Posts tagged Washington Mutual
September 30, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged dollar, dow, euro, fourth quarter, oil, Q3, Q4, stock market, third quarter, TMA, trading, WAMQ, Washington Mutual
Everyone loves a bargain. Yesterday’s loss that evaporated $1.2 trillion from the value of US stocks was just north of half-way made up today by investors scooping up some good deals. Maybe the sentiment is that the bottom has finally been hit. Or maybe it’s the belief that Congress will end up passing some sort of relief bill when they meet back up on Thursday. Even Japan, who’s been in a bit of a slump themselves for a while, is pressing us to pass something and vowed to give money to our banks to keep them liquid. The world is watching our scales turn, ripping money from the rich hands of a few and giving it to the open hands of many little investors who know when a price is right.
I need to do something about my portfolio. TMA and the new Washington Mutual (WAMQ) respectfully made 50% and 140% gains today, and all I made was a combined $75 on the two. After the TMA reverse split, and the fact WAMQ is now trading at 8 cents, these big percentage gains mean little to my combined 450 shares of the two. A 140% increase on an 8 cent stock was barely a nickel move. I need to pick up more shares to take advantage of these huge percentage gains, but this is where my rational self and my irrational self start fighting. My rational self says “forget it, wait it out and pay your credit card off this month,” while my irrational side says, “screw your credit card, this is a once-in-a-quarter-century opportunity to get in on the bottom of the market!” Who will win, who will win…. I get paid Friday.
The Dow closed up 485 points after a steady climb all day to $10,850. Oil gained $4.27 to close the day at $100.64. The dollar made up some ground it had recently lost against the euro; it would now take $1.41 to get one euro.
And so ends the third quarter.
September 27, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged $25 billion, bailout, bankruptcy, C, Chevrolet, Chrysler, Citi, Citigroup, F, FDIC, Ford, General Motors, GM, green, green cars, JP Morgan, Michael Sincere, QMNM, Quest Minerals, Understanding Options, US automakers, Wachovia, WaMu, Washington Mutual, WM
I’d like to send a shout out to Michael Sincere, author of Understanding Options, who actually read my blog and commented on it. Maybe someday, if I ever land an agent and if that agent ever lands a deal, Michael Sincere will write the foreword to this book. I have time. This experiment is going to be a long time in the making.
Slowly, news is leaking out about the failure of Washington Mutual. A Bloomberg article that hit today finally used the word “bankruptcy”, however the failure still isn’t a top story. Is it just me? Am I the only one who thinks that the biggest bank failure in the short history of our country is at least warranted one full day of sensationalism?
“WaMu had its banking unit seized Sept. 25 by government regulators after customers withdrew $16.7 billion over 10 days. JPMorgan Chase & Co. became the biggest U.S. bank by deposits when it bought WaMu’s branches with a $1.9 billion payment to the Federal Deposit Insurance Corp.
The Chapter 11 bankruptcy petition, filed Sept. 26 in U.S. Bankruptcy Court in Delaware, wasn’t immediately available due to Web site maintenance. The Web site was expected to be operating again on Sept. 27 at noon, Eastern time.
JPMorgan, Citigroup Inc., Wells Fargo & Co., Banco Santander SA and Toronto-Dominion Bank had all expressed interest in buying all or parts of WaMu ahead of the JPMorgan purchase.
WaMu was expected to lose as much as $19 billion on bad mortgages during the next 2 1/2 years. Standard & Poor’s cut the bank’s credit rating twice in nine days, to eight levels below investment grade, as chances decreased that any deal wouldn’t be a buyout of the whole company, leaving creditors of the holding company to face substantial losses.”
Maybe it was the web site maintenance that slowed the news down. Baffling.
Citigroup (C) may acquire Wachovia (WB), but it’s now being reported that Citi may first wait for Wachovia to fail, exactly following JP Morgan’s lead on WaMu. I have no stake in Wachovia, thankfully, and maybe in this case, since I do own a few Citi shares, I’m all for this slimy tactic. Buying low and selling high oils the entire market- from multibillion dollar mergers to a college kid buying a few thousand shares of QMNM hoping for a miracle. This is how growth happens. But when that strategy is applied to the heart of the market- the financials- it has to be expected that “buying low” will take on an entirely new appearance. If one bank can wait two days for another bank to fail before buying it, the merger will cost fractions less.
