 8-12 and short as 5 or less)...then with growth I would hope those numbers would get me there.
At 62, I hope to trim my workload (and the resulting income) by half and hold-off on SS until I'm 65. (Assuming it hasnt gone bust yet by then.)
Thanks again for your input. You're one of the few people I know with what I'll call a respectable knowledge level of investing, that I can query and get answers that arent colored by a self-serving motive.
|
|
| | | 31 | nerveclinic
ID: 105222
Wed, Mar 05, 2008, 09:17
|
Thanks Sarge
that arent colored by a self-serving motive.
Yeah you really can't trust "investment advisers". That's why it pays to learn at least the basics yourself.
I know we get into a bit more complicated stuff here sometimes but the truth is you can keep it really simple and do extremely well.
Here is the Vanguard educational section...
link
If you just spend some time reading some of these pages I think you will get a lot out of it. They keep it very simple (That's the kind of investing Vanguard believes in anyway)
|
|
| | | 32 | sarge33rd
ID: 99331714
Wed, Mar 05, 2008, 09:51
|
Interesting article on msn money yesterday, re some funds which had been closed and are now reopening to new investors. From the article, there appears to be a historic trend for these types of events to lead a fund to doing well in the short-term at any rate.
IPOs for the rest of us...
Side note: perusing the eligibility of IRAs, it appears as though I can contribute and deduct for tax year 2007. Since I began participation though in Jan 2008 in the company retirement plan, I could still contribute this year and beyond, but would no longer have the tax deductibility of said contribution. (So, set up a traditional IRA for tax year 2007 and contribute the max, then setup a ROTH for tax year 2008 and onward?) How does that impact of disbursements later on, when some of the money invested was tax deducted at time of investment, and some wasnt? (Or would one be better served to use seperate investment vehicles, to keep all the balances in a given program, the same for tax purposes?)
|
|
| | | 33 | nerveclinic
ID: 105222
Wed, Mar 05, 2008, 10:09
|
Interesting article on msn money yesterday, re some funds which had been closed and are now reopening to new investors.
Dodge & Cox Stock (DODGX)
I almost pulled the trigger on this the last two days, in fact the only reason I didn't was distraction. Because Mutual funds are priced after the market closes I will only buy one at the very end of the day (I don't want an price surprises) yesterday I was busy buying the SP 500 and forgot to grab this. Great company and well respected fund.
I knew before I clicked on your link this would be one of them because this fund has created quite a buzz.
|
|
| | | 34 | sarge33rd
ID: 99331714
Wed, Mar 05, 2008, 10:19
|
FTR, our work plan is a SIMPLE Pension Plan:
SIMPLE plans defined
Employee's Cost and Information
1. Each employee may put up to $10,000 a year (see item 3) in the SIMPLE plan; the deduction is to be stated as a percentage of pay.
2. Employees (including owners) age 50 or older will be permitted to make an additional $1,000 contribution per year in 2005, $2,500 in 2006 and beyond. This has increased from $500 in 2002 when first allowed.
3. Maximum amount of employee contribution was increased in the 2001 Tax Act. For 2002, the maximum amount is $8,000 ($9,000 in 2004) with a $1,000 increase per year up to $10,000 in 2005. The limit is indexed for inflation after that point.
4. IRA 10% early withdrawal rules apply PLUS a 25% penalty for early withdrawal from SIMPLE within two years of plan participation.
5. Employee's contributions are subject to payroll taxes but are not included in income tax wages; employer's contributions are not subject to payroll taxes.
6. Can not commingle this with your IRA account within two years of contribution due to the potential 25% penalty. You could after that point though.
So, the penalty for "early withdrawl" can be quite severe.
|
|
| | | 35 | weykool
ID: 2842717
Wed, Mar 05, 2008, 15:44
|
So, the penalty for "early withdrawl" can be quite severe.
The penalty for not doing an "Early Withdrawl" can be even more severe.
Forget 25% we are talking about 18 years to life.
|
|
| | | 36 | nerveclinic
ID: 105222
Thu, Mar 06, 2008, 16:04
|
Closed below the January 22nd lows today...not good.
Unless we get some surprising news tomorrow (really good jobs numbers?)...or a Fed rate cut, the direction of least resistance is down.
|
|
| | | 37 | sarge33rd
ID: 99331714
Fri, Mar 07, 2008, 11:41
|
Anybody watching these guys at all?
AtheroGenics Inc
Small pharmaceutical research company. Did some trials recently on a new drug and while the drug failed its targetted results, there appeared to be some VERY promising outcomes all the same. Second trial targetting this alternative outcome is almost complete and due for release some time in April.
52 wk high of $11.00 and a low of $.35. Currently $.83
Sore tempted to "roll the dice" with $900 and buy 1,000 shares. I'd have to think that if the study results are favorable, the $3-$5 share target price I have read of is entirely within reach. If it tanks, maybe the company gets bought out and at worse, you lose $900 which isnt exactly the end of the world. Just not something I care to do with any frequency. :)
|
|
| | | 38 | Boxman
ID: 337352111
Fri, Mar 07, 2008, 13:15
|
I avoid penny stocks like the plague. I also avoid pharma stocks because once a good drug goes generic, say bye bye to profits and then there are the lawsuits and recalls to consider when a drug has side effects. It gives me a headache.
If you want to buy a growth stock, which it sounds like your root goal is, then look at what the institutional investors (mutual and pension funds) are buying. What you and I think are good and bad companies or stocks is irrelevant. It matters what the institutionals think. Look at Crocs and Buffalo Wild Wings. Apple may follow suit. Both were traded as growth stocks and once earnings failed the streets expectations, they never recovered. Who cares if they're a good company. The insitutionals killed them because they disappointed.
The reason why is because they were traded as growth stocks, not as buy and holds or foundational stocks.
Take a look at the agricultural and precious mineral sectors. When a sector itself is hot, it's almost impossible to swing and miss. You may be better off with a sector based ETF. As part of your portfolio I would really recommend to anyone that a portion of it goes to a mineral or precious metal play. Mine is Yamana Gold (AUY)and it's done rather well for me. It does fit my strategy because it does pay a dividend; a paltry 4 cents (IIRC) per year, but it's a good hedge against a weak dollar and the commodity boom we're having now.
I don't know what to make of Ag, but if the street likes it I will not fight it. Part of me thinks that if the economy is going into the toilet that capital spending will go down, but if you find an Ag company (Deere?) with lots of int'l exposure you should do well.
|
|
| | | 39 | sarge33rd
ID: 99331714
Fri, Mar 07, 2008, 16:17
|
NC....
Why Fidelity vs E-Trade? Fees look smaller on E-Trade ($12.99 vs $19.95) and the per share charge of $.015 is on trades over 1k shares on Fidelity but requires 2k shares via E-Trdae to kick in.
(My trading, will be low volume and infrequent. Most buys, will be with the intent of holding for 5+ years.)
|
|
| | | 40 | nerveclinic
ID: 105222
Fri, Mar 07, 2008, 16:31
|
Sarge
I would avoid penny stocks that recently had to file to get re-listed on the NASDAQ.
Of course $900 is a cheap lesson.
My two cents.
|
|
| | | 41 | sarge33rd
ID: 99331714
Fri, Mar 07, 2008, 16:42
|
lol Oh I know Nerve. Not gonna make a play on it, but I found it interesting.
|
|
| | | 42 | Boxman
ID: 337352111
Fri, Mar 07, 2008, 17:23
|
Sarge, take a look at Scottrade or T. Rowe Price and see what their fees are.
|
|
| | | 43 | sarge33rd
ID: 99331714
Fri, Mar 07, 2008, 18:40
|
BoA and Citi....
both are paying handsome dividends...
both are subject to HUGE losses from this mortgage fallout...
both are too damn big to let fail...right?
Look like good candidates for a longterm position. (To this uneducated eye at any rate.)
|
|
| | | 44 | nerveclinic
ID: 105222
Sat, Mar 08, 2008, 04:38
|
both are paying handsome dividends...
Citi has already cut it's dividend once, no guarantee they won't suspend it.
both are subject to HUGE losses from this mortgage fallout...
And no one knows how big the losses are going to be yet.
both are too damn big to let fail...right?
No one is "too big to fail" and certainly no one is too big to have their stock price continue falling.
Look like good candidates for a longterm position.
Lot's of people said the same thing when Citi was at $45.00 in August, then at $33.00, then they said it at $30.00, then they said it at $28.00, and at $25.00... now it's at $21.00 you get the idea.
No one knows how bad the carnage will be in the financials. If you are talking about a 5 year hold, you might be getting a great price right now, you might get a beter price in a month.
I wouldn't make the dividend part of the equation though, it could disappear next week.
|
|
| | | 45 | Boxman
ID: 571114225
Sat, Mar 08, 2008, 06:58
|
BoA and Citi....
both are paying handsome dividends...
both are subject to HUGE losses from this mortgage fallout...
both are too damn big to let fail...right?
Look like good candidates for a longterm position. (To this uneducated eye at any rate.)
In a word, yes. In Nerve's above example I am one of the people who have taken a stepped position in Citi (Wells Fargo too) for quite some time.
When you're looking to buy a stock for a long term hold and you like their dividend payout (This is precisely what I do BTW. If a stock doesn't pay a dividend, I don't buy it.) here is what I look at:
How sustainable is the current dividend? Look at the dividend yield (in $) relative to earnings per share (EPS). I would be suspect of the sustained dividend of Citi right now given the yield relationship to EPS. Now if you're buying C for a long term hold you have to ask yourself if you really care about the next quarter or two quarters of dividends. As an investor, would you rather sacrifice a portion, or all, of the dividend if it helped to right the boat?
Look at the history of dividend growth (again in $) relative to EPS. You can then take that info and look at forecased earnings and what the street thinks future earnings will be and then hypothesize what you think future dividends will be.
Look at the sustained cash flows of the business. This will show how consistent their revenue streams are and will help determine the volatility of the dividend. If the cash flows are peaks and valleys, compare that against the dividend payout and see if the company has a level dividend or if they tie it to cash flows.
Bottom line, I think you're on the right track with BAC and C, but don't let dividend yield by itself drive you. The reason being is because a great way to fudge the yield # is to take the share price and drive it into the floor.
You can find most of the info I alluded to earlier on Yahoo! Finance and of course you can ask here and I'll help out as best I can. I'm sure Nerve will too.
|
|
| | | 46 | sarge33rd
ID: 99331714
Sat, Mar 08, 2008, 09:52
|
Understood NC, that no company is "too big to fail". My thought here is, the if a Citi were to fail, what would the financial repercussions to the American econmoy be? Can the govt (who already bailed out Chrysler once) "afford to allow" such a failing to occur? Something inside me says the answer to that is "no". Should they allow it if it were to come is an entirely different question.
BoA has some bad press lately re their indiscriminate adjustments to their CC rates, and that will probably put some downward pressure on them for the short-term. I dont see it though, as approaching insurmountable for them.
I think in 3-5 yrs, once this mortgage disaster has shaken itself out, these two companies have solid cores, and will ost likely climb rapidly. In the interim, I like the dividends.
Quesion re dividends:
1) How does one find out if a given company would automatically re-invest the dividend in additional shares, vs paying it out?
2) What are the tax ramifications of doing this? Say for ex, the stocks are in a traditional IRA, and the holder of that IRA is no longer eligible for tax deductible contributions to it? IF, dividends can be and are re-invested, how are those monies treated for tax purposes? (If paid, I'm assuming they show as capital gains vs ordinary income. Another question, since assumptions with taxes tend to be dangerous. lol)
3) Another "assumption", but based on some research: It appears that there is nothing to preclude one individual from having both a traditional AND a ROTH IRA. Over-simplified, but the way I understand a ROTH, is that the contributions are taxed now, so the eventual principle is untaxed when withdrawn, and the growth is still tax-deferred so only the "gains" are subject to income tax at a later date. Is this done on a ratio basis? ie, value of the ROTH = 100k and principle contributions over the lifetime of the ROTH are for ex 40k. (40% principle) So withdrawls would result in 60% of those disbursements being taxed???
Yep, in a week...I have learned juuuuuuuuuuuuuuuuuuuuust enough to be dangerous. :)
|
|
| | | 47 | nerveclinic
ID: 105222
Sat, Mar 08, 2008, 13:51
|
1) How does one find out if a given company would automatically re-invest the dividend in additional shares, vs paying it out?
You have to tell the broker you buy the stock from if you want to "reinvest the dividends" (In the same stock) Or take it as a cash payout. Fidelity by default reinvests it unless you specify otherwise.
Can the govt (who already bailed out Chrysler once) "afford to allow" such a failing to occur? Something inside me says the answer to that is "no".
Right but you are equating "not allowing it to fail" with propping up the stock price, the two are not the same. The stock could continue to fall and the government may eventually "save" the company, that doesn't mean they will just hand you anywhere near your full stock price.
The truth is Citi probably won't fail anyway, but the stock price is based on it's earnings per share and even though they may be strong enough to survive, as you can see when they keep "losing" money, the stock price keeps going down.
Some people honestly thought $30.00 was a safe bottom and a great price for Citi which is at $21.00 now. The person who is buying it at $21.00 is much happier then the person buying it at $30.00.
Personally I just hate investing in a company when it's so hard to understand how much trouble they are in.
Apple is down 40% from the high, 13% from where I bought it at $138 (I added at 117+ and 118) but I understand Apple and what the future looks like. I have no clue with the financial stocks.
Citi may be a stroke of genius buy right now, seriously, but the truth is no one knows how bad the damage is.
2) What are the tax ramifications of doing this?
Clearly from all the tax advice you've seen here you should talk to a CPA, put together a list of questions a half hour with him/her will cost very little.
Over-simplified, but the way I understand a ROTH, is that the contributions are taxed now, so the eventual principle is untaxed when withdrawn, and the growth is still tax-deferred so only the "gains" are subject to income tax at a later date.
No even the gains are tax free, that's the beauty of the ROTH. You pay taxes now, when you take the money out at retirement, everything is tax free, including all cap gains.
