Posts tagged RDN
October 14, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged BAC, Bank of America, Bank of New York, BK, C, Citigroup, Goldman Sachs, GS, JP Morgan Chase, JPM, MER, Merrill Lynch, Morgan Stanley, MS, National City, ncc, Radian Group, RDN, State Street Corp, STT, Wells Fargo, WFC
Bank of America (BAC), Merrill Lynch (MER), Morgan Stanley (MS), JP Morgan Chase (JPM), Bank of New York (BK), State Street Corp (STT), Wells Fargo (WFC), Goldman Sachs (GS), and Citigroup (C) will be the first nine banks to be capitalized by the US government, and will be followed by the funding of “thousands” of smaller banks once these top nine start lending.
Today was another good day for the financial sector, despite the Dow dropping 76 points of yesterday’s profits and most sectors slipping back into the red. MER pulled back into the green for me today, bringing the tally to 4 greens and 12 reds. So things are slowly coming back. National City (NCC) and Regions Financial (RF) respectfully made 34% and 28% gains today, so I’m guessing they’ll be the next to return from the dark side.
The Dow closed at $9,311, showing that investors gave back just a fraction of the almost $1 trillion made [back] yesterday on Wall Street. Crude oil closed down 2.56 dollars at 78.63.
October 13, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged ABK, ambac, dow closed, Henry Paulson, interbank lending, MBI, MBIA, Mitsubishi, Moody's, Morgan Stanley, MS, Radian Group, RDN, SCA, stimulus package, stocks, Syncora, wall street
Forget Prozac, the market needs lithium. After last week’s worst week, today marked the best day in Wall Street’s history and the biggest one-day percentage gain since 1933. Stocks rallied all across the board. The Dow closed up 936 points, or over 11%, to $9,387, and the Nasdaq and S&P also gained over 11% each. Morgan Stanley (MS) traded like an OTC today, gaining 86% from its close of $9.68 on Friday after Japan’s Mitsubishi UFJ Financial Group invested in it $9 billion. Will it stick? Maybe. Countries all across the globe are now jointly focused on fixing their banks to stave off a worldwide recession, so if this doesn’t work, what will?
By the way, sometime over the weekend the plan changed from “buying toxic mortgage-backed assets” to “let’s follow Great Brittan because they seem to know how to deal with this crisis, so let’s pump money into a few good banks like they’re doing over there across the pond”. So that’s what we’re doing. And the figure is now $250 billion instead of $700 or $850 or whatever it ended up being once al the rum and wooden arrow makers across the nation were settled up.
The credit markets were closed today because of the holiday, but they open back up tomorrow. Analysts are now looking to see if the interbank lending rates, or the rates banks charge each other to borrow each other’s money (think what needed to happen but didn’t when people ran IndyMac) will come down so that banks will again lend to each other. Until banks again start covering each other, no one who missed one electric bill will be able to get a loan.
The only stocks I’m ahead in right now are Radian Group (RDN), MBIA (MBI), and Syncora (SCA); the rest are one big hemorrhage. Moody’s still hasn’t lifted their threat of downgrade of Ambac (ABK). But to stay positive after such a positive day, at least I’ll be able to average down. And average down I definitely will!
Word that a second stimulus package may be on its way may have also helped boost the markets today. Crude oil followed the rest of the market today, closing up $4.14 to $81.84.
The #1 movie in America is Beverly Hills Chihuahua.