The $25 billion government loan that Ford and Chrysler applied for this summer to transform their outdated factories into green car producers will come a little early. The bill, which states that the automakers would not have to make payments on the loan for five years, passed the Senate today and is now off to President Bush for final approval.
September 26, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged bailout plan, bank, bank failure, dow, oil, Resolution Trust Corp, S&L crisis, Thornburg Mortgage, TMA, wall street, WaMu, Washington Mutual, WM
WaMu closed the day at 16 cents. Its website says “WaMu Customers, Welcome to JP Morgan Chase”. The fail of Washington Mutual is the largest in history, yet it wasn’t nearly as front-page news as other failures. Something’s strange. But like I said, I haven’t a clue what it all means.
A CNNMoney.com article today put the size of WaMu’s failure into terms more easily understood for all us common folk:
“To put the size of WaMu in context, its assets are equal to about two-thirds of the combined book value assets of all 747 failed thrifts that were sold off by the Resolution Trust Corp. – the former government body that handled the S&L crisis from 1989 through 1995.”
My Dad thinks I should get out now. I can’t. Every bank failure and deal has been made over a weekend, so I’m hoping the bailout plan will come this weekend. However, I do really doubt it will do much to my share prices!
In other news, TMA extended its tender offer- again. Imagine that!
At least it’s the weekend. What a week! I think everyone needs a break. Maybe if everyone gets some rest over the weekend some sanity will return to the market on Monday. The Dow closed up 121 to $11,143. Crude lost $1.12 to close at $106.89.
September 25, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged bailout plan, congress, FDIC, FRE, freddie mac, IDMC, indymac, JP Morgan, tender offering, Thornburg Mortgage, TMA, WaMu, Washington Mutual, WM
This week has totally sucked. Congress is dragging its feet with the bailout plan and Washington Mutual (WM) was seized tonight by the FDIC and sold to JP Morgan. What does that mean for WM shareholders? I haven’t a clue. Message boarders think it means terrible things. This afternoon, WaMu closed the trading day at $1.69, then fell in afterhours trading to 45 cents. What I do know is that, right now, it looks like I made a big mistake on investing in this one.
Thornburg Mortgage has been extending and extending and extending an offer to its preferred shareholders to tender their preferred stock and receive a few shares worth of common stock for each of those shares. Tomorrow is the latest extension’s deadline. If the tender offering goes through, the loss I incurred with WaMu will be erased. If it gets extended again, or does not go through, I will seriously consider pulling out of this whole experiment altogether, paying off my car, and taking a nice trip somewhere.
The fact is, there aren’t enough hours in the day to keep a finger on the economy’s pulse, be in graduate school, and hold down a full-time non-desk job. My head is spinning from the amount of information I’ve missed this week. I have no idea why Freddie Mac (FRE) has been making consistent daily gains of 50%. I have no idea why the OTC IndyMac (IDMC) made a 300% gain today. What are the changes Congress made to the bailout plan? No idea. Is cosine or negative cosine the antiderivative of sine? Not sure. The only thing I do know is, that when push comes to shove, I’d rather be in a classroom of 9th graders for 80 minutes than in a room with slimy bankers for 5 minutes. So all’s not lost.
The Dow gained 196 to close the day at $11,022. Oil made gains today to close at $108.02 per barrel.
Go TMA!
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 17, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged AIG, banks, dow, economy, GLD, gold, naked short selling, offshore drilling, oil, oil futures, oil speculation, oil speculators, speculators, StreetTRACKS Gold, wall street, WaMu, Washington Mutual
The entire market was on a downward run the entire day. The impending restrictions on naked short selling did nothing to break the financials’ falls, and the bailout of AIG seemed to deepen the “crisis of confidence” in our economy. The dollar was down and oil and gold were suddenly trading way up.
A friend of mine brought up an interesting point yesterday: now that the banks are failing, the price of oil is also failing. In his email to me, he wrote:
“BTW, have you noticed the rapid decline in crude oil now that the banks have to focus on their books and capital? Could the banks have been speculating the price of crude??? Only the shadow knows. WAMU after hours trading closed at $2.55.”