The ROTH is phenomenal.
It appears that there is nothing to preclude one individual from having both a traditional AND a ROTH IRA.
Correct.
|
|
| | | 48 | sarge33rd
ID: 99331714
Sat, Mar 08, 2008, 14:16
|
TY sincerely for your input, patience as I ask what are most likely elementary questions and just generally make a nuisance of myself as I pick your collective brains. :)
|
|
| | | 49 | Boxman
ID: 571114225
Sat, Mar 08, 2008, 16:35
|
Sarge: Nonsense. This s#it is fun for me.
One trick is to play with the house's money as much as humanly possible. For instance, back when I first started I only made one trade per month because it focused my financial energy on one buy or one sell and it lowered my overall cost basis. Then once the dividends got to equal my monthly trading fee, I still only allowed myself one trade, but now the house pays for it. As time passed I now always trade using the house's money and I limit myself to two trades per month max unless there are extenuating circumstances.
Here's a simple example on what to do when you make money with this. Let's say you buy 100 shares of Acme Explosives for $1. Now it goes to $2. Congrats. Now sell 50 immediately and remove your cost basis. Those other 50 shares you have can shoot to the moon or hell for all you care now; at worst you are even. Then take the proceeds and look at the next company or increase an existing position that you think is a value play.
|
|
| | | 50 | sarge33rd
ID: 76442923
Sat, Mar 08, 2008, 19:50
|
OK, looking at various on-line brokerages; I've pretty much narrowed it down to 3, and really dont see much differene between them
Scottrade at $7 trade
Ameritrade at $9.95 trade
Fidelity at $19.95 trade
The obvious diff between the first 2 and Fidelity is the per trade fee. However, making MAYBE 1 or 2 trades month (after setting up the initial IRA and such), its really a very minor diff at $20-$30 total fee difference.
What does one broker offer that makes them actually worth more/less in comparison to the other 2?
|
|
| | | 51 | Building 7
ID: 48033121
Sat, Mar 08, 2008, 20:08
|
They usually have a sign-up bonus for new customers. ....30 free trades for a month or a daytrader I know got an I-pod. E-trade almost went bankrupt due to investments in derivatives or something. I'd avoid them. I have one at Ameritrade, but I imagine they're all similar for what you're wanting to do.
|
|
| | | 52 | Boxman
ID: 571114225
Sat, Mar 08, 2008, 21:01
|
Sarge: What does one broker offer that makes them actually worth more/less in comparison to the other 2?
Let's compare Scottrade to Fidelity. There is a $13 fee differential. Let's say you do 1.5 trades per month since you said between 1 - 2. That is $234 per year or roughly 11 shares of Citi at its current price every year until you retire. It adds up and that doesn't even factor in compounding value of shares and dividends. Cost basis is SO important in trading. Even if $20 is chump change, the money adds up.
Now those fees are not for broker assisted trades and are most likely just for standard market orders. Limit orders will cost more. I'm guessing that you'll be using market orders especially when you start off so those will be the figures you actually get charged.
Look for any other hidden fees. Account maintenance, things like that. Just to be sure. You were in the car business you know to ask those questions. :)
Limit orders are for when you say or input online, "I want 50 shares of AAPL, but only at $128 per share or less." Vice versa when selling.
I'm sure things like CS hold time (not a broker, but CS) factors into play along with statements in print versus online and then you print them along with trade confirmations being online where you print them instead of the brokerage.
Another thing to look at is a location of a branch office near you. My broker has a branch office within a 12 minute drive from the house. I've only gone there a couple handfuls of time, but it's been nice because when I have a question (especially when I have one about stocks and may need a broker assisted trade) I like a face to face over a telephone any day of the week.
Now like anything in life you get what you pay for. Yet with stocks its slightly different. I do 100% of my homework on any buy or sell 99% of the time. The other 1% I'll ask a broker. It's my money, not his, I ultimately care about it more. If you are willing to do the homework and research, then I would go with Scottrade and not look back. Placing a stock order online is an extremely simple thing (You'll be surprised how easy it is actually.) probably regardless of whom you choose.
I recommend Scottrade. $20 per trade is ridiculous. I don't care what the balance of the account is, there's no reason to charge people that much anymore.
|
|
| | | 53 | WiddleAvi
ID: 251113917
Sat, Mar 08, 2008, 21:29
|
If I can join in on the questions....
How do you research a company ? What exactly are you looking for to see if a stock is a good value or overpriced ?
|
|
| | | 54 | nerveclinic
ID: 105222
Sun, Mar 09, 2008, 02:36
|
Sarge you can't compare Scott Trade and Fidelity. They are really two completely different kinds of companies.
The decision rests on what kind of investments you are going to make.
If you plan on buying mutual funds (A smarter idea for a beginning investor then stocks) they are FREE at Fidelity (As in no transaction fee) as long as you buy one of theirs. This is where Fidelity will be cheaper then Scott Trade. Check how much Scott Trade charges for a mutual fund purchase.
Also, Fidelity is one of the biggest, most respected investment companies in the world. I don't know how much better Scott Trade is then E-Trade. I feel safer having my money market funds with a company like Fidelity.
I do think 19.95 is much to expensive for trading stocks. (I pay $8.00 with Fidelity) I guess you have to determine if you are going to be buying individual stocks or mutual funds (Where an expert is essentially picking the stocks for you).
Personally my opinion is if you are just starting to learn about investing you shouldn't be buying individual stocks you should be buying mutual funds or index funds.
I have about half my retirement in mutual funds so it helps me to have a company like Fidelity that specializes in no load mutual funds.
A fourth company you didn't mention is Vanguard, see what their trading fees are.
Seriously though, you should go on a one year intensive learning curve if you are going to buy individual stocks. Start reading books like Peter Lynch's "One Up On Wall Street". Brinker has a great recommended reading list on his site.
If you are determined to buy individual stocks I also would buy a stock picking newsletter. You can't really just start out doing it on your own and be successful. Motley Fool is a decent one for beginners, but they are starting to wear on me.
Going into it blind is like playing poker with a card shark who has a camera behind you and can see all your cards.
|
|
| | | 55 | Boxman
ID: 571114225
Sun, Mar 09, 2008, 07:49
|
I have a hard time disagreeing with Nerveclinic on his advice regarding allocation between mutual funds and stocks for beginners. You'll want an S&P 500 index fund and then a bond fund (US Treasuries, Munis, or AAA rated corporate bonds) that is allocated as a % depending on your age. The older you are, the more you allocate to bonds. A third fund could be a mid-cap or large-cap fund made of US companies with strong overseas exposure. Keep in mind that the more exotic the fund, the higher the management fee.
I do suggest allocating some of your portfolio to stocks and then to cash. I justify this because if you put (10%?) of your portfolio to stocks in the beginning it will keep you interested and make it fun and that will cause you to want to learn more about the market, if that is your wish. When I say stocks, I don't mean the semiconductor company that the guy at your BBQ recommended because it's coming out with "the next big thing". I'm referring to good US companies with solid overseas exposure.
The cash piece allows you to pick purchase timing with greater ease. Say the S&P just got thrown under a bus and dropped 2% in a week, there's a time to buy and add to your S&P fund. Don't just buy on the 20th of every month or every third Tuesday with your cash position. Buy when the price is right.
Adding onto Nerve's reading list here are some books that helped me out.
Beating The Street by Peter Lynch
Stocks for the Long Run by Jeremy. J. Siegel
Jim Cramer's Real Money by Jim Cramer
Stay Mad for Life by Jim Cramer
Widdle: How do you research a company ? What exactly are you looking for to see if a stock is a good value or overpriced ?
That's really a big question because you have to factor what kind of company, stuff like that. People spend hours researching just one company. I would start at Yahoo! Finance and look how it performs compared to its competitors and then find out why it performs that way.
|
|
| | | 56 | sarge33rd
ID: 76442923
Sun, Mar 09, 2008, 09:55
|
I agree entirely re the mutual funds. My entire work plan, is composed strictly of mutual funds.
I've been reading Motley from time-to-time or a while and following MSN Money off-n-on re their picks, suggestions, things to watch for etc.
Do I know what I'm doing? No, and I'd be trying to fool myself if I claimed otherwise. Am I reasonably comfortable with what I am looking at for individual choices? Yes. And if they tank (which I dont expect) then I'm prepared to suffer that fate.
Here are a couple companies other than BoA and Citi that I am looking into:
Dean Foods (DF): Leading milk bottler/distributor amongst other food stuffs. People ARE going to eat. Right? 7 of 11 analysts rate it "Strong Buy" as it sits now at its 52 wk low. 80%+ held by institutionals (meaning to me that Fund Managers seem to like the company) Looking at this like I am Citi...speculation play. Limit my exposure to a predetermined level in terms of dollars I'd be willing to "toy" with in it.
Pfizer Ord (PFE): Good dividend history, 68%+ institutionally held, 6 of 11 analysts rank it a buy, 5 have it a hold. (None say sell). This one is I think a solid long-term hold.
Windstream Corp (WIN): Company under heavy acquisition recently by institutionals, up now to 75%+ held via institutions. Good dividend history ($12/share stock with a $.25 dividend declared for Apr 15, X-date Mar 30) and a product whose demand isnt going to go away anytime real soon. (ISP and tele-comm for rural areas)
|
|
| | | 57 | sarge33rd
ID: 76442923
Sun, Mar 09, 2008, 10:23
|
Should add too: Scottrade also has no fee Mutuals when you select from their list of no-load funds.
Box: I'm intending to keep some cash on hand in the account. Especially looking at the upcoming IPO with VISA. I'm thinking thats an offering I'll want to get some shares out of.
|
|
| | | 58 | Boxman
ID: 571114225
Sun, Mar 09, 2008, 12:36
|
I'm intending to keep some cash on hand in the account. Especially looking at the upcoming IPO with VISA. I'm thinking thats an offering I'll want to get some shares out of.
I did talk to my broker about the VISA IPO. From what he told me the financial underwriting institutions will soak up the approx. 406 million shares that will be offered between 37 and 42 dollars per share. Whatever they decide to release to the public will then be what you can buy. So while the IPO price is 37 to 42 expect to pay significantly more.
Now since MasterCard does pay a dividend and they have a similar business model to VISA, I want in for that.
Do some more homework on Pfizer. Take a look at an annual report and poke around their website. Find out what drugs that they have patents on are eligible to go generic over the next span of time. That will hurt the company unless they have new drugs to create additional revenue streams.
|
|
| | | 59 | sarge33rd
ID: 99331714
Tue, Mar 11, 2008, 12:59
|
Pretty much what I figured re that IPO. Oh well....
OK, officially not so sure about C and BOA atm. Both are continuing to decline with no "end" in sight. Gonna sit back and watch them for awhile.
Also, thinking the notion of the books/reading is probably the best "investment" I can make atm. So, gonna make my initial foray into the market, via an index fund which will go into a traditional IRA. Most likely one of the S&P500 indexes. (Since the 2007 tax year is the last chance I have for tax deductible IRA contributions. My participation in a company sponsored plan in Jan '08, nullifies that venue from 08 forward. Just means that future contributions will go into a ROTH IRA instead.)
|
|
| | | 60 | Boxman
ID: 337352111
Tue, Mar 11, 2008, 13:20
|
Also, thinking the notion of the books/reading is probably the best "investment" I can make atm. So, gonna make my initial foray into the market, via an index fund which will go into a traditional IRA. Most likely one of the S&P500 indexes.
That is probably your best strategy now. I do suggest a bond fund proportionate to your age to act as a hedge against market risk.
I'm a big proponent of S&P 500 index funds. They have low fees and other mutual funds have a hard time beating the S&P in multiple consecutive years.
Go get some books and read up.
Another thing that worked for me that I'm doing now is practice runs. I'm going to be diving into options pretty soon and what I do is pick options and track them to see how I do. If you like a company's stock and you'll still be reading and learning, just pick a couple that you like and at what price you would have hypothetically gotten in on and then track the stock to see how you would have done.
The best thing is if you get a big hit or a big loss, research why it happened. That's a great learning experience.
Kinda like a fantasy game. :)
|
|
| | | 61 | nerveclinic
ID: 105222
Tue, Mar 11, 2008, 13:54
|
The best thing is if you get a big hit or a big loss, research why it happened. That's a great learning experience.
Except in the current market where there seems to be no rhyme or reason sometimes.
|
|
| | | 62 | Boxman
ID: 337352111
Tue, Mar 11, 2008, 15:56
|
I am loving today. Just loving it.
|
|
| | | 63 | nerveclinic
ID: 105222
Wed, Mar 12, 2008, 02:14
|
I am loving today. Just loving it.
Yeah, rah, rah, made up for the losses of the last two days, now just 99 more of these to go.
Maybe the Fed can just lend everyone 5 Trillion dollars and we'll be out of this mess...that will work won't it?
Desperate times.
|
|
| | | 64 | Boxman
ID: 571114225
Wed, Mar 12, 2008, 06:03
|
I'll take my victories where I can get them in this market right now.
|
|
| | | 65 | sarge33rd
ID: 99331714
Wed, Mar 12, 2008, 17:49
|
quick glance, looks like fair sized chunks of yesterdays gains; were taken back today. 2 or 3 days like it, and all those gains are gone and we're right back where we were Monday.
|
|
| | | 66 | nerveclinic
ID: 105222
Thu, Mar 13, 2008, 12:20
|
March 8th
Sarge
BoA and Citi....both are paying handsome dividends...
Nerve
I wouldn't make the dividend part of the equation though, it could disappear next week.
March 13th
The largest U.S. banks saw their stock prices slide during a choppy trading day and following remarks by Treasury Secretary Henry Paulson suggesting that banks may need to suspend dividend payments in order to shore up capital. "We are encouraging financial institutions to continue to strengthen balance sheets by raising capital and revisiting dividend policies,
And so it goes...
|
|
| | | 67 | Boxman
ID: 337352111
Thu, Mar 13, 2008, 13:32
|
Another nugget from the journal.