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September 18, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged AIG, American International Group, bailout, banks, dow, economy, financials, first marblehead, FMB, naked short selling, rally, RDN, uptick rule, WaMu, Washington Mutual, WM
Since it had become a matter of market confidence, or really a lack thereof, confidence was bolstered today with the Fed’s announcement it would pump $180 billion into the world’s banking system and the implementation of the naked short ban. I read the news of the naked short selling ban wrong; I thought the ban went into place yesterday. So when yesterday’s market was a total sinker, I figured it was too late for the ban to do anything and that my experiment would soon go bust. I was very wrong. The ban actually went into effect TODAY, not yesterday, and it had a definite effect:
Centerline Holding (CHC): Up 3% to $1.72
Syncora Holdings (SCA): Up 13% to $2.25
Thornburg Mortgage (TMA): Up 13% to 34 cents
Merrill Lynch (MER): Up 14% to $22.06
Ambac (ABK): Up 15% to $6.67
Citigroup (C): Up 18% to $16.65
MBIA (MBI): Up 19% to $11.64
PMI Group (PMI): Up 22% to $2.57
National City(NCC): Up 24% to $4.40
Regions Financial (RF): Up 34% to $14.60
Radian Group (RDN): Up 35% to $5.00
Washington Mutual (WM): Up 48% to $2.99
First Marblehead (FMD): Up 67% to $4.75
MGIC Investment (MTG): Up 74% to $9.50
To be fair, most of the gains made today were only enough to erase just Wednesday’s huge losses, and the last week and a half of loss before today’s rally is still “on the books”. And, there will likely be a fair amount of profit-taking tomorrow. But who am I to complain? I made [up] $2,600 today, and most of that came in just the last hour of trading.
Even American International Group (AIG) had a double digit percentage gain today: up 31% to close at $2.69. The Dow closed up 410 points to $11,019. Oil gained 72 cents to close at $97.88. Today was Wall Street’s best day in six years.
September 15, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged ABK, AIG, American International Group, BAC, Bank of America, bankruptcy, banks, CHC, fmd, Great Depression, Lehman Brothers, lending window, PMI, RDN, reform, short sellers, TMA, wall street, WaMu, Washington Mututal, WM
Exactly two months from the widely-believed bottom, “the biggest shakeup since the Great Depression” is what it’s being called. Today was the largest 1-day loss to the Dow in seven years. What a total mess. All this time, I’ve been sure no one knew what they were talking about the financials and that the bottom was already hit. Slowly though, I’m coming to ask myself, “what were you thinking??” Analysts had said the worst wasn’t over, but of course I didn’t believe them; I’m stubborn and always have been. Late last night and early this morning, former employees streamed out of Boston’s Lehman building, and all other Lehman locations, with boxes and resumes in hand. After last night’s negotiations failed, it was certain death for their jobs, and their stock, which was at 70 cents by 6:30AM, 45 cents by 7:30AM, and 18 cents at day’s close. In less than 24 hours, the 158 year old mainstay lost 94% of its value. Not only was the bankruptcy of Lehman Brothers the largest bankruptcy in United States history, it dwarfed all other bankruptcies in our country’s history. Along for the hellevator ride from par to the bottomless abyss went all the financials today. Even Merrill Lynch, which was up 30% in premarket trading because of being bought out last night for nearly twice its current value, closed the day up just 0.6% from its sorry close on Friday.
Articles and blog titles that ht today had some pretty colorful titles: “Jaw-dropping day for financial markets”, “A day of reckoning”, “Meltdown in US finance system pummels stock market”, “AIG fights for survival”, “Street’s nasty surprises keep experts guessing”, “Giants fall on judgment day”, “Stocks plummet on financial meltdown”, “It’s a morose Monday for Street’s employees”, “Goodbye to easy money”, and “Broken brothers” were just a sampling. The articles spanned all languages as today hit the entire world like a million tons of bricks.
So many questions arose out of today. What will happen to WaMu? What will happen to the mortgage insurers now that one of the banks they insured has evaporated? What will happen to AIG’s stock value now that the bank plans to head to the lending window? AIG had asked for $40 billion, but word on the street is that they’ll “only” get $20 billion. Following suit of its sibling ratings companies, Standard & Poor cut Washington Mutual’s rating to “junk” today.