As if the market heard his words directly, a CNNMoney.com article hit this morning titled “Oil rallies as Wall Street gets a lifeline: Crude futures rebound as the Fed steps in to lend insurer AIG much-needed capital, and ahead of the government’s weekly supply report”
Now that the big banks are being shored up, will oil bounce?
My Calculus 2 class starts tonight. Any free time I’ve had will now be absorbed into homework, studying, and stress. If it was possible to do so, I’d buy a few puts on my weight with a January 2009 expiration date so that I could rake in some money in time to buy myself a nice Valentine’s day gift. Calculus stresses me out. Anyway, it may put a damper on my writing. But I guess I said the same thing for when I went back to work, and that didn’t stick, so maybe I have no idea what I’m talking about.
The Dow almost had another -500 point day: it tumbled 449 to close the day at $10,609. Oil rose $6.01 to close at $97.16. The Associated Press chalked up the rise in oil to “an easing of worries that the insurance giant and other financial firms would liquidate commodities holdings to raise cash”. The dollar lost value because of the AIG bailout, too. Typing in “dollar” into Google News returned articles with titles like: “US dollar falls amid wary credit markets”, “Dollar falls vs. euro, yen despite AIG bailout”, “India’s rupee firms against dollar”, “Bonds soar, dollar sinks”, and Oil rallies as dollar weakens”. Seems my friend was right; the oil speculators are back. Time to get back into oil? God was way up, too. The ETF StreetTRACKS Gold (GLD) climbed 11% today.
The House of Representatives, with a democrat majority, passed a bill last night to lift the 26-year old ban on offshore drilling. But because the bill also added on tax credits for clean energy companies, President Bush’s advisors are asking that he veto the bill in its current form.
The ban on naked short selling will take effect tomorrow. We’ll see what happens.
September 16, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged $85 billion, AIG, bailout, bankruptcy, banks, Barclays, Christopher Cox, crude oil, economy, Enron, gasoline prices, Goldman Sachs, government bailout, GS, Hank Greenberg, interest rate, investing, Lehman, Lehman Brothers, MER, Merrill Lynch, Morgan Stanley, MS, naked short selling, real estate, SEC, uptick rule, WaMu, Washington Mutual, WM, WorldCom
Where to start? All these stories are unfolding all at the same time. Most people alive have never seen such things.
AIG no doubt drove the market today. Lehman was six times as big as Enron and WorldCom, and AIG is 50% bigger than Lehman. Yesterday when it became clear that Goldman Sachs (GS) and Morgan Stanley (MS) were last two independent investment banks left standing, the government asked the two giants to inject capital into AIG to keep it alive. When that didn’t go over so well, the fed went back to the drawing board and came up with a new idea, which was later captured in a Bloomberg article titled “Fed Said to Reverse Stance, Consider AIG Loan Package”. Originally the government said that it would absolutely not help AIG, but throughout the day AIG’s tentacles were measured and realized to stretch much further than previously thought. The news stories about AIG threw the stock all over the place today. As an example of just how turbulent the ride was, at 2:30PM the stock was trading at $2.76. At 3PM, the stock was trading at $5. That’s an 81% increase in 30 minutes. AIG is the world’s largest insurer, and unless it’s shored up, many institutions (including regional banks, as exposed by CNNMoney.com) will likely get knocked out.
Reuters released an odd article today about former chief executive of AIG Hank Greenberg leading a hoard of investors in a bid to take over AIG. I think I’ll let that one rest.
The Federal Reserve, against what everyone predicted, left interests rates alone today. The rate will stay at 2%.
When the market broke in 1937 signaling the Great Depression, the US Securities and Exchange Commission (SEC) created the “uptick” rule, which essentially stopped people from betting against failing stocks. “Naked short selling” is what it’s called now, and is when a trader buys a put for an underlying amount of stock he or she would not be able to deliver. The SEC did not eliminate the uptick rule until July 6, 2007.
Our government tried to being back a sort of uptick rule this past July and it did, in fact, help the financials rebound. You can still see the ban reflected in most stock charts, not only the financials, from July 15 until the beginning weeks of August.