How We Beat the '70s
By MARK BLOOMFIELD
March 13, 2008; Page A18
With rising oil prices, rising unemployment, and inflation eating away at the economy, a powerful politician pushes for a populist tax hike in Washington.
It sounds a little like the current state of play. But the year was 1978, the push for a tax hike came from President Jimmy Carter, and the tax in question was on capital gains. Mr. Carter wanted to tax capital gains at the same rate as ordinary income -- effectively doubling the rate for many taxpayers.
He didn't get his tax hike, but he did spark a pro-growth insurgency that reframed the tax debate.
The chief insurgent was Republican Rep. Bill Steiger of Wisconsin, who called for cutting the top capital gains tax rate almost in half. From its inception, the 1978 "Steiger amendment" won bipartisan support. In the Senate, Democrat Russell Long (then chairman of the tax-writing committee), Alan Cranston (the second-ranking Democrat) and Republican Clifford Hansen signed up 59 Democrats and Republicans to co-sponsor legislation to cut capital gains taxes.
Within weeks, political and popular support turned in favor of the tax cuts as more people acknowledged that lowering the rates would reward the middle class for saving and investing, not just "fill the pockets of fat cats." Soon the Carter tax increase morphed into a tax cut, bringing the top rate down to 28% from 50%.
What prompted this unexpectedly strong support for lower taxes on capital gains? The tax on capital gains may have been seen as a tax on the rich by some in Washington, but most Americans saw it differently. People believe in the American Dream, the old-fashioned Horatio Alger rags-to-riches story. A tax on capital gains is a tax on the hard work and risk-taking people undertake to build their own wealth.
Mainstream economists know that lower capital gains taxes result in lower capital costs, more saving and investment, and a stronger economy. And ordinary citizens understand that low taxes on capital gains can make it possible for them to buy a new lathe or the newest software, which will give them the chance to compete effectively in today's global economy. Retirement security is also at stake. Low taxes on capital gains allow Americans to build up larger nest eggs.
The 1978 capital gains tax cut was an economic success, as we saw in the 1980s. What followed was a period of fluctuating capital gains tax rates. But a second round of substantial rate cuts came in 1997. Again the result was a clear benefit to the economy. The tax cut was pushed through by Sens. Joe Lieberman (then a Democrat) and Orrin Hatch (a Republican), and it took the top capital gains tax rate to 20% from 28%. President Bill Clinton signed the bill into law. According to a 1999 study by David Wyss of Standard & Poor's DRI, an economic consulting firm, the 1997 tax cut increased GDP, investment and jobs, and raised federal tax receipts.
Today, as in 1978, we are facing pressure to put in place a populist tax increase -- in this case to eliminate "tax breaks for the rich" -- at a time of rising oil prices and signs of rising inflation. This pressure is coming from two presidential candidates as well as Rep. Charles Rangel, chairman of the House tax-writing committee, who is proposing comprehensive tax reform, which in his view includes increasing the tax on capital gains.
But Mr. Rangel, a highly regarded and respected policymaker, is also calling for a full-scale and honest debate on tax policy. This is a debate we should welcome. Let's put the best economists to work and the best research on the table. Let's look at the fact that, as a recent study by the Organization for Economic Co-operation and Development pointed out, nearly half of the 30 countries surveyed do not subject individuals to any tax on capital gains. And let's consider that not keeping our capital gains tax at its current rate (15%) will put us at a disadvantage when competing for global capital.
On Jan. 20, a new president and a new Congress will begin work on a new economic policy. The lessons from cutting capital gains taxes over the past 30 years shouldn't be ignored.
President John F. Kennedy may have said it best in 1963 in a message to Congress: "The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital from static to more dynamic situations, the ease or difficulty experienced in new ventures in obtaining capital, and thereby the strength and potential for growth of the economy."
I couldn't agree more.
Mr. Bloomfield is president and CEO of the American Council for Capital Formation. He served as an aide to the late Rep. William Steiger (R., Wis.).
|
|
| | |
| | | 69 | nerveclinic
ID: 105222
Fri, Mar 14, 2008, 10:29
|
Post 68
I think he's a little late. If the right move is to be in cash, it would have been wiser to do it when Bili made the comments 6 months ago a little closer to the market top.
To take money out, assuming it's been invested at the top, after a 16% drop, is how the sharks steal your money. Maybe it will go down another 16%, but we do have the Fed slashing rates, adding liquidity like never before and the congress about to hand out tax refunds.
Will this same guy write an article telling us the place to be is in equities once we are back near the highs?
A little late.
|
|
| | | 70 | nerveclinic
ID: 105222
Fri, Mar 14, 2008, 11:08
|
VIX hit 31 today, very positive sign of approaching a temporary bottom.
|
|
| | | 71 | biliruben
ID: 33258140
Fri, Mar 14, 2008, 12:13
|
There is no risk-free investment, even cash.
If we keep dropping interest rates, we may cause a run on the dollar, spiking inflation and making those dollars lose mucho value.
Here's what the Chief Economist of Northern Trust has to say:
But, in our opinion, what could turn a walk on the dollar into a sprint would be a decision by the Chinese and/or Saudi central banks to eliminate the pegs of their currencies to the greenback. Now, what would motivate these central banks to sever the peg? The desire to rein in their domestic inflation. In an environment in which the dollar is under downward pressure, the by-product of pegging one’s currency is higher inflation in the economy whose central bank is pegging.
The inflation mechanics are as follows. The pegging central bank has to buy U.S. dollars in the foreign exchange market in order to prevent the dollar from falling against its currency. The dollar-buying central bank purchases dollar with its own currency. The dollar-buying central bank gets its own currency the same way all central banks get their own currency – it figuratively “prints” it. The dollar-purchasing central bank therefore floods its economy with its own base money, resulting in inflation – inflation in the prices of goods/services and inflation in the prices of assets.
Chart 4 shows the growth rate in the annual average total assets of the Saudi Arabian Monetary Authority (SAMA) and the People’s Bank of China (PBoC). In the five years ended 2007, the compound annual growth rate in SAMA’s balance sheet has been 43%; 27% in PBoC’s balance sheet. Chart 5 shows the behavior of consumer price inflation in China and Saudi Arabia in recent years. Given the high growth in monetary base money in each economy, is it any wonder that their consumer inflation rates also are high?
|
|
| | | 72 | nerveclinic
ID: 105222
Fri, Mar 14, 2008, 12:49
|
Holy ZIT Bear Sterns was down as much as 40% today based on the their liquidity news.
|
|
| | | 73 | biliruben
ID: 33258140
Fri, Mar 14, 2008, 13:12
|
Yeah. It looks like JP Morgan might be on a bear hunt. The NY Fed is loaning them money short-term.
From CR:
It was just last Monday that former Bear Stearns CEO "Ace" Greenberg responded on CNBC to the rumor that Bear faced a liquidity crisis:
"It's ridiculous, totally ridiculous."
Heh.
|
|
| | | 74 | Boxman
ID: 337352111
Fri, Mar 14, 2008, 13:29
|
Another dose of good news from the Journal
Recession Is Inevitable
By DAVID ROCHE
March 14, 2008; Page A19
It is a very logical progression. Peloton, Carlyle, Focus -- hedge funds and other non-deposit-taking financial institutions (NDFIs) are now being hit by the credit crunch, which had so far been mainly confined to mortgage lenders and the banks.
The Federal Reserve has reacted. Its Term Securities Lending Facility aims to encourage investment banks and prime brokers to lend to NDFIs and so relieve those parts of the credit market it cannot reach with its rate cuts and loans to banks.
The Fed understands the structure of the liquidity pyramid (from central bank money at the bottom, through bank lending, to the even bigger securitized debt markets, up to the huge derivatives sectors at the top). So far its liquidity injections have got no further than the banks. Now it hopes to reach higher. Unfortunately, it won't work.
The Fed is like King Canute with a difference -- it is trying to halt an ebbing tide rather than a rising one. Its liquidity injection seems huge at $200 billion (with perhaps more to follow), but it is still only equivalent to one-third of the expected losses in the NDFI sector.
Moreover, the Fed's readiness to accept almost any asset at just below face value as collateral will prevent price discovery. That means the U.S. financial system will remain burdened with uncleansed balance sheets that penalize future lending and economic growth.
Creating a lot of liquidity does not resolve an issue of solvency, which is now the driver of credit contraction. All the Fed will achieve is a dollar that will be further debased and inflation that will be higher. It cannot stop the process of deleveraging and asset price decline.
The hit to NDFIs was inevitable. It has been delayed because banks and prime brokers went on lending to hedge funds, partly because of the nature and terms of their credit contracts, and their very significant contribution to broker/investment banking profits. Hedge fund and broker balance sheets are around half the size of the commercial banks in the U.S. and one-quarter of those in Europe. Both assets and liabilities of NDFIs are financed by repurchase agreements, or "repos," meaning that NDFIs lend and borrow based upon collateral of assets that are constantly marked to market. As asset prices fluctuate, leverage must constantly be adjusted.
In a bear market, as asset prices fall, leverage is reduced. This causes lenders to ask for more collateral on existing loans, and borrowers to sell assets so as to reduce the need for such loans, and for additional collateral.
The opposite happens in a bull market when rising asset prices cause the balance sheets of NDFIs to expand. The liquidity this creates is used to invest in assets, boosting their prices and creating demand and collateral for more borrowing to make more investments.
So the balance sheets of NDFIs are highly geared to asset price cycles. They act in a pro-cyclical manner, reinforcing bull and bear market cycles and through them economic cycles. The effect on liquidity is greater than that of deleveraging by banks, which lend for a wider range of purposes than NDFIs.
We are now in the contractionary (bear) phase of the cycle. Prime brokers and banks are reining in credit to leveraged investors. This is a direct consequence of the damage done to banks' credit capacity by the writedowns of loans in other areas, such as structured finance and mortgages. This reduces their risk-free capital (value-at-risk ratios have doubled in the last year in the U.S.). In order to maintain adequate reserves as a proportion of risk assets, lending must be cut. Until now, deleveraging has been delayed. That's for three reasons. First, up to 80% of lending to leveraged investors is subject to legal agreements of credit lines that oblige the banks and prime brokers to lend for the duration of the contract. These are now ending.
Second, the prime brokerage business has until recently accounted for a very big part (often more than half) of investment banking profitability. This gave the hedge funds big leverage (sic) over the lenders.
Third, lenders continued to believe that their nominally high (up to 90% of loans) collateral ratio was a sufficient guarantee against loss in case of default. In other words, risk management remained behind the curve (yet again). Now that the liquidity contraction is affecting a much broader range of assets and categories of debt than subprime, collateral values have started to tank and this attitude is (belatedly) changing.
The credit crisis is unfolding as we expected, but more slowly than anticipated, because of the actions taken by central banks (mainly the Fed) and the U.S. government to allay its effects. The wholesale socialization of credit has meant that government and central bank measures account for 70% of new credit since last summer.
But these policy measures will not prevent asset-price deflation or credit contraction, which are functions of risk appetite and general readiness to maintain current levels of gearing throughout the economy. The non-bank sector has the potential to inflict more damage on the system than banks, because it has a much smaller capital cushion for a much more volatile and risky balance sheet.
Credit contraction translates through the financial system into a reduction in available credit for the non-financial corporate sector, and thus into reduced investment and growth in the real economy. The size of that contraction can be estimated from the leverage ratios of the financial sector and their impact on real GDP growth.
We estimate that nonfinancial corporate debt ultimately will have to shrink by 11%-12%. This will generate a decline of five percentage points of real U.S. GDP growth and push the U.S. into recession. Europe's real GDP growth will contract by two percentage points.
Globally, total credit losses of $1.4 trillion will cause a contraction in world GDP of 2.5 percentage points, or half the current rate of global growth. So the global economy will become a gray, dull world of semi-recession and sticky inflation that will last a long time. Without major policy blunders, however, it won't be a 1930s-style depression.
Mr. Roche is president of Independent Strategy, a London-based consultancy (www.instrategy.com).
|
|
| | | 75 | biliruben
ID: 33258140
Fri, Mar 14, 2008, 13:49
|
I don't know who he is, but he's awfully gloooooomy....
|
|
| | | 76 | biliruben
ID: 33258140
Fri, Mar 14, 2008, 13:55
|
I need to go read MISH and remind myself of his arguments predicting deflation rather than inflation.
Right now if I sell my house (which I am seriously thinking about doing), and inflation goes to 10% for a few years, I'll have made a big mistake even if the houses value deflates by 20%.
Particularly if credit dries up and I end up paying 12% for my next mortgage, even with an 800 FICO and 50% down.
|
|
| | | 77 | biliruben
ID: 33258140
Fri, Mar 14, 2008, 14:01
|
My worry, mainly, is that the fed and legislature will do everything possible to save the homeowner, and they will be successful, but destroy the dollar and the economy in the process.
Up until now, I assumed Bernanke, as a student of the Great Depression, would realize the homeowner couldn't be saved, so they wouldn't go down that path of futility and destruction. Now I'm not so sure.
A few years of 10% inflation would do wonders for shrinking the mortgage burden. That assumes that labor costs keep reasonable pace with inflation and salaries rise close to that 10% annually.
|
|
| | | 78 | nerveclinic
ID: 105222
Fri, Mar 14, 2008, 14:20
|
It was just last Monday that former Bear Stearns CEO "Ace" Greenberg responded on CNBC to the rumor that Bear faced a liquidity crisis:
"It's ridiculous, totally ridiculous."
yeah and it was the day before. One would think criminal charges are possible...influencing stock movement with a pure lie.
|
|
| | | 79 | sarge33rd
ID: 99331714
Fri, Mar 14, 2008, 14:34
|
Foresight......
In that article, the fella asks an interesting question (almost mockingly of my thought that Citi is "too big to allow to fail"...)