Of the stocks I watch, here are today’s nearly unbelievable numbers:
Regions Financial (RF): Down 4% to $11.12
Community Bancorp (CBON): Down 4% to $4.53
Syncora Holdings (SCA): Down 6% to $2.39
Thornburg Mortgage (TMA): Down 7% to 35 cents
Triad Guarantee (TGIC): Down 9% to $2.1549
Financial Select Sector ETF (XLF): Down 9% to $19.15
MBIA (MBI): Down 11% to $11.45
National City (NCC): Down 11% to $4.28
First Marblehead (FMD): Down 14% to $2.67
Centerline Holding (CHC): Down 14% to $2.05
Radian Group (RDN): Down 14% to $3.90
Citigroup (C): Down 15% to $15.24
Ambac (ABK): Down 16% to $6.24
PMI Group (PMI): Down 17% to $2.57
Deerfield Capital (DFR): Down 18% to 60 cents
Bank of America (BAC): Down 21% to $26.55
MGIC Investment (MTG): Down 21% to $5.35
Washington Mutual (WM): Down 26% to $2.00
American International Group (AIG): Down 60% to $4.76
My friend works for AIG. I hope that if he loses his job it’ll be the kick in the pants he needs to get his ass to Hollywood.
The Dow plunged 504 points today to close below $11,000 to $10,917. A few days ago, an analyst on TV said that “it is possible we may see $100 oil within six months”. Within six months, buddy, how about within six days? Crude oil fell to a 7-month low today, losing $5.47 to close at $95.71 a barrel.
This experiment is going to be much longer-term than I previously thought. Luckily I have time to wait. I took another advance on my credit card to possibly take advantage of some of the week’s bargains, and will pay it back on Friday when my paycheck hits.
Later in the day, an article titled “Wall Street Losses Seen Spurring Regulatory Reform” hit CNNMoney.com. Some are calling for another ban on short-sellers. Alan Greenspan, in his interview this weekend, said that short-sellers are necessary to keep prices as a closer reflection of company values. But if Washington Mutual, for example is really trading at [now less than] 17% of its book value (MarketWatch, September 11), how real are the shorties really keeping things?
September 10, 2008
· Filed under economy, investing, money, politics, stock market · Tagged Alan Fishman, default, dow closed, LEH, Lehman Brothers, mortgages, oil closed, oil demand, OPEC, Radian Group, RDN, TMA, WaMu, Washington Mututal, WM
OPEC is made up of 11 countries, and in September 2007, the group agreed to produce 28.8 million barrels a day. Because global demand had been so high (except for in the last few months, of course), OPEC needed to bump that production up by 500,000 barrels a day.
Now that global demand is down, OPEC is “cutting” its production by those extra 500,000 barrels a day and re-adhering to the September 2007 quota. But despite this, and the impending hit on Texas by Hurricane Ike, crude oil lost 68 cents a barrel to end the day at $102.58.
My strength has really been tested this week. Often in the sectors, one bad stock in one sector can cause investors to run hard to other sectors. This week that rotten apple has no doubt been Lehman Brothers whose premarket numbers were up over 20% before 8AM, but then fell like a rotten redwood once 8AM, along with the news that the bank lost $3.9 billion in Q3, hit. Over the course of the day, LEH did make up ground and go green, and when it did, other financials followed. But by 3:30PM the optimism was over and LEH took a turn to close down 7% for the day, again, taking other financials with it. Later in the day, the company made a claim that it will spin its commercial real estate, worth $30 billion, into a new company and will sell another $40 billion worth of residential mortgages to the United Kingdom bank Blackrock. Regardless of all these claims, the last thirty minutes of trading were gut wrenchingly painful as I watched the modest gains of some of my riskier stocks slip away.
I have no stake in Lehman Brothers other than the residual effect its bad numbers have on my stocks’ numbers; I just watch the stock out of interest, much like some (not me) are compelled to slow down to rubberneck a car wreck on the other side of the highway. However, I do own Washington Mutual (WM) who is having some serious problems of its own and whose share price fell to a 17-year low today. I read somewhere today that “there is a 90% chance it will default within five years.” By “default” do they mean “go bust”? And if so, who can predict even the next day, let alone the market five years out? I’m hoping that it was artificial panic, but WM fell by a very real 30% today. Someone on the Google message boards claimed to have purposefully driven by a local branch to make sure a run wasn’t happening. It wasn’t. People were still going in at a leisurely pace to make deposits. That made me feel [only very, very slightly] better since there are no WaMus around here for me to drive by, and I had been wondering. A friend of mine says that Washington Mutual’s new CEO Alan Fishman is “a genius and had a stellar record with Sovereign Bank”. He doesn’t see WM failing. I’m going to take his word for it because my friend is smart himself and what other option do I have? Sell at a loss? Cry in my hands? I don’t think so! Go big or go bust! Oh please go big, not bust!
