“Never count your chickens before they’ve hatched” goes the saying, but I didn’t follow this advice. This morning during the premarket, I busted out my calculator to crunch just how much I was set to make based on the premarket numbers, and it was a lot. So you can imagine my surprise when I signed back into Etrade at 11AM to see most of my stocks in the red and Freddie trading at $1 (which actually was better than I expected). Indeed, the financials all opened up big- real big- and I’m sure today’s blip will be seen for years to come. But then things happened. I’m still not sure exactly what, but maybe it was a composite of a bunch of things:
Washington Mutual (WM) gave their CEO Kerry Killinger the boot, instated veteran Alan Fishman, and was told by the Office of Thrift Supervision to provide “an updated, multi-year business plan and forecast for its earnings, asset quality, capital and business segment performance” (SmartMoney.com). Sure sounds like micromanagement to me. WM closed the day down 5.62% after being down 20% during some of the session.
Syncora’s (SCA) rating was withdrawn by Fitch Ratings, who had just in August changed SCA’s rating from “evolving” to “positive”. Who are these Fitch Ratings people anyway, and why does their word mean so much? SCA closed the day down 4% after being down by double digit percentages various times during today’s session.
Radian Group (RDN) opened the day at $5.50, which was up from Friday’s close of $4.79, steadily fell throughout the day like its siblings, then fell off in the last few minutes of trading to close the day down 17%. Google message boarders think someone knows something, although no news has yet hit.
Silver State Bancorp (SSBX), driven into the ground by John McCain’s son Andrew McCain, failed on Friday, making US bank casualty number eleven. I held just 125 shares of them, worth just over $100, so the hit wasn’t so hard. But that with Freddie had me reeling. I contemplated selling WM and SCA, or buying more WM, or buying Deerfield Capital (DFR), or not buying them, or waiting it out, or putting a 60-day limit order in, but in the end I did nothing. I sold SSBX at market for a gain less than the commission and held on to FRE. I decided that once the smoke clears, which stock is which and where each is going will become much clearer. But I sure do wish those pre- and early-market numbers held! And most of all, I hope today isn’t a sign that the US banking industry is going the way of Wal-Mart (who coincidentally closed the day up 2%), and headed to put all the little guys out of business. One analyst, Steve Stelmach of Friedman, Billings, Ramsey & Co. said that “mortgage insurance could become an obsolete form of credit enhancement” in the long-term because of the bailout. He was loosely referring to the drop in RDN’s share price and how the company, and ones like it, could be phased out.
The Dow ironically traced a smiley face, opening way up, dipping a bit, then closing the day up 289 to $11,510. Because of Hurricane Ike barreling towards the Gulf of Mexico, oil closed the day up as well, but just by 11 cents to $106.34. The dollar is at its highest value in nearly a year! It would now take just $1.41 to get one euro. Including the hit from SSBX, I closed the day down $323, $211 of which was from FRE.
You win some, you lose some; I just wish I had won today. The market rallied and I was left in its dust. With any luck, much of today’s activity in the financial sector was just profit-taking and the days to come will reveal the real reaction to this past weekend’s news. Next time I won’t count my chickens before they’ve hatched and started laying eggs of their own!