Now that banks are acting more like houses made of cards than they are the good old impenetrable banks we all grew up with, the government and some analysts have began buzzing about a possible reinstatement of the uptick rule. Back in August when the ban on naked short selling was lifted off the 19 financials it protected, the plan was to create “within a few months” a sweeping rule would eliminate excessive short selling. Some, like Alan Greenspan, think this is eliminating an important side of the market, but when a bet is sure, much like oil was six months ago, people will take and take advantage of it.
The head of the SEC, Christopher Cox, announced today that the “within a few months” will probably be this week (TheStreet.com) in light of what happened yesterday and the free lunch frenzy it caused among the traders who know how to sell short naked.
I’m not going to lie; In this economy, with oil going down yet gasoline refusing to budge, the price of food through the roof, the cost of electricity forcing me to cram foods into my toaster oven instead of firing up my electric stove, and clothing being so expensive I’m at least 3 seasons behind (if not many more), I’d naked short sell a few of the stocks I own if I knew how to. But just a few, not all day and not to the point I felt sick with guilt. I wonder if anyone feels guilty. Doubt it.
I bought long into Merrill Lynch (MER) today, and added to my positions of Citigroup (C) and Washington Mutual (WM). Washington Mutual is a real gamble, but MER should be one stock I won’t have to worry about.
The Dow crossed from red to green and back again 15 times today and really rallied in the last two hours of trading to close up 141 points to $11,059. My stocks that gained today included C, MBI, MER, MTG, RDN, RF, and WM, but it wasn’t enough to have me end the day in the green, and in fact, I’m now overall up just $2.08. But I’m keeping the faith that regulations will come this week and we’ll look back on this time as another bottom.
When the top stories are no longer about the banks, people are going to start asking questions about the price of gasoline. Crude oil slipped another $4.56 today to close at $91.15, so why is gas still over $3.50 a gallon? I smell “pissed off” coming.
In late-breaking news tonight, Barclays announced it put a bid in to buy Lehman Brothers for $2 billion, and the government decided to loan AIG $85 billion.
Also in tonight’s late-breaking news, an SEC spokesman told Reuters that “The American Bankers Association said many of its members have seen precipitous declines in their stock, high trading volumes and huge spikes in so-called failures to deliver [due to naked short sellers], leading them to conclude that their stock is being manipulated. The U.S. Securities and Exchange Commission expects to issue new rules against abusive short selling within 24 hours.”
Within 24 hours. This is great news.
September 11, 2008
· Filed under business, economy, investing, money, politics, stock market · Tagged BAC, Bank of America, Fitch Ratings, Galveston Texas, Hurricane Ike, LEH, Lehman Brothers, Moody's, WaMu, Washington Mutual, WM
Lehman Brothers (LEH) again dragged down the entire market for the great majority of the day. The stock closed last night’s afterhours at $7.25, and was trading below $5 by today’s 8am premarket. By 8:30, the stock was below $4 and by the opening bell, the stock was already down 38%.
But in the last half hour of today’s trading, Bank of America stepped in to stop the hemorrhage. This large bank, who earlier in the year bought Countrywide, announced a possible purchase of Lehman Brothers. The announcement did little to the common share price of LEH, maybe because no one believed them, and the stock closed down 41% to $4.22. Later in the night, the Federal Reserve announced that they would step in and help Lehman sell itself, and Bank of America started to sound like it was having second thoughts.
The Bank of America announcement seemed to kick Washington Mutual from red to green and the Dow to skyrocket. Both WM and the Dow took a sharp turn north right afterwards. In premarket trading, WM stock had slipped below $2, but turned around in the last half hour of the trading day to close at a 22% gain to $2.83.
After the closing bell, Washington Mutual released an updated third quarter expectations report, which included a focus to build reserves, an unchanged long-term credit outlook, a stable $50 billion of liquidity, and an updated projection of loan losses in the third quarter- from $5.9 billion to $4.5 billion.
But then a few minutes later, Fitch Ratings threw a wrench in the works, as they seem to enjoy doing, and “downgraded” the company. Fitch is the fingernail in the birthday cake. Fitch is the hair in the risotto. A few hours later, Moody’s Investors Service