This week has been painful, but out of optimism, I have to say today was less painful than yesterday, and hopefully tomorrow will be positive, or at least even less painful than today. And amidst it all, Radian Group (RDN) and Thornburg Mortgage (TMA) made double digit percentage gains today, so there is still some light in the sector. The bailout of Freddie and Fannie was a game changer, and arguably a very unfair one, but soon again it will be about balance sheets and not terror.
The Dow moved sideways today and closed up 38 points to $11,268.
September 9, 2008
· Filed under economy, investing, money, politics, stock market · Tagged ABK, ArthurDental, BAC, C, dow, Fannie Mae, FMH, freddie mac, investing, LEH, Lehman Brothers, MA, oil, OPEC, PMI, RDN, reuters, September 9 2008, STI, TGIC, TMA, trading, Visa, Washington Mutual, WM
My God, what have I done? All across the country, investors in all sectors and companies must be asking themselves the same thing. I know my friends are. After yesterday’s huge [emotional] rally in all sectors but one (energy), today seemed completely irrational. Everything fell. This was more than profit-taking. All of yesterday’s gains, 280 points, were shaved off the Dow as the index slipped all day to close down to $11,230, as investors in the financials asked themselves one extra question: “will any financial survive?”
Lehman Brothers (LEH), Washington Mutual (WM), Radian Group (RDN), PMI Group (PMI), Ambac Financial (ABK), First Marblehead (FMH), MBIA, Inc. (MBI), MGIC Investment (MTG), Triad Guarantee (TGIC), and Thornburg Mortgage (TMA) are just some of the financial institutions that had double-digit percentage losses today, and those are just the ones with losses greater than 10%. Citigroup (C), Bank of America (BAC), JP Morgan (JPM), SunTrust (STI), American Express (AXP), and even Visa (V) and MasterCard (MA) lost today. Lehman Brothers (LEH) is reporting their third quarter earnings tomorrow- a week early- after their Korea Development Bank deal fell through and its stock price lost 45% of its value today. LEH stock did bump up 7% in afterhours trading, so maybe there’s good news on the horizon. But no doubt, this bad news cast even more doubt into the financial sector today and helped push share values down. Today was very, very painful. Luckily I was so busy at work, with teaching, duties, and meetings, that I had no time to sit down and digest what was happening.
But my friends did. One of my stock friends, who has made a small fortune day-trading these financials, sent me an article that eased my mind a bit. It definitely crossed my mind a few times in the last couple days that my experiment may not work out after all, but the article he sent gave me some hope. It was titled “S&P Picks and Pans: Wells Fargo, Washington Mutual, TW Telecom, JC Penney, Avery Denison”, and was an article in BusinessWeek online. After all the upgrades and downgrades and rating cuts by people with questionable credentials and too much power, it was nice to read an article from a reputable source deeming one of my stocks, WM, a “hold”. If Washington Mutual is a hold and its going through some actual concrete, documented troubles, then my thinking (and hope) is that yesterday and today’s major sell-offs were out of pure fear. But I still hope the sell-off doesn’t continue!
A Reuters article from yesterday titled “Ambac’s planned muni insurer may be hit by changes” shed some light on what the common sentiment towards the mortgage and bond insurers might be. “In another even more fundamental change, agencies are mulling a shift in how they rate muni debt, using the same scale used for corporate debt. That would result in widespread rating upgrades for municipal bonds, which have a much smaller risk of default than corporate bonds. Higher ratings would in turn reduce the need for insurance.” If there’s less risk of default, then there’s less need for insurance.
One last article I’ll quote, this one from MarketWatch.com titled “Community building ire MarketWatch readers kindle own outrage over Fannie, Freddie takeover” quoted ArthurDental, who is a member of the MarketWatch Community. “”Everyone gets upset about financial aid to the poor,” ArthurDental wrote, “but where’s the outrage when taxpayers foot the bill because some ‘investments’ went sour? So stockholders would be largely wiped out; why then aren’t bondholders made to pay for their mistakes, too?”