Burry remains short the corporate debt of major U.S. financial institutions, as he believes several will collapse under the weight of their write-offs. Optimists believe a Fannie Mae (FNM, news, msgs) or Citigroup (C, news, msgs) may be too big to fail, but Burry asks, "How many too-big-to-fail companies can fail at the same time?"
Have to admit, I hadnt thought of it in those terms. What DOES happen, if 2 or 3 truly large financials go down "together"? Are we looking at bank runs like the "Great Depression"?
Gotta say, after doing some reading, doing some honest research, I'm not so sure a mason jar and a deep hole in the backyard, arent amongst the safest plays atm.
|
|
| | | 80 | biliruben
ID: 33258140
Fri, Mar 14, 2008, 14:46
|
There are no safe plays when there are bleeding sharks in the water. They are too unpredictable, and other sharks smell the blood.
The Fed is like the croc hunter out there. Not a lot of fire-power beyond bravado and jedi mind-tricks. They work until they don't, and they look to have stopped working.
We'll see a bunch of failures, and we've already seen some traditional bank-runs both here (Countrywide) and abroad (Blackrock). But the problem isn'twith the traditional banks, otherwise FDIC insurance would pretty much do the trick.
The problem with non-depository financial companies like hedge funds and private equity funds, as well as a whole myriad of murkier institutions and structures that are largely unregulated. They have been dabbling in very risky, highly leveraged investments over the last number of years, and the banks had been lending to them. They've stopped, because they know a number are going under, and they don't want to be dragged down into the depths with them.
My strategy is diversification - some cash, some stocks, some funds some real estate. Right now I'm debating whether divesting real estate is a good idea, given the that it's the government's favorite target to help right now. My house seemed like an anchor, but it might actually be a lifeboat.
Okay, enough mixed metaphors.
|
|
| | | 81 | nerveclinic
ID: 105222
Fri, Mar 14, 2008, 14:55
|
I'm not so sure a mason jar and a deep hole in the backyard, arent amongst the safest plays atm.
If you really feel that way you should probably avoid ever investing in the stock market altogether and just put your money in bonds.
The only way to really make money in stocks is to have the guts to stick it out during tough times (Unless you are smart enough to get out at the top) and to put new money in when everyone thinks the whole thing is about to collapse.
If you can't muster that mind set, you will probably make more money in bonds.
|
|
| | | 82 | nerveclinic
ID: 105222
Fri, Mar 14, 2008, 15:03
|
My worry, mainly, is that the fed and legislature will do everything possible to save the homeowner,
The legislature might, I don't think the Fed cares. They are cutting the rates because growth is slowing and unemployement is rising. They are also trying to save the banks.
I hope the Fed is smart enough to know that home buyers who couldn't afford the loan don't deserve to keep the house at the expense of the rest of the tax payers.
They might ask the banks to stop the ARM but that is to keep foreclosures that the banks don't even want at this point right?
They don't want the house they want the mortgage payment.
Oil and food are up. Core is still not out of control, recessions end up reducing inflation. Some of the oil price rise is speck and don't forget it was happening before the Fed cut rates
Oil and food is being stretched by the growth of the emerging markets, it's not just because the Fed is lowering rates.
|
|
| | | 83 | biliruben
ID: 33258140
Fri, Mar 14, 2008, 15:27
|
... recessions end up reducing inflation...
They do? I've heard this before, but I don't understand why that would be. It certainly wasn't in the 70s.
Read 71 if you want to read the case for high inflation.
|
|
| | | 84 | sarge33rd
ID: 99331714
Fri, Mar 14, 2008, 17:04
|
re 81.....Dont get the notion I'm "afraid" of stocks. I'm not. Its the current trends I see, where smallish companies with stocks under $10/share, turning losses for the quarter, are the "big gainers". That type of thing, seems on the surface to defy logic. Yet the "big boys", are pretty much across the board, getting their collective a$$e$ handed to them. When losers outnumber gainers 5 and 6 to 1, I just dont see that as very obliging for pumping money in.
|
|
| | | 85 | nerveclinic
ID: 105222
Fri, Mar 14, 2008, 18:13
|
They do? I've heard this before, but I don't understand why that would be. It certainly wasn't in the 70s.
It seems obvious to me.
The reason most recessions lower inflation is because people become unemployed, consumer's stop spending because they are scared. Merchants can't raise prices in an environment when people aren't spending.
I don't know what to say except that for the last 6 months I've read dozens of articles and listened to economists on podcasts who for the most part all seem to say that recessions are naturally deflationary.
Rising oil prices are also deflationary in terms of how they effect core inflation. If you spend all your money on gas, you have no money left to buy other discretionary items, clothes, cars, expensive meals etc. so these industries are forced to hold prices.
The 70's were an anomaly not typical.
There is actually a significant camp of economists who are nervous about deflation rather then inflation because of the extreme nature of falling house prices. To most families the equity in their home is 25% of their total worth...and it's deflating quickly.
|
|
| | | 86 | nerveclinic
ID: 105222
Fri, Mar 14, 2008, 18:21
|
economists on podcasts who for the most part all seem to say that recessions are naturally deflationary
Let me correct that, it's 2AM, that was sloppy.
Recessions aren't naturally deflationary, they are naturally times of "low inflation". De-inflation is actually fairly rare.
|
|
| | | 87 | nerveclinic
ID: 105222
Fri, Mar 14, 2008, 18:29
|
Its the current trends I see, where smallish companies with stocks under $10/share, turning losses for the quarter, are the "big gainers". That type of thing, seems on the surface to defy logic. Yet the "big boys", are pretty much across the board, getting their collective a$$e$ handed to them.
Sarge I'm sorry but you have it backwards. For at least the last 12 months Large caps have been doing much better then small caps. (Although both have done poorly)
During times of economic crisis, investors tend to stick with Large Cap companies who can whether the storm.
Large Caps have also been benefiting from the global growth story (multinationals) while small caps tend to be domestic.
If you are focusing on Financials then yes those large caps have done badly. In the grand picture though small caps, which are more volatile, have gotten hammered.
|
|
| | | 88 | biliruben
ID: 33258140
Fri, Mar 14, 2008, 19:13
|
Price per share has no (well, little) relationship to the size of the company. It doesn't mean anything at all.
I guess that makes sense, Nerve. I am only too aware of the deflationists (or dis-inflationists? - I think there is a difference). I thing our own B7 is one.
Where I disconnect from them is when the talk about the contraction of money and credit in the system as deflation. Does that necessarily mean that inflation as measured by the CPI will decline? If so, why?
They sometimes make sense to me intuitively, but I don't think their theories are rigorously tested or mathematically proven.
Even so, I could see where prices might spike temporarily in the short-term, but then have a prolonged deflationary period.
|
|
| | | 89 | Boxman
ID: 571114225
Fri, Mar 14, 2008, 19:29
|
Sarge: It is markets like the one we're in that if you buy appropriately, you will thank God that you did. I'm buying more now than I did a year ago.
Look at it this way, when is the best time to buy a new pair of jeans? When they're on sale at the department store right? That's the retail equivalent of a bear market.
Would you buy a pair of jeans if the retailer said "20% higher than normal"? Absolutely not.
The entire US stock market is on sale. Time to buy. I'm like a crazy mom waiting out front of a Wal-Mart on the day after Thanksgiving.
|
|
| | | 90 | Building 7
ID: 48033121
Fri, Mar 14, 2008, 19:30
|
I think you can have inflation in some things and deflation in other things at the same time. For example, right now we are having inflation in commodities and deflation in housing prices. Generally, I think there will be inflation followed by hperinflation, followed by deflation. Gold and silver will do well under the first two. Not sure about the end game. The high price of oil is mostly do to the dollar going down the toilet. If you look at a chart of oil price in Euro's it would look a lot different.
|
|
| | | 91 | biliruben
ID: 33258140
Fri, Mar 14, 2008, 19:32
|
I am started to shop soon myself. We are 18% off peak. When we hit 20%, I'll get serious. My guess is we might see 30% before it's over (recessions average 25%), but I'm not going to try and time the bottom.
|
|
| | | 92 | sarge33rd
ID: 76442923
Fri, Mar 14, 2008, 20:57
|
Sarge I'm sorry but you have it backwards.
Looking at this link daily over the past couple weeks, the days big gainers have by and large, been very low priced stocks.
link
Now some of these companies may not be "small caps", but I see many days wehre the days biggest gainers are trading <$7.50/share and running margins <5%.
Take today as an example (actually, not atypical from what I've observed). The days "big" winner, LXRX up 31%, trades at $2.23 at todays close and has an earnigns of -$.64 share. Net profit margin of - 142.13%.
|
|
| | | 93 | nerveclinic
ID: 105222
Sat, Mar 15, 2008, 01:59
|
Even so, I could see where prices might spike temporarily in the short-term, but then have a prolonged deflationary period.
Again Bili I misspoke, I just meant that during a recession price inflation is generally held in check, I shouldn't of used the word deflation, that's rare.
|
|
| | | 94 | nerveclinic
ID: 105222
Sat, Mar 15, 2008, 02:10
|
Sarge here's a good way to look at it. Forget the under 10 dollar part. The red and green line is the Dow Jones. The line below is the russell 2000. DJIA are top 30 companies in America. Russell 2000 are small caps.
DJIA is flat for the year. The Russell 2000 is down 15%.
|
|
| | | 95 | nerveclinic
ID: 105222
Sat, Mar 15, 2008, 06:58
|
I've been listening to all the Bloomberg podcasts which can be subscribed to for free on Itunes and refreshed daily. They have some of the top economists in the world on discussing current issues in particular this credit crisis.
I just want to bring up a few points that get made that run contrary to some of the points made often here. It's not that some of the points here about inflation and the depreciating dollar aren't accurate, it's that they over simplify the situation.
Many posters here seems to blame the Fed cutting interest rates for causing the devaluation of the dollar.
Counter point is that while, yes, the Fed cutting rates does have an effect on the value of the dollar, there are many other effects unrelated.
For instance, the dollar has been in decline over the last several years, and was even declining in value during the period when Bernake was dramatically raising rates.
Other big reasons for the current decline aside from the Fed are
1) The budgets that congress and the President are passing that are causing huge budget deficits. This is likely the biggest cause as the world is extending us credit, to put off into the future our paying our government bills. This huge debt greatly reduces the value of our currency and is the reason the dollar was declining even when Bernake was raising rates.
2) The huge trade deficit is also a pull on the dollar.
3) The war in Iraq which is really a subset of point 1 had a big effect.
4) The future cost of medicare and SS devalues our currency.
Another point is that the rate cuts will cause inflation and therefore do we conclude that those decrying this thinks the cuts shouldn't be made?
What is the alternative?
If the rate cuts hadn't been made one can only imagine where we would be now including, Bank failures (we've already seen Black Rock fail in England, So Gen on the ropes in France and now Bear Sterns on life support here), massive recession, much larger unemployment.
Are there negative effects of the rate cuts, of course, but, it's africkin' mess right now with the credit problems, do we just sit back and watch the titanic sink?
Is the "problem" that the Fed is cutting rates? Or is the problem that...Americans refuse to save, congress refuses to live within it's means, people bought homes who couldn't afford them, people paid more for homes then they were worth, banks and mortgage lenders made loans that have been obviously improper.
Further to my post early to Bili about the recession usually acting as a buffer on inflation...Bili gave the example of the 70's.
We only have to go back to the last recession in 2001 to illustrate my point. In 2001 Greenspan cut interest rates lower then they have been in our history taking them all the way to zero.
During that time there was no noticeable increase in inflation caused by the cuts.
If rate cuts "automatically" cause inflation, why was there none during the period of the greatest cuts in our history?
If rate increases automatically increase the value of the dollar, why was it declining during the years when Bernake was raising rates?
I've actually heard many economists the last few weeks on Bloomberg say that they anticipate a drop in inflation relative to had bad economic conditions get.
Again a lot of this is just points I am hearing being made by economists being interviewed on Bloomberg. As other issues come up I will post again.
I can't emphasize enough the quality and depth of these podcasts although to some they probably come across as dry and over academic, they are not dumbed down for the general public so they are only for those interested in the nuts and bolts of the current economic environment.
|
|
| | | 96 | revvingparson
Sustainer
ID: 059856912
Sat, Mar 15, 2008, 09:53
|
re:95 To add to #4 is the unfunded retirement plans and retirement medical cost of states (NJ) and cities (becoming more by the week).
Fresno county
New Jersy
How's your state doing?
Vallejo CA might declare bankruptcy
And Nerve has perhaps the top reason for the current financial affairs: Is the "problem" that the Fed is cutting rates? Or is the problem that...Americans refuse to save, congress refuses to live within it's means, people bought homes who couldn't afford them, people paid more for homes then they were worth, banks and mortgage lenders made loans that have been obviously improper.
Personally as more of this bad news gets out there the markets will continue to slide down, but it is simply a natural correction to our debt related problems and until Americans as a whole decide to personally hold themselves accountable rather than depending on government of any level to "bail them out" we will continue to see this correction get worse before it gets better.
|
|
| | | 97 | sarge33rd
ID: 99331714
Sat, Mar 15, 2008, 10:26
|
"penny stock" I refenerenced above
Precisely what I'm referring to. From a low yesterday of $.65, it screams up to $.86. This is a company with virtually EVERYTHING, riding on the results of a single upcoming medical trials result. Either it "passes" and the company is rewarded handsomely, or it fails....and the company most likely fades into oblivion.
|
|
| | | 98 | sarge33rd
ID: 99331714
Sat, Mar 15, 2008, 10:34
|
correction: Low yesterday was $.67, not 65.
Anywya, it shows my point (I think)...trying to "guess" who/what is coming next in this volatility, is an excercise in futility I think.
Again, dont get the idea I'm buying. I'm putting approx 1100 month into the company plan and getting an additional 275 or so from my employer.
