OK, I’m back. Too bad my stocks aren’t! One of Mary Caraccioli’s guests last night on Money Matters Today sees nothing but “doom and gloom” for the financials for the foreseeable future. Based on the sector’s performance so far this week, I’d have to agree! But he did also mention that “unless you’re a bottom feeder and are willing to wait two to five years for these things to come back…” I tuned him out there. I’m a bottom feeder! I know this and I have time to wait. Last week no doubt made it feel like the wait would be shorter, but it will be a long haul. In fact, I hope it will be. If these stocks stay unhappy through my paydays, I’ll be able to stock up, no pun intended, on cheap shares.
At the opening bell, the financials in my portfolio were split: half liked the day, half didn’t. This week was filled with gloomy news about the general economy and housing market; there wasn’t any solid negative news about any of the individual financials, save FRE and FNM, that would cause the nosedivers to do so. Radian Group (RDN), which soared last week, closed 16% below opening on no news at all. The bottom dropped out of Thornburg Mortgage (TMA), which needs 66.6% of its preferred shareholders to agree to exchange their shares for common ones, after it announced a deadline extension on the offer. TMA saw green again about an hour later, either because people realized they freaked for no reason or because buy limit orders kicked in, but a deadline extension causing a stock to drop trou? People are definitely jumpy.
Both FRE and FNM are being pressed to somehow raise their own capital, which is seemingly impossible and surely scary, and with both being a sort of dipstick for the market, it makes sense they’re pulling other stocks into their vortex. I’ve lost almost 60% of the value of my Freddie (FRE) stock, and luckily only bought 50 shares. But I’m not scared, I have time on my side.
The Dow hasn’t been particularly happy this week either. But the NASDAQ’s tech stocks, like Best Buy (BBY) and Hewlett Packard (HPQ) have been seeing a lot of daylight lately. Verifone (PAY), which is the company that makes all those electronic card swipers at supermarkets and wherenot, opened up over 25% today after last night’s outlook announcement beat Wall Street’s prediction, and closed the day up 31%. Techs seem the place to be right now if short to mid-term gains are being sought. I’m just not sure how to get in or what the best stocks are- I’m no techie. General Motors (GM) announced that it will be bringing its electric car, the Volt, to Europe as a “Vauxhall” or “Opal”, but I hope they get the battery situation figured out beforehand. Batteries are a huge deal; the ultimate battery has yet to be developed. People are getting burned by the Apple nano first generation’s battery. Stock in Duracel, maybe? Samsung? Maybe even GM?
A while ago, I read somewhere that the small-caps consistently do well in down markets. From my experience, kids, especially ones in college trying to make a few bucks, are the ones drawn to the cheaper small-caps. But I’m not going back. Still, there are a few I keep my eye on just to see what’s happening. The Russell 2000, which is a conglomerate of small-caps, has climbed 13% since July 15, reported the Wall Street Journal on Monday. I picked up a copy of the WSJ at a Whole Foods in Greenwich, Connecticut, which was by far the crappiest Whole Foods either me or my friend (and her vegan self took a car trip across the US hitting every Whole Foods from here to California and back) have ever been in. The parking lot was dirt (literally dirt, like a campground), the selection was garbage, and the rich people were toxic. I couldn’t get out of their ways fast enough before they basically pushed me over, just for the sake of staking their claims in front of the sushi selection or on the left side of isle 9. And two of them held up two different check out lines arguing prices. To be optimistic about it all, maybe they were like that because their Whole Foods was so shitty or because in their minds “people are always trying to get money out of rich people”. In whatever case, the place sucked big time.
OK enough bashing, back to stocks. But speaking of Whole Foods (WFMI), I’m waiting for their stock to bottom out. With a 52-week high of $53 and a current trade of under $20, its definitely one I have my eye on after the financials come back. OK, now back to stocks for real.
There is a bunch of bad news circulating, throwing a stick in the market’s wheel. Bloomberg reported this morning that mortgage applications are down to their lowest levels since December 2000, but later that figure was changed to just 8 years ago by the Phoenix Business Journal, who reported that the construction of new homes is what’s at its lowest since 1990. Who knows what’s what with the stats, but regardless, lending standards are definitely becoming increasingly stricter, and foreclosed homes are not moving. As an early 30-somethinger and hearing the complaints of my hard-working college-educated friends whose annual salaries seem to cap at $40K, I know that there is a huge discrepancy between the paychecks of the home-buying generation, housing worth, and housing prices. Housing prices have to come down to make the market turn up for good. Or, salaries need to increase. The 80-something man who lives across the street from me bought his house for $5,600 in 1956. It’s now worth over a million. He and I have conversations about how things have changed over the years, and he feels bad for my generation because of how expensive everything has become. My generation just can’t afford to buy, and since we are the generation that historically has been the home buyers, something has got to give-either companies have to increase salaries or housing prices have to become proportionate to salaries- before things start moving.
The Dow was all over the place today: up, down, up down, until the confusion finally ended at 4PM with the Dow closing up 68 points to $11,417. Reports that oil inventories magically grew overnight caused the cost of crude to plummet then rebound then continue the slide down, then rebound again to close the day up 45 cents to $114.98.
MasterCard (MA) reported today that demand for gasoline has dropped for 17 weeks in a row, and CNNMoney.com reported that gasoline prices have dropped for 34 consecutive days.
I know the financials have been crashing, and unless it’s the 2000iu of feel good vitamin D I’ve been taking every day, I’m happy about the crash. I want to buy more shares cheap but have to wait to get paid. In the meantime, I’m thinking of going to Borders to finally get a book on options trading so I can take advantage of these downturns. Might as well learn one more skill before work and school start back up and it’s go go go until next summer.
A story I wrote is being published in Chicken Soup for the Soul: Teens Talk Middle School, due out in November. What now, agents? Can I get some love?