It’s telling that this article didn’t hit yesterday when the market soared, but ArthurDental is right. When SSBX failed, I lost my investment. But when Freddie and Fannie exposed themselves to trillions of dollars in bad mortgages and therefore didn’t have the capital to pay the bonds it issued to China, the two lending giants got a slap on the wrist and trillions of our taxpayer dollars. Hey, I made a mistake investing in a company run by a McCain, where’s my money? It ain’t coming and I have to deal. And that’s the way it should be.
That Hurricane Ike took a turn south, and the Organization of the Petroleum Exporting Countries (OPEC) will likely maintain its oil production even though demand is down, caused the price of crude oil to fall to a 5-month low. Crude oil lost $3.08 to close the day at $103.26 a barrel. I lost $1700 today, or in my brother’s terminology, “seventeen hundo”. Ouch.
So what is going to happen now that the rules of the game have completely changed? I don’t dare speculate. But whatever it is that eventually happens seems as if it won’t make itself known for a while. For now, I’ll keep the faith. I took a gamble and put in a limit order for 25 more shares of WM today, and you can imagine my surprise when I signed on later, saw the stock price was at $3.30, and that my order executed at $3.60. When I put the order in, I assumed it was so low that it would expire unexecuted.
And more than anything, tomorrow’s a new day when anything can happen.
September 8, 2008
· Filed under money, politics, stock market · Tagged Alan Fishman, Andrew McCain, dollar, dollar value, dow closed, financials, Fitch Ratings, freddie mac, Friedman Billings Ramsey, Hurricane Ike, investing, John McCain's son, Kerry Killinger, money, oil closed, Radian Group, RDN, SCA, September 8 2008, Silver State Bancorp, SSBX, Steve Stelmach, stocks, Syncora, trading, Washington Mutual, WM
“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!
September 4, 2008
· Filed under money, politics, stock market · Tagged ABK, bear market, Bill Gross, dollar, dow, euro, market september 4, McCain, MTG, National City, Palin, PIMCO, PMI, RDN, SCA, speech, stock market september 4
“Nobody knows why the Dow dropped 345 points today” was the headline on Bloggingstocks.com. The bottom dropped out of the Dow today- 344 points to close at $11,188!- and speculation is flying about why. All three indices- the Dow, NASDAQ, and S&P 500- fell back into bear markets.
A lot of data was slotted to come out this week, and today’s data showed that initial unemployment claims, and therefore people recently laid off, have risen to a near 5 year high. But retail store sales are up and oil dropped $1.46 to $107.89, a 5-month low. Oil has lost $40 in two months. So why did the market plunge today?
Conspiracy theorists think the rich of the world sold off for a reason and are keeping tight-lipped about why. Maybe it was a hedge fund sell off. A story came out yesterday predicting the fall of many hedge funds because commodities are falling. Maybe it’s just a manifestation of the extreme volatility the market has seen this summer. Bill Gross, the head of Pacific Investment Management (PIMCO), recognized and announced August’s light trading volumes, and warned of an imminent “financial tsunami”. Maybe this scared people? What the heck is a financial tsunami? Was today’s selloff a reflection of a weakening global economy? The dollar is up to its highest against the euro since the year began, and it now takes just $1.43 to get one euro. The euro was created, in part, as a similar exchange to the US dollar, but $1.43 is a great improvement from the $1.5903 it would have taken to get one euro on July 15. And isn’t it true that if the US economy improves it will lead the world back out of the hole?
Maybe Sarah Palin’s dirty nomination speech made everyone run. “When [Obama] you’re done parting the waters and healing the world…”? Was she serious? Maybe when she’s done slinging mud she’ll focus on what she’ll do about the desperate economy and enormous national debt.
It’s unclear what happened today, but what I know for myself is that I lost $300 today when the Dow lost 345, and I gained $1,000 yesterday when the Dow gained just 15. Five of my financial stocks- PMI, RDN, ABK, SCA, and MTG- had double digit gains yesterday, so I expected a selloff today; but I expected it to be a lot worse than it was after [fighting my internet connection and finally] seeing that the market took such a hit today. National City’s (NCC) rating was cut today by S&P but the stock price fell less than 6%! First Horizon’s (FHN) rating was also cut, and its stock price fell just over 6%. If I can make large gains when the market makes small ones, and have medium losses when the market has big ones, then I’ll be sure my experiment is working.