What I'm looking for, is a solid company whose core biz is sound, but whose stock has taken a beating in the current market downward spiral. Perhaps not deserving of the beating, but caught up in the wave.Motley Fool makes 1 suggestion I am exploring, but I have to ask myself if I want to invest almost 5k for 10 or 11 shares of something with no dividend vs getting maybe 100-250 shares of a dividend paying stock. Still doing research into it.
|
|
| | | 99 | sarge33rd
ID: 99331714
Sat, Mar 15, 2008, 10:36
|
I need more coffee...
Again, dont get the idea I'm buying.
should read;
Again, dont get the idea I'm not buying.
|
|
| | | 100 | Building 7
ID: 48033121
Sat, Mar 15, 2008, 10:42
|
Many posters here seems to blame the Fed cutting interest rates for causing the devaluation of the dollar.
The general thinking is if the U.S. lowers their rates, then global investers will be more inclined to invest in Euros (for example) and less in dollars. With more people demanding Euros and less dollars, the dollar/Euro exchange rate will go down accordingly.
But, yes, there are other factors invloved, such as the supply of dollars and other currencies. The U.S. supply is increasing at 16% per year. Other countries are similar. Gold increase about 1-2% per year and we can witness the rise of gold from $250 to $1000.
|
|
| | | 101 | nerveclinic
ID: 105222
Sat, Mar 15, 2008, 13:57
|
Sarge Motley Fool makes 1 suggestion I am exploring, but I have to ask myself if I want to invest almost 5k for 10 or 11 shares of something with no dividend vs getting maybe 100-250 shares of a dividend paying stock.
I'm guessing you are talking about MKL? In any case why do you need to invest $5,000 in this stock. If you research it and like it buy 1 or 2 shares. Then find 4 or five other stocks you like and buy a basket in diversified industries.
The number of shares doesn't matter, if it goes up or down, 10 shares of a 50 dollar stock is no different then one share of a $500 stock.
If you really want to get into the market now (Since it's so beaten up) why not take the $5,000 and put it into VTI, it trades like a stock but it's actually 5,000 American stocks. It sells in shares at $128 dollars a share.
You can buy it and forget about it while you begin to study investing. Then when you are sure your ready to buy an individual stock you can sell some or all of it and begin to buy stocks your sure of.
Just a thought.
|
|
| | | 102 | nerveclinic
ID: 105222
Sat, Mar 15, 2008, 14:12
|
Sarge another thought, if you are worried about dividends is buying the DVY.
iShares Dow Jones Select Dividend Index
My only concern here is the exposure to financials.
It's a basket of stocks that all have dividends. The yield is 4% a year. It's a basket of stocks but you buy it just like you are buying a regular stock.
By buying this one ETF (Exchange traded fund) you are buying a little bit of all these stocks which pay dividends...
Altria Group Inc.*
FirstEnergy Corporation*
FPL Group*
Merck & Co., Inc.*
DTE Energy Holding Company*
PNC Financial Services Group*
Bank of America Corporation*
AT&T, Inc.*
Pinnacle West Capital*
Chevron Corporation*
PPL Corporation*
Bristol-Myers Squibb Company*
Lincoln National Corp.*
Unitrin, Inc.
Regions Financial Corporation*
Eastman Chemical Company*
PPG Industries, Inc.*
Comerica Incorporated*
Energy East Corporation*
Lyondell Chemical Company
Genuine Parts Company*
Nicor Inc.*
KeyCorp*
J.P. Morgan Chase & Co.*
Lubrizol Corporation
All of them pay a dividend. You don't have to worry if one is going to cut their dividend. You don't have to worry if your one pick is bad.
There are other ETF's that are pure dividend plays but this is the obvious well known one that I could come up with off the top of my head.
|
|
| | | 103 | sarge33rd
ID: 99331714
Sat, Mar 15, 2008, 14:50
|
Thanks NC. I certainly hope my tone doesnt come across as "challenging" your wisdom per se. More the intent, is to challenge myself to frame my mindset correctly. I'm basically using you, box et al; as sounding boards as I "think aloud". (No doubt, occassionally causing some to wonder just how much "thinking", I'm actually doing. lol)
|
|
| | | 104 | sarge33rd
ID: 99331714
Sat, Mar 15, 2008, 14:56
|
and to answer your other quest re MKL...
I have 3 grandkids and 2 kids. 1 share ea for them and 5 for me, was the thinking.
|
|
| | | 105 | nerveclinic
ID: 105222
Sat, Mar 15, 2008, 15:17
|
I certainly hope my tone doesnt come across as "challenging" your wisdom
Ha, I'm not sure how wise I've been the last few months, just look at my portfolio.
No you said you wanted to learn so I'm just going through your sounding board points more a less. Based on what you've mentioned about how much you have to invest I just thought $5,000 is a lot to sink in any one stock.
Motley has a good track record but they have actually been off the mark the last few months, meaning doing worse then the overall market.
|
|
| | | 106 | Boxman
ID: 571114225
Sat, Mar 15, 2008, 15:18
|
Sarge: Don't just buy one stock or one ETF for your portfolio. I don't go the ETF route. That isn't meant to imply that I think they are inferior vehicles than stocks. I like picking a company, observing it, studying it, getting confidence in it and then buying its stock. Now it does seem a tad hypocritical given that in my retirement is a blend of mutual funds which are like ETFs in a sort of way, but those are my choices in a 401(k) so I go that way.
Diversification is hugely important. I cannot stress that enough. You'll want to study and then select probably about five companies or a couple of ETFs.
I'm sure you're quick enough to figure out a common theme that Nerve and I hit on: studying. Read up, get a good book, a magazine subscription, and just watch CNBC (or really any other channels that cover the market during the day) and learn as much about the market as you possibily can. Ask questions here like you've been doing. I've said it before, learning about the market and investing is fun for me. I'm sure its fun for Nerve too.
Figure out how you want to diversify and try and keep the overlap to a minimum. A great example would be a telecom, oil company, bank, railroad, and a consumer staples cluster (like P&G). It won't be hard to find great companies in each of those sectors that pay dividends.
I'm glad you mentioned stocks for kids because I have some experience in that area. Perhaps you may want to look at stocks kids could identify with in the hopes of that being used as an incentive to want to learn how to invest. Disney, P&G, Apple, BNI, companies like that.
|
|
| | | 107 | Boxman
ID: 571114225
Sat, Mar 15, 2008, 15:20
|
We talked about the VISA IPO before. While doing my weekend homework on Wells Fargo, I came across this article.
VISA IPO Date
Credit card giant Visa, which was scheduled to price its mammoth IPO Wednesday night for trading Thursday, is moving the offering up to price Tuesday night for trading trade on Wednesday.
Four hundred and six million shares will be offered between $37-$42, all by the company (42 percent of the company is being sold). This should eventually translate into a nice windfall for JP Morgan (23.3 percent), Bank of America (owns 11.5 percent), Citigroup (5.5 percent), and Wells Fargo (5 percent), who are all shareholders. JP Morgan and Goldman are the lead managers.
|
|
| | | 108 | Building 7
ID: 48033121
Sat, Mar 15, 2008, 16:41
|
visa-ipo-to-raise-cash-and-transfer-risk
The lead underwriters for the offering are JP Morgan Chase and Goldman Sachs. JP Morgan may have set the modern record for conflicts of interest by a lead underwriter. It is:
1. The largest shareholder in Visa.
2. The company�s largest customer, getting breaks of pricing not available to most other customers.
3. A member of the bank syndicate that agreed to lend $3 billion to Visa.
4. Slated to get $1.1 billion from the offering, through redeeming shares.
There is litigation from consumers over fraudulent fees as well as antitrust lawsuits against the banks who own Visa. Although the banks admit no wrong doing, their actions may be speaking louder than words. In addition, Citigroup and WaMu desperately needs to raise capital. This is one way to do it, and arguably the real driving force behind the IPO. Otherwise, this is clearly not the best time to be doing an IPO.
Me: I'm not saying the IPO is good or bad, just that you may want to read this before jumping in.
|
|
| | | 109 | sarge33rd
ID: 99331714
Sat, Mar 15, 2008, 16:43
|
This wouldnt be my "portfolio" Box. I have 5 mutuals being bought into monthly via my co sponsored retirement plan. With 5k, I have limited initial funds for additional investments. SO I'd prefer to minimize transaction costs, and rather than buy 25 shares of this, and pay a fee, and 22 shares of that, and pay another fee, and 37 shares of those, and pay yet another fee...for the here and now, I'm looking for one or possibly two "core" places to begin an additional portfolio. Right way? Wrong way? I dunno. Not yet anyway.
|
|
| | | 110 | The Beezer
Dude
ID: 191202817
Sun, Mar 16, 2008, 23:21
|
Well, stock futures are looking pretty lousy right now, Bear Stearns just got sold for $2 a share after closing at $30 on Friday, and the Fed didn't want to wait until tomorrow to announce their latest initiatives. Monday could be ugly unless someone rides into the NYSE on a white horse and saves the day.
With inflation being reported as better than expected last week, I won't be shocked by a 100 point cut on Tuesday, and I'll be surprised if it's less than 75. I'd love to be wrong about the doom and gloom, but it's looking rough out there.
|
|
| | | 111 | Building 7
ID: 48033121
Sun, Mar 16, 2008, 23:29
|
I read there was a 50% chance of a 100 point cut. That's remarkable. I remember in the old days they used to move it by that much, but not lately.
|
|
| | | 112 | nerveclinic
ID: 105222
Mon, Mar 17, 2008, 01:40
|
I read there was a 50% chance of a 100 point cut. That's remarkable. I remember in the old days they used to move it by that much, but not lately.
Part of the reason they are moving so quickly, aside from the urgency of the situation, is the political race. I can remember Brinker saying as far back as last summer that because of the elections, the Fed would cut rates quickly and early and try to be done by early spring so they could be more apolitical going into the elections.
Right or wrong, it's just one more reality to deal with as you make investment decisions.
Part of Brinker's premise all along that the market wouldn't completely collapse, is the fact we are headed into a Presidential election, and Fed Banks tend to over compensate during these times to make sure they are not part of the election story.
He was surprised they didn't cut faster at the beginning because of this, but the "getting the cuts done by spring" prediction seems to be coming true since January.
Now the collapse of Bear Sterns is adding another layer of urgency. The market actually opened strong Friday based on the low CPI number and looked like it was headed up until the Bear Sterns news hit, that hit the market like a tidal wave.
|
|
| | | 113 | nerveclinic
ID: 105222
Mon, Mar 17, 2008, 03:51
|
BoA and Citi....
both are paying handsome dividends...
both are subject to HUGE losses from this mortgage fallout...
both are too damn big to let fail...right?
Well it ain't Citi bank but Bear Sterns is pretty dang big and guess who just failed?
This is an 85 year old company. One of the biggest brokerages in the world.
Less then a year ago the stock was at 160.
Early Feb it was at 93.
Feb 27th it was at 89.
March 12th 67.
Friday it closed at 30.
Sunday it sold to JP Morgan for 2 dollars a share.
It might not be Citi Sarge, but I think we have the answer to your question.
My point is, as you are just getting into investing, why mess with such a poisoned area right now.
There's an old saying buy when there is blood in the street, but the financials are such a complicated mess, it just doesn't seem worth the risk to me, not with all these failures we are seeing, and particularly when a beast like Bear Sterns gets slaughtered.
Imagine if you put your $5,000 into that stock at $160? It would be worth $62.00 right now.
|
|
| | | 114 | Pancho Villa
ID: 495272016
Mon, Mar 17, 2008, 08:22
|
Imagine if you put your $5,000 into that stock at $160? It would be worth $62.00 right now.
It could be worse. You could have invested that 5 grand in
Carlyle Capital.
LONDON (MarketWatch) -- Shares in Carlyle Capital Corp. (CCC.AE) dropped by more than half Monday after the mortgage-bond fund said it will wind up its operations and indicated there won't be any money left for shareholders.
At 1115 GMT, the Amsterdam-listed stock was down $0.41, or 57%, at $0.31.
Carlyle Capital said its Class A shareholders - who consist of six Carlyle Group partners - voted Sunday to wind up the fund in Guernsey, where it is incorporated. It said it has received default notices on funding lines for its entire $21.7 billion portfolio of mortgage-backed securities, and that it believes that its liabilities are more than its assets.
It is also an embarrassment for Carlyle Group, the powerful Washington private-equity firm whose executives own 15% of the fund. It created Carlyle Capital as part of its efforts to diversify its business, and to give public shareholders a way to get exposure to some of its funds. But within weeks of the July listing, it was forced to make its first bailout of the fund, and is now owed at least $150 million from the failed business.
My sympathy for the Carlyle Group principals, mostly ex-CIA and other top-ranking State and Defense Department officials who made billions via defense contracts, is nil.
|
|
| | | 115 | sarge33rd
ID: 76442923
Mon, Mar 17, 2008, 08:55
|
Not to worry NC. I've been "sold" on the notion that while there is "blood in the streets" re the financials...I think that in too many cases, there are also intestines, guts , hearts, brains etc; to go right along with that blood.
Back in post 37, I indicated a "penny stock" I'm watching. Last Fri, it was added to BUYINS.NET "Naked Short Sell List". To me, that means a significant nr of shares had been "shorted" and this should drive the price down. Yet by Fri close, it was up 38.7%, from .62 to .86; with OVER 5 million short shares having yet failed to deliver. Either I'm grossly over-simplifying in my own mind (entirely possible if not in fact probable) and/or, someone(s) have lost their perverbial arses in that short sell and I'd *ahem* assume subsequent margin calls.
|
|
| | | 116 | leggestand
Leader
ID: 451036518
Mon, Mar 17, 2008, 09:21
|
Nerve 113 -
Imagine if you put your $5,000 into that stock at $160? It would be worth $62.00 right now.
No need to imagine...last summer, some British billionaire (Joe Lewis?) bought about $1 billion worth of shares at over $100/share. It's now worth about $20,000. Quite an investment.
|
|
| | | 117 | sarge33rd
ID: 76442923
Mon, Mar 17, 2008, 10:04
|
OK...Now I'm REALLY confused.
How does a stock close Fri at $.86 and opening bid on Mon is $.53?????????????????? In about 10 minutes, it went from $.53 to $.78 which is where it sits atm.
C, opens and loses $1.38 in 15 minutes. BAC down $.79, FCNTX down $.74...
This is what has me hesitant right now. Seems almost everything is still downward, and while I'm not trying to gauge the floor, I'm not at all sure that I'm standing on the second floor, while they (the market) is still basement bound.
|
|
| | | 118 | nerveclinic
ID: 105222
Mon, Mar 17, 2008, 10:10
|
This is what has me hesitant right now. Seems almost everything is still downward, and while I'm not trying to gauge the floor, I'm not at all sure that I'm standing on the second floor, while they (the market) is still basement bound.
Then stay out of the market, you'll sleep better.
At least stay out until you've done the research we are talking about. The fact you are even looking at penny stocks tells me you'd be better off at a casino.
|
|
| | | 119 | sarge33rd
ID: 76442923
Mon, Mar 17, 2008, 10:39
|
Geez Nerve. I picked a stock to watch and a company to research, to see what i could learn about the company, its financials, etc. This one happened to be a penny-stock. So what? It could just as easily have been Berkshire-Hathaway, except that company is I think, too EASY to research. WAY too much info available re W Buffet and company.
My question still stand though:
How does a stock close at one price and open the next day at 60% of that price, and then within an hour and half climb back ABOVE that prior close?????
|
|
| | | 120 | nerveclinic
ID: 105222
Mon, Mar 17, 2008, 12:08
|
Sarge, sorry I wasn't trying to be rude (although I guess I was) but most investors don't really consider penny stocks as investments, the are ponsi schemes. There's a reason the price of the stock is so low. I read at least 5-7 financial websites literally every day and I have never read an article seriously discussing the value of a penny stock company.
Your other question is a good one... How does a stock close at one price and open the next day at 60% of that price, and then within an hour and half climb back ABOVE that prior close?????
First the big swings for the stock you are discussing are, as I described above, because they aren't real stocks they are garbage, but even a real stock changes price after hours.
There are several ways this happens.
1) After hours trading. This is something I've actually done myself the last few months. I bought Apple during the conference call after the market closed. Fidelity allows a limited period of "after hour trading" 4PM - 8Pm and 7:30AM-9:15AM. All it takes is two parties willing to trade. The "market closed" you are referring to is just the "normal market hours".
2) There are trades that go on even after, after hours. Most of this takes place at the trading desks of large institutions between themselves or big clients. Often the shift in price is based on news that comes out after the market closes (Earning reports are a good example) One of the "perks" of being the "big boys".
3) Look at Bear Sterns. Closed Friday at $30.00 a share. Opened this morning at $3.15 because it was "bought" after hours by JP Morgan.
Hope that makes sense.
Seriously though, I don't know anyone who would advise you to start your research studying penny stocks. I'm not trying to be rude, just blunt about that advice. I can't really answer any questions about penny stock companies because I avoid them.
|
|
| | | 121 | Boxman
ID: 337352111
Mon, Mar 17, 2008, 13:12
|
I really wanted to add something here, but Nerve pretty much covered it in 120.
Sarge, your willingness and initiative to learn is great. Just don't waste that effort on penny stocks.
Penny stocks are trash and it's not just stocks under $1. I'll arbitralily (yeah the spelling is screwed up) say any stock under $4 is trash.
A recent example of this is Communicate.com. This stock was hyped up in Kiplinger's last month and it even had a juicy quote from "a hedge fund manager" who said that if he had 1MM dollars he'd buy up this stock. At the time it traded in the high 2s. I got the magazine on Saturday. I figured a bunch of people also got it on Saturday.
After being in the market for a while I knew precisely what would happen: a bunch of folks who read Kiplinger's would buy Communicate.com. Either because they would buy and hold or buy and flip; which is what I wanted to do, but didn't do because quite frankly I didn't feeeeel like it because then I'd have to try and time it and guess when the institutionals would dump it.
I watched Monday as the stock went up. I can't recall how many days (couldn't have been more than 2 or 3) it went up. Then it dropped right back down. I had to laugh and now I'm guessing that a lot of folks that bought it are stuck with garbage paper. It currently trades for less than what it did when Kiplinger's mentioned it.
|
|
| | | 122 | biliruben
ID: 33258140
Mon, Mar 17, 2008, 13:12
|
Ah, panic.
It's almost time to start buying. Almost.
|
|
| | | 123 | Boxman
ID: 337352111
Mon, Mar 17, 2008, 13:20
|
The Bear Stearns thing probably has a lot of folks messing their drawers.
I finished adding to my XOM position for now that I mentioned a month ago, today. Got in at 84 even today. Now let the world get into some sort of conflict or the economy recover. ;)
|
|
| | | 124 | sarge33rd
ID: 76442923
Mon, Mar 17, 2008, 13:29
|
re 122...thats precisely what I'm thinking too. As virtually everything is still falling, and some of those that are climbing, I cant find so much as a favorable news article to account for the climb; I'd imagine a fair amount of "loss cutting" selling to be taking place. That happens, I expect to see stocks go down, where there is no rhyme/reason for the apparent devaluation of the company concerned. THAT, is I think, the time to start buying.
|
|
| | | 125 | nerveclinic
ID: 105222
Mon, Mar 17, 2008, 13:50
|
Ah, panic.
It's almost time to start buying. Almost.
Bili don't get greedy start buying we need your cash.
VIX hit 35.60, second highest reading this year. The highest was Jan 22nd the former market low.
Are you buying an index or do you have a list of individual stocks?
|
|
| | | 126 | sarge33rd
ID: 76442923
Mon, Mar 17, 2008, 14:05
|
Penny stocks are trash and it's not just stocks under $1. I'll arbitralily (yeah the spelling is screwed up) say any stock under $4 is trash.
WAMU is approaching that level. Now down on the day to $8.80, from a 52 wk high of $44.66.
|
|
| | | 127 | biliruben
ID: 33258140
Mon, Mar 17, 2008, 14:26
|
Avoid -
- Over the counter stocks. They aren't subject to the rigorous filing standards of stocks on the major exchanges.
- Stocks that have extremely low trading volume or have a large number of shares concentrated in with a few individuals. They are easily manipulated and vulnerable to pump and dump schemes.
- financial stocks. They're all insolvent. ;)
Seriously, Sarge. Buy what you know. In your case you should probably be focusing on car makers, dealers, parts makers, distributors, tire stores, and Halliburton.
Stocks are not a get rich quick scheme. If you are quickly looking to turn a 5K into 10K by buying 50 cent stock and having it go to a dollar, it will much more likely go to 10 cents.
Keep your goals modest and reasonable.
Can you buy high flyers? Sure. But make sure that's a small minority of your investments and assume that money will be gone. Either that or invest in 10 of them, and assume 8 of them will tank, and two will triple.
|
|
| | | 128 | nerveclinic
ID: 105222
Mon, Mar 17, 2008, 14:55
|
WAMU is approaching that level. Now down on the day to $8.80, from a 52 wk high of $44.66.
Clearly they are in trouble.
|
|
| | | 129 | nerveclinic
ID: 105222
Mon, Mar 17, 2008, 14:56
|
Lehman is down 40% today...looks like the are next.
|
|
| | | 130 | Building 7
ID: 471052128
Mon, Mar 17, 2008, 15:40
|
Where are the auditors in all this mess? They're worthless. Every one of these companies probably received an unqualified audit report less than a year ago. And now they're on the verge of bankruptcy. How can that happen? Let me guess...this mark-to-market nonsense. When there is no market for derivatives. Investors have to rely on the public auditors to certify that managements' fiancial statements are reliable. This is not happening. Tha auditors have been punked once again. My guess is they have a lucrative consulting contract on the side, in addition to their audit work for the company.
|
|
| | | 131 | nerveclinic
ID: 105222
Mon, Mar 17, 2008, 15:53
|
Really interesting day. And sitting in Dubai it's night so I have nothing better to do then watch it.
We KNEW the market would open with a panic...SP dropped 25 points...also felt like this should be a temp bottom with the horrific Bear Sterns news. Sure enough 15 minutes left in the day and the Dow is up 99 and SP only down 4 points.
I actually had the guts to buy today
Dolby (DLB) and Nokia (NOK) I only understand technology so that's the main thing I buy...I need to get out of that rut but I am still beating the market.
|
|
| | | 132 | Boxman
ID: 571114225
Mon, Mar 17, 2008, 19:38
|
WaMu is in deep do-do because I think they had hopes of being bought and JPM scooping up Bear Stearns lowers that probability.
Seriously, Sarge. Buy what you know. In your case you should probably be focusing on car makers, dealers, parts makers, distributors, tire stores, and Halliburton.
Don't forget Wal Mart. If Sarge buys Wal-Mart I'll laugh my ass off. :)
|
|
| | | 133 | sarge33rd
ID: 76442923
Tue, Mar 18, 2008, 07:49
|
If Sarge buys wally-world....nuclear devastation cant be far behind.
|
|
| | | 134 | Building 7
ID: 48033121
Tue, Mar 18, 2008, 08:29
|
If Sarge buys one share of Wal_Mart, he can go to the annual stockholders meeting and ask questions. I probably shouldn't give him any ideas, though.
|
|
| | | 135 | Boxman
ID: 337352111
Tue, Mar 18, 2008, 13:29
|
Oh Lord have mercy. Could you see Sarge at Wal Mart's annual stockholders meeting?
Hide the women and children.
Sarge, wouldn't it be worth owning one share just for that?
|
|
| | | 136 | sarge33rd
ID: 99331714
Tue, Mar 18, 2008, 13:54
|
Nope.
|
|
| | | 137 | nerveclinic
ID: 105222
Tue, Mar 18, 2008, 15:27
|
Bili did you pull the trigger yesterday?
|
|
| | | 138 | weykool
ID: 21532811
Tue, Mar 18, 2008, 15:42
|
No need to imagine...last summer, some British billionaire (Joe Lewis?) bought about $1 billion worth of shares at over $100/share. It's now worth about $20,000. Quite an investment
If he bought at $100 and it is now worth $2 that is 2%.
2% of a billion is 20 Million.
Still a loss of 980 million so point well taken.
|
|
| | | 139 | biliruben
ID: 33258140
Tue, Mar 18, 2008, 15:53
|
No. I arbitrarily set my sites on 1260 and I never saw it dip down that far. Also, I was just too busy to shop. I'm not too worried about it. It will get down there again. My CD matures in 20 days.
|
|
| | | 140 | nerveclinic
ID: 105222
Tue, Mar 18, 2008, 16:10
|
I'm not too worried about it. It will get down there again.
Fair enough.
Yesterday felt like an important day to me.
Bear Sterns being the worst possible news creating capitulation. The double bottom of the Jan true lows (Not closing lows) being breached. The markets all still stayed above their 2008 closing lows. Finally the VIX I mentioned yesterday hit it's 2nd highest reading of the year, another bullish signal.
That's why I bought a little more yesterday.
The fact the day after the Bear Sterns news we are closing with the SP up 4% after the FED cut 3/4 of a point even though everyone expected a full point is impressive.
Here's hoping you don't see 1260 but you certainly have been right on about market direction up to now...respect.
Nerve
|
|
| | | 141 | biliruben
ID: 33258140
Tue, Mar 18, 2008, 16:28
|
Well, I dunno. I could be wrong. I just think we still will see the other shoe drop. Fed only realistically has another point or so to cut, then they are out of ammo. If the banks still hesitate to lend going forward, we are back in the same situation.
It's just just still too hazy as to who is carrying the big risks and who is teetering on insolvency.
The fed is throwing huge amounts of cash out there, but they are already more than half-way through their reserves and their efforts so far have been pretty ineffectual. They can always just start the presses, I suppose.
I am frankly pretty ticked that they are throwing 100s and 100s of billions to rescue the deal-makers, players and principle perps in this mess to little effect other than bringing the risk onto the taxpayer, when the efforts to help homeowners have been modest, restrained and frankly misdirected and too small.
These dudes were being paid millions a year to take-on and understand risk. They frankly need a lesson in what happens when they do a crappy job. They go bankrupt. Stop f'in with market capitalism, or you'll continue to see mis-pricing of risk.
|
|
| | | 142 | nerveclinic
ID: 105222
Tue, Mar 18, 2008, 17:26
|
The fed is throwing huge amounts of cash out there, but they are already more than half-way through their reserves and their efforts so far have been pretty ineffectual. They can always just start the presses, I suppose.
Yeah well it's a mess and I don't envy the Fed's task.
I am frankly pretty ticked that they are throwing 100s and 100s of billions to rescue the deal-makers, players and principle perps in this mess to little effect other than bringing the risk onto the taxpayer,
Well they did just throw one of the largest brokerage firms in America under the bus. That was no bail out, it was basically half a click better then bankruptcy, and they appear to have only done it to protect people with stocks bought through Stern. The company was handed to the sharks.
when the efforts to help homeowners have been modest, restrained and frankly misdirected and too small.
I know there are two groups of homeowners here, the responsible ones and the fakes. Are you advocating bailing out people who lied about their income, or took ARM's they would never be able to pay? Should the tax payers just hand them the keys to their house courtesy of our wallets? If so how can I sign up for that plan? Or maybe that's not what you meant?
|
|
| | | 143 | biliruben
ID: 33258140
Tue, Mar 18, 2008, 17:44
|
Of course that's not what I meant. I would target those who were victims of fraud or who ran into trouble through job loss or health issues. I'd also throw 50-100 billion into a massive infrastructure program, rebuilding our crumbling and insufficient roads, highways, bridges and mass-transit systems.
From what I see around here, the folks who over-extended themselves the most were the contractors who were making 6 figures during the boom times, bought a house reflecting that salary, then the jobs dried up. Get these guys working on rebuilding our infrastructure, and keeping them from defaulting on their homes at the same time.