Data on the total unemployment rate comes out tomorrow, and it is believed to be at 5.7%. Will this data spike the market again? A lot of questions are unanswered.
It’s easy to read between the lines that I’m voting for Barack Obama, but to stay aware of both sides, I have been watching speeches from both sides and John McCain’s speech scared me tonight. By the end of his speech, it seemed that if he had a gun he would have started popping caps in the air. I’m not sure I’d feel safe with him in the same room as the red phone and bomb button.
In the hopes that Mary Caraccioli had some insight into today’s market, I stayed up past McCain’s speech and then past Comcast Channel 3’s insightful commentary on McCain’s speech to catch Money Matters Today. It’s usually on at 11PM (and rerun the next day at 11AM) but to my dismay, the show was completely run over by the McCain commentators and was not pushed up to a later time. The sports show Out of Bounds came on instead. Typical. I guess tomorrow will be a complete surprise.
August 28, 2008
· Filed under money, stock market · Tagged ABK, ambac, Gustav, IEA, investing, MBI, MBIA, money, RDN, trading
Yertle, my 7,000 year old turtle, woke me up this morning grinding her shell against my bedroom furniture she’s a little too big to fit under, and because it was already light out, my efforts to fall back asleep failed. So, I got up and of course got onto Etrade to watch the premarket. Expecting to see all zeros in the % change column in my watch list, you can imagine my surprise when most were green. I had never realized that the premarket watch list reflected the closing price from the afterhours the night before, and because good news came out about MBIA (MBI), it blew up over night and took a lot of its fellow bondsmen with it, including ABK, PMI, SCA, TMA, and RDN.
Yertle’s not really 7,000 years old; actually I have no idea how old she is. She could be 7,000, she could be 70. All I know is that I’ve had her for 12 years and she’s about the same size as when my friend first handed her down to me, which leads me to believe she’s probably older than anyone would guess and that I’ll have to will her to someone when I die.
Europe and Japan are reportedly headed towards their own recessions, but Bloomberg reported that our economy- possibly fueled by exports to these struggling regions- grew faster in the second quarter than originally calculated. This boosted today’s market big time. Trading is thought to have been the biggest contributor to the growth of the economy in the quarter, and a bigger contributor than it has been in 30 years. Well no kidding! Everyone knows to get in at the bottom!
My car got towed today because I was on the wrong side of the street for street sweeping, and it wasn’t until I got to the tow lot that I realized I had my debit instead of my credit card. So I got back on my bike, rode back home, got the card, rode back to the tow lot, and paid them $117.47 (on top of the $40 ticket this fair City slid under my wiper) to bail my car out of car prison. If it wasn’t for MBI and Ambac (ABK), which came out of the cut today with a 41% gain sometime between the tow fiasco and when I finally sat back down to look at everything, I would have been way more pissed. Street sweeping. Please! Five seconds after the zambonie passes, trash is back on the street. What a joke.
The stars align once in a while in the financials sector, and today was one of those days. Thursday August 14 was the last time it happened. Today’s massive gains were a combination of the revised economy numbers, MBIA’s good news, and the Bloomberg report that “Crude oil fell more than $2 a barrel after the International Energy Agency (IEA) said it would tap strategic stockpiles, if needed, because of Tropical Storm Gustav.” Forecasters are now predicting Gustav will turn Category 3 and is headed straight to Louisiana. Oil crashed at 11AM because of the IEA’s announcement, then took a bit of a bounce around noon, but the damage was already done. The Dow gained 212 to end the day at $11,715, oil lost $2.56 to end the day at $115.59, my stocks pulled in $1,700, and so probably ended the week’s rally. No doubt the profit takers will enter the market tomorrow.
August 20, 2008
· Filed under money, stock market · Tagged chicken soup for the soul, dow closed at, Fannie, financials, freddie, gasoline, Hewlett Packard, housing, investing, mortgage, oil closed at, PAY, Radian, RDN, stock market, TMA, trading, Verifone
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?