If forced to choose between IBs and the homeowner however, I'd certainly rather lend a hand to someone who foolishly bought the "home prices never decline - just refi in a couple years!" malarkey from their broker when taking out a crappy ARM to buy too much house over Wall Street sharks who know the risks and the score, or should, and are paid handsomely.
A nice house is seductive thing for a lot of people. And when you are trusting the "expert" in the situation, the broker and agent, to reassure you that you CAN really afford too much house, it's easy for the less informed and knowledgeable to be misled by smooth-talking salespeople who are generally wrongly thought to have the consumer's best interest at heart.
The Fed took 30 billion in Bear mortgage backed securities as collateral on their loan. Jeezus. That's a bailout in my book. If it's almost a bankruptcy, we should have let them go bankrupt without getting stuck with used toilet paper in the process.
|
|
| | | 144 | The Beezer
Dude
ID: 191202817
Tue, Mar 18, 2008, 18:27
|
Nice pop for the Dow today, and Lehman and Goldman numbers didn't look awful. Dollar has rallied back about 5% since the Yen since hitting a low, even with the rate cut. I'd love to think that maybe we're going to be OK, but then I look at that ARM reset chart and I just can't see us getting off that easily.
|
|
| | | 145 | nerveclinic
ID: 105222
Tue, Mar 18, 2008, 18:56
|
The Fed took 30 billion in Bear mortgage backed securities as collateral on their loan. Jeezus. That's a bailout in my book. If it's almost a bankruptcy, we should have let them go bankrupt without getting stuck with used toilet paper in the process.
First of all it's almost certainly not used toilet paper. The problem wasn't the value of the company and it's assets, the problem was they ran out of cash.
Given time, they more then likely easily had enough assets worth far more then $2 a share so your toilet paper premise is inaccurate. It's very possible JP Morgan (and the Fed and the American taxpayer) got a steal.
There's a lot of pissed Bear stock holders right now who think they were under paid for their "toilet paper".
Bear is gone. There was no bail out.
The keys were handed to JP Morgan. They were insolvent, the reason the Fed kept the $2 on the books was to protect the average American who bought their stock portfolios through Bear. JP and the Fed likely got a company worth far more then $2 a share.
If Bear goes completely bankrupt then anyone who bought stocks, bonds etc through their bank has all their money tied up until the loose ends get fixed. How would that affect a retired person, for example who had their 401K/IRA through Bear?
My God Bear was a "bail out " in your book? All the big wigs lost everything. All the stock holders lost everything. What is 2 bucks a share when the stock was at 160 less then a year ago?
The 2 bucks is symbolic to keep the brokerage division functional so people still have access to their solvent funds in unrelated stocks.
If the Fed let them completely fail you'd be complaining about the retirees who can't access their IRA's held by Bear.
Try telling someone who bought stock in Bear Friday at $30, let alone $160 this was a bail out.
The Fed opened the door on the plane and tossed Bear Sterns out.
Bear is history. Usually bail out doesn't mean your "history".
|
|
| | | 146 | biliruben
ID: 33258140
Tue, Mar 18, 2008, 19:25
|
I can think of a few ways to keep servicing all these FDIC insured accounts without taking on 30 billion in securities as collateral which, I would guess optimistically is worth 50 cents on the dollar. Morgan appears to have seamlessly taken over Bear's obligations. I don't know why that required the 30 billion gift loan to JP Morgan.
I don't claim to understand the intricacies of the deal, however. Why couldn't JP Morgan just buy them outright? Why did the deal hinge on the Fed getting stuck with paper of dubious worth, with no recourse to JP Morgan if they are, as I suspect, crap paper?
|
|
| | | 147 | PuNk42AE
Donor
ID: 036635522
Tue, Mar 18, 2008, 20:48
|
Did anyone get in on the Visa buy?
|
|
| | | 148 | Boxman
ID: 571114225
Tue, Mar 18, 2008, 20:50
|
Visa is tomorrow.
|
|
| | | 149 | PuNk42AE
Donor
ID: 036635522
Tue, Mar 18, 2008, 21:04
|
Oh, wasn't sure who all was able to get in before. Has that just been brokers?
|
|
| | | 150 | nerveclinic
ID: 105222
Wed, Mar 19, 2008, 00:52
|
I can think of a few ways to keep servicing all these FDIC insured accounts without taking on 30 billion in securities as collateral which
Well you should have called Bernake and advised him then, there have been plenty of cases in the past when servicing FDIC accounts hasn't gone on when a company goes under, it can take months or even years for people to get to their money. It could have further clogged the securities system by locking these investments up until they could be straightened out.
I don't know why that required the 30 billion gift loan to JP Morgan.
My understanding is the 30 Billion was incentive to get JP Morgan to take the deal. They didn't "give" it to them, it's basically just a guarantee against any big problems that might come up as they unwind Bear.
My understanding is it's very likely the money won't be used. Without the guarantee JP might have just said "good luck" and then you would have an nonoperational bankrupt Bear...not so seamless.
I don't understand a lot about the deal yet either but I heard a number of economists explain it briefly and this is the explanation I've heard.
A bailout is what they did to Chrysler where they literally lent them the money to remain operational, like wise the NY City bailout. In the end by the way the Federal government made a lot of money on the Chrysler loan. Bear Sterns wasn't saved. The name might stay on the building, but it's JP Morgan now.
There are economists suggesting the taxpayer may actually come out ahead on all the mortgage backed securities the Fed is taking over. It's not that they are worthless, they just aren't liquid until this thing unwinds. The Fed and the tax payer will own the mortgages and the property that backs them.
|
|
| | | 151 | nerveclinic
ID: 105222
Wed, Mar 19, 2008, 04:15
|
Oh, wasn't sure who all was able to get in before. Has that just been brokers?
Fidelity sent me an email offering to let me get in on the IPO at 44.00 a share. I didn't even bother checking into it because I am sure the minimums would have been far to rich for my blood.
|
|
| | | 152 | Boldwin
ID: 3013265
Wed, Mar 19, 2008, 04:56
|
I'd rather see our government holding the defaulted property than 'foreign sovereign interests' [read saudi] buying america up on the cheap. Not sure if that is how it works but prolly.
|
|
| | | 153 | Boldwin
ID: 3013265
Wed, Mar 19, 2008, 05:00
|
Honest, I posted that before I just found this.
|
|
| | | 154 | nerveclinic
ID: 105222
Wed, Mar 19, 2008, 07:30
|
Baldwin post 152
The Abu Dhabi group saved Citi's ass with their infusion of cash.
What are you scared of? What exactly is it you think they will do? Give me a concrete, real world example?
Yeah if it gets out of hand, and the capital ownership becomes huge it could be an issue but these are small percentages of ownership.
The USA invests in foreign companies. Is this another example of it's OK for the USA but not other countries?
Please don't put Abu Dhabi and Dubai in the same sentence as Saudi. It's like night and day. This is where the Saudi's are coming to party.
The fact is we've dug this hole our selves with obscene debt and we need the capital. It's sad but reality. We should be grateful they are willing to help bail us out. They may not be interested since they lost so much on Citi Bank.
Is WND the best source you can find for your concerns?
Honestly Baldwin you would love it here.
1) Abortion is illegal.
2) No kissing in public.
3) Homosexuality is well hidden
Theocracy in action.
This would be paradise for you.
|
|
| | | 155 | nerveclinic
ID: 105222
Wed, Mar 19, 2008, 08:13
|
Baldwin I read the entire WND article and I still can't figure out what exactly it is they are concerned these foreign investment firms will do. There's no concrete examples given.
Everyone was worried about Japan investing in the USA in the late 80's.
|
|
| | | 156 | Perm Dude
ID: 9211197
Wed, Mar 19, 2008, 10:08
|
Jim Cramer misses one.
Hope "Peter" didn't take his advice. Silly man.
|
|
| | | 157 | sarge33rd
ID: 99331714
Wed, Mar 19, 2008, 10:12
|
nice find PD. Have to wonder in fairness though, how often has he been spot-on? (I honestly dont know, so I'm not asking to be the devils advocate.)
|
|
| | | 158 | Mac Daddy
ID: 31242198
Wed, Mar 19, 2008, 10:47
|
Heard his show last night. He was spot on, according to him. The question was asked if the e-mailer should pull his deposits with Bear, not if it was OK to be invested in Bear stock.
|
|
| | | 159 | Perm Dude
ID: 9211197
Wed, Mar 19, 2008, 10:53
|
Interesting. That distinction, however, isn't clear in the original. Peter merely asks if "he should get my money out of there" which could mean stocks or could mean deposits. Interesting that Cramer himself didn't make that distinction either, so one could say that either he was being intentionally vague or that he advocated people keeping both stocks & deposits in bith Bear.
|
|
| | | 160 | Myboyjack
ID: 44249198
Wed, Mar 19, 2008, 10:55
|
You missed the nuance, PD.
|
|
| | | 161 | Perm Dude
ID: 9211197
Wed, Mar 19, 2008, 10:56
|
Nuance in the video? I must have.
|
|
| | | 162 | PuNk42AE
Donor
ID: 036635522
Wed, Mar 19, 2008, 11:38
|
They showed Cramer on G4's AOTS as the Epic Fail.
|
|
| | | 163 | The Beezer
Dude
ID: 191202817
Wed, Mar 19, 2008, 23:59
|
Prediction:
The next two FOMC meetings are on April 29-30 and June 24-25. By the end of the day June 25, we will be below a 1% Fed Funds Rate.
Discuss.
|
|
| | | 164 | nerveclinic
ID: 105222
Thu, Mar 20, 2008, 01:10
|
The next two FOMC meetings are on April 29-30 and June 24-25. By the end of the day June 25, we will be below a 1% Fed Funds Rate.
Hard to guess now since they will use the data that comes out in between, They signaled more concern about inflation at the last meeting which is why commodities are falling.
Price of gold was down 59.00 yesterday which implies the gold market doesn't think they will cut that much as well as the strengthening of the dollar also implying the cuts will slow down.
That having been said, it all depends on the inflation, employment and growth data and health of the banks between now and then so it's hard to know this early.
|
|
| | | 165 | The Beezer
Dude
ID: 191202817
Fri, Mar 21, 2008, 00:21
|
Agreed, nerve. The move down in gold the past two days has been enormous. The wild gyrations all over the map are just nuts. Any day traders that have stuck it out this long have some real opportunity with all the volatility.
|
|
| | | 166 | Boxman
ID: 571114225
Sun, Mar 23, 2008, 19:37
|
Widdle: How do you research a company ? What exactly are you looking for to see if a stock is a good value or overpriced ?
Well if you're looking to add a new company to your portfolio versus adding to an existing position there are slightly different roads to take. Holding period also comes into play.
To see if a stock is a good value or overpriced you've really got to do your homework.
Look at other companies in its sector. How does the stock grow and decline compared to the sector? Is it more volatile? If so, are you compensated for that in terms of higher returns or higher dividends?
Look at the PE ratio for companies in the sector. Is the one you're reviewing higher or lower? Why is that so?
To determine if a stock is a value play or overpriced I don't think it's fair to compare it to the market, I think a sector comparison is a fairer measure.
[Boxman proofreading: For whatever reason I got on the below tangent. I was going to delete because I have no idea what it has to do with your question, but I decided to leave it in here and just put up a disclaimer.] :)
If you're going to add a new company, then you've really got to learn the sector they're in, what drives it up and down. Look at the beta of the stock. You can find this at Yahoo! Finance. Even better, calculate your own relative to the DOW or S&P. I use the DOW. That isn't a slap at the S&P. I just use the DOW. If you use the S&P, I'm sure you'll be fine.
So then let's say the stock has a beta relative to the DOW of 1.25. That means for every dollar the DOW goes up, the stock goes up 1.25. Conversely, every dollar the DOW goes down the stock goes down 1.25. Yes, it's possible to have a negative beta where your stock goes down in an up market and up in a down market.
If you foresee a market upturn or downturn, forecast your purchase accordingly as it relates to the beta and other more qualitative factors like analyst opinion, earnings calls, etc.
Now, if you're adding to an existing position, life got a lot easier. You should already know what I've mentioned above and then you can figure out the cyclical movement of the stock and time your buying and selling accordingly. It isn't perfect, but it works.
|
|
| | | 167 | biliruben
ID: 32237209
Tue, Mar 25, 2008, 10:03
|
Now Wells Fargo is like, "dude! "
"If you are bailing out companies on the taxpayer dime and then
giving the companies away, we are like, so in!
Toss us National City, baby."
When you consider that the shattered remnants of welfare is less
than half the cost of this bailout, any conservative with any
actual philosophical objection to entitlements should be
shouting to the skies about how disgusting this is.
We should have just nationalized Bear.
Need More Chavez!
|
|
| | | 168 | nerveclinic
ID: 105222
Tue, Mar 25, 2008, 13:26
|
"If you are bailing out companies on the taxpayer dime and then giving the companies away, we are like, so in!
Are you still making the case that Bear was "bailed out"?
If so I think you should read a bit more about the terms. I've read a dozen "financial" articles and comments by economist and none of them call it a bail out...just a few screaming headlines did.
It's only on the taxpayers dime if the paper is worthless...they are mortgage backed securities, the taxpayers own the houses at worst.
We could actually make money on the deal.
You honestly like Chavez? Or was that a joke?
|
|
| | | 169 | biliruben
ID: 51232515
Tue, Mar 25, 2008, 17:12
|
If we could make money on the deal, then a company, not the
Fed would have bought them.
50 cents on the dollar at best on that trash.
Nearly every non-shill economist I have read has said it's a bail-
out in every sense except the simple technicality regarding the
Fed's status as a private company.
Bear was insolvent. They had more liabilities than assets.
They're shareholders shouldn't even be getting one red cent.
The only reason they are is because the benevolent Fed is giving
it to them. And that's just a small bit of what we are on the
hook for. Who ever said this isn't a bailout doesn't have a clue.
There are certainly many things about Chavez I don't like, but
engaging in corporate welfare is not one of them. At least he
make some attempt to help the needy, not some investors who
made poor decisions.
|
|
| | | 170 | Building 7
ID: 22271821
Tue, Mar 25, 2008, 20:24
|
If Bear Sterns were allowed to go bankrupt, a value would have to placed on their derivatives. And the counter party would then have a value on their worthless derivatives. Ditto with Countrywide and E-Trade. This could cause the whole financial system to spazz out. Now that JP Morgan bought them it can be deferred.
|
|
| | | 171 | biliruben
ID: 51232515
Tue, Mar 25, 2008, 21:16
|
Tell it to Japan. Let's find out who's swimming naked sooner rather
than later to we can get on with recovery.
|
|
| | | 172 | nerveclinic
ID: 105222
Wed, Mar 26, 2008, 12:32
|
Bili They had more liabilities than assets. They're shareholders shouldn't even be getting one red cent.
Bili that just isn't a factually accurate statement. They were insolvent, meaning they didn't have the cash to cover immediate debt that was due, but that doesn't mean their liabilities are more then their assets.
Why do you think JP is offering to go from $2 to $10 per share now if the company has no assests. Sheez
Shareholders are pissed about this not happy, they are concerned they are getting ripped off.
The extent that the Fed "bailed them out" was to keep the company running, so people had access to their stocks, and money markets. Had they let the whole thing crash speculation is it would have been a domino effect and we would have had that golden run on the banks you love to talk about.
A true bail out and the company would have been saved...(Chrysler)
If we could make money on the deal, then a company, not the
Fed would have bought them.
Ahhh Bili, check it out. The week before the CEO of Bear said everything was fine, (liar) on Friday it was $30.00 per share, over the weekend debts were called in they couldn't meet so they were insolvent. Who was going to buy a company as big as Bear, under that scenario, that fast, like by stock market open Monday?
No one really knows what will happen with these assets. The Fed just created a relationship with Blackrock to start to filter through the mortgages to see what they got. No one has a clue right now, it was an emergency.
I'm not talking about if it was right or wrong, good or bad for the tax payer. I'm just saying that to characterize it as a true bailout of Bear Sterns is wrong. They are busted.
At least he (Chavez)makes some attempt to help the needy, not some investors who made poor decisions.
160 to 2 dollars is helping an investor who made a bad decision? Dude those investors were thrown out with the trash. The car door was opened and they were kicked to the pavement, they are bloody, and broken and beaten. Do you have any sense of reality this week?
For God sakes Bili, are you saying if you bought the shares for $30 Friday and Monday morning you were told that the Fed was saving your a$$ giving you $2.00 per share you would feel "bailed out". Geez dude what are you tripping on? Or are you letting your political agenda get in the way of reality?
Tell it to Japan.
The difference is, Japan really would have bailed out Bear, in the true sense of the word.
|
|
| | | 173 | biliruben
ID: 33258140
Wed, Mar 26, 2008, 12:46
|
I don't know if it's a "political agenda" I just get angry when a government that won't even pony up to pay for healthcare for poor toddlers is eager to toss 30 billion of good money after bad in order to save an out of control banking system who members desperately need to learn a lesson: if they fcuk up, they could lose it all.
Right now anyone who thinks they might be considered a domino is free to take outrageous risks and expect uncle Sammy to come to the rescue.
Burn it down if that's the system we have, because it's a corruption of true capitalism and deserves to be destroyed. Capitalism is bad enough when it's working properly. It's destructive as well as evil when it's not.
You can call it anything you want, but absent kindly uncle Sammy, all Bear stockholders would be getting $0 and zero cents per share. Bailout in any sense of the word that means anything.
Bond-holders were buying on Friday, knowing they were going to get less than their full buck back. They get paid before stock-holders. A+B= stock shares were worthless.
|
|
| | | 174 | nerveclinic
ID: 105222
Wed, Mar 26, 2008, 14:34
|
I just get angry when a government that won't even pony up to pay for healthcare for poor toddlers is eager to toss 30 billion of good money after bad in order to save an out of control banking system who members desperately need to learn a lesson:
Look I'm not arguing with you on that point. I'm not worried about the bankers, I'm worried about the country. Letting Bear Sterns go completely bankrupt and the further domino effects could have hurt everyone, it could have sent the economy further down the drain.
Consequences become many lost jobs, more poverty, more people without health care coverage...it's like you don't look at that angle.
That's the angle I am worried about, not the bankers. I don't shed a tear for the people who brought this on, it's the collateral damage.
|
|
| | | 175 | biliruben
ID: 33258140
Wed, Mar 26, 2008, 14:52
|
I do consider that angle. As much as I come off as an alarmist sometimes, I actually think our global financial infrastructure is quite robust.
I don't think if bear went down there would be significant dominoes. I think in might take out a few more banks, hedge funds and shadow structures and cause some hardship among those using Bear as an investment bank, but on balance the economy would be largely untouched. Untouched, meaning we would still be going into a recession, but I don't think it would be any nastier than the one we would go in if the government just watched Bear burn. It would be messy but not catastrophic.
The plus side would be that it would force us to price the nuclear waste securities that Bear couldn't offload, and help us mark other assets on other people's books. Sure, this could send someone like Lehman down the tubes, but it would also be a cleansing procedure that would begin to rebuild trust and transparency and help our economy recover more quickly.
I prefer a shorter and slightly deeper recession. As I see it, we could be in for a long, drawn-out down turn. That would also suck. I prefer the sucking that doesn't come with us making sure billionaires don't become hundred millionaires, by softening the impact of IB bankruptcies.
I'm sure there are some grannies that could be trotted out that can't access their retirement account for a month or two while we straighten out the mess. Spend that 30 billion compensating them.
|
|
| | | 176 | nerveclinic
ID: 105222
Wed, Mar 26, 2008, 15:38
|
Bili
What is your comment on the fact the offer was raised from $2 to $10 if bear was really worthless? Just JP being charitable?
|
|
| | | 177 | nerveclinic
ID: 105222
Wed, Mar 26, 2008, 15:54
|
Bear Stearns Memorabilia. A T-shirt "bearing" the Bear Stearns logo sold for $151.76 on eBay, as memorabilia from the investment bank have become hot items since its demise last week.
Wait they were bailed out, how could there be a "demise"?
Several more Bear items are currently up for sale on the auction site, including umbrellas, tote bags, golf balls, and even a plastic "bear" toy.
|
|
| | | 178 | biliruben
ID: 33258140
Wed, Mar 26, 2008, 17:44
|
Well, now that there is 30 billion in tax-payer money taking the majority of the risk, Bear is suddenly worth something.
JP Morgan needs to get shareholder approval. Their risking the first billion by upping the price is still a bargain now that the tax-payer is willing to back the majority of the nuclear waste.
When you take away a large amount Bear's liability and place it in the taxpayer's lap, the remainder of Bear is probably worth quite a bit. A billion's probably a bargain.
Wells Fargo is hoping for a similar deal for bankrupt Nat. City.
Such a deal! Buy viable company with the taxpayer taking on the risk for you!
I wish I had a billion. I'd do it too.
|
|
| | | 179 | biliruben
ID: 33258140
Wed, Mar 26, 2008, 17:45
|
The stockholders were bailed out, not the company.
JP Morgan was just handed a gift. They weren't bailed out.
|
|
| | | 180 | Building 7
ID: 22271821
Wed, Mar 26, 2008, 22:43
|
What is your comment on the fact the offer was raised from $2 to $10 if bear was really worthless?
If I may interject here. I read where their building on prime NYC real estate was worh more than $2 a share. Probably $10. And the shareholders were not happy at that. There will be lawsuits. One dude lost a billion dollars.
You two are just arguing semantics. Bailout, demise, bankruptcy.....whatever, nobody's happy about it. It's academic. I love when I get a chance to use that word. Not only that it's a moot point. Another favorite. Frankly, anybody who would name a Wall street firm Bear anything deserves to go out of business. Even if it took 80 years.
|
|
| | | 181 | nerveclinic
ID: 105222
Thu, Mar 27, 2008, 14:40
|
B7 You two are just arguing semantics. Bailout, demise, bankruptcy.....whatever, nobody's happy about it. It's academic.
Yeah I know that. Bili and I love to debate and while we sometimes take contrasting positions, the further the debate goes semantics often comes out the winner. It's something I've noticed on a number of occasions...what to do?
|
|
| | | 182 | sarge33rd
ID: 99331714
Thu, Mar 27, 2008, 14:47
|
get a new Thesaurus?
|
|
| | | 183 | biliruben
ID: 33258140
Thu, Mar 27, 2008, 14:53
|
B7- In any rational world, the taxpayer just bought that 2 billion dollar building. Hands off, JP.
The proper thing to do would be to use it to house victims of foreclosure that was the result of fraud, or personal catastrophe.
Yeah, you are right. Semantics. Bah. The important thing is that taxpayer monies were used, and it is very unlikely it will be the last time, before this mess is all over. As long as we all recognize that, it doesn't matter what we call it. I call it shitty, you call it pragmatic.
|
|
| | | 184 | Boldwin
ID: 332562616
Thu, Mar 27, 2008, 17:11
|
How was JP Morgan handed a gift? They have to pay 5X the price before the government got involved.
|
|
| | | 185 | Boldwin
ID: 332562616
Thu, Mar 27, 2008, 17:17
|
ARMs were by no means the only shakey financial instruments just waiting to break the system when put under strain. If the government can gradually let the air outta this balloon without a loud popping sound I am all for it. That would be bailing us all out.
|
|
| | | 186 | biliruben
ID: 33258140
Thu, Mar 27, 2008, 17:37
|
No. That's not how I understand it.
The $2 price tag was negotiated with the Fed at the table, already pushing their 30 billion onto the table, and Bear twisting in the wind with certain bankruptcy as soon as the Asian markets opened on Monday. The $10 raise was just to get the shareholders to go along.
I very much doubt JP would have seen worth that was worth the risk to bid even 2 cents on Bear, until the Fed said, "no sweat, you take the company we'll pawn off the risk onto the taxpayer."
I don't agree with your balloon analogy.
I would say it's more like water pouring over a ever-increasing holes in a damn. There are a number of dead bodies with cement overshoes that have been tossed in the lake on the other side of the damn over the last number of years. The Fed is desperately trying to staunch the flow of water and keep the number and names of the bodies concealed by throwing innocent American bodies into the ever widening holes. We can't begin to rebuild the damn until the pressure is relieved, the bodies exposed and the murderers found and prosecuted.
I agree this certainly isn't about ARMs anymore.
|
|
| | | 187 | Building 7
ID: 22271821
Thu, Mar 27, 2008, 20:00
|
The important thing is that taxpayer monies were used, and it is very unlikely it will be the last time, before this mess is all over. As long as we all recognize that, it doesn't matter what we call it. I call it shitty, you call it pragmatic.
I'm in favor of eliminating the Federal Reserve and voted for the only candidate who would do that.
|
|
| | | 188 | nerveclinic
ID: 105222
Thu, Mar 27, 2008, 20:20
|
b7 I'm in favor of eliminating the Federal Reserve and voted for the only candidate who would do that.
so what would replace it B7...gold standard?
do you know what would have to happen to make that a reality?
|
|
| | | 189 | Building 7
ID: 22271821
Thu, Mar 27, 2008, 23:12
|
so what would replace it B7...gold standard?
At the minimum a currency backed substantially by gold and silver. The country somehow managed to survive from 1776 to 1913 under the gold standard with little inflation.
do you know what would have to happen to make that a reality?
Yes. Congress would have to repeal the Federal Reserve Act of 1913. Or the Supreme Court would have to rule the Federal Reserve Act of 1913 as unconstitutional, which it is.
|
|
| | | 190 | nerveclinic
ID: 105222
Mon, Apr 07, 2008, 13:46
|
Yes. Congress would have to repeal the Federal Reserve Act of 1913. Or the Supreme Court would have to rule the Federal Reserve Act of 1913 as unconstitutional, which it is.
In the short term, spending would have to match up with the amount of gold reserves, correct?
There's a 7 Trillion dollar US float, know gold reserves in the entire world at $1,000 an ounce is much smaller then this. IN THE WORLD.
So we can't go back to a gold standard "overnight", just by repealing some bill.
I'm doing this off the top of my head and I don't know how close I am to the truth but...
How deep of a depression would we go into getting there overnight?
Now parts of this I like.
All troops would have to come home, incl Korea and Germany and of course Iraq.
No deficit spending whatsoever no matter how bad the economy gets.
Dramatic increase in taxes to immediately pay down the difference between the budget surplus and actual holding in gold. B7 are you for 50% 60% 70% tax rates to get there?
These increases in taxes would trigger an economic slowdown, massive loss of jobs.
Huge cuts in social programs, incl Social Security and Medicare. Just tell grandma and grandpa they have to get by in the streets?
It's funny, I hear economist after economist questioned about this...it comes up from time to time on the Bloomberg podcasts, and I haven't heard one yet say it's a good idea.
It's not as simple as saying "repeal the act" and there are no consequences.
Maybe I exaggerate some of the points, I am guessing, but it won't come without EXTREME consequences.
You make it sound so easy.
Why don't we start by demanding Congress and Bush stop this excessive surplus sending. That would be a great short term move in the right direction (We were headed there during the 90's)
Here we go again, talking about this in the stock market thread when we started a seperate thread to discuss this issue.
|
|
| | | 191 | nerveclinic
ID: 105222
Mon, Apr 07, 2008, 13:48
|
Here we go again, talking about this in the stock market thread when we started a seperate thread to discuss this issue.
No wonder. I'm the dumbass who opened the first stock market thread because I was looking for an old post.
Sorry B7
Let's let this thread die.
|
|
| | | 192 | nerveclinic
ID: 105222
Mon, Apr 07, 2008, 13:51
|
Wrong again this is the newest thread...sheez and I haven't even started drinking yet tonight.
|
|
| | | 193 | nerveclinic
ID: 105222
Wed, May 07, 2008, 07:36
|
Boxman:
drop me an email when you get a chance I want to discuss something with you off board and I don't know how to reach you.
Nerve
|
|
|
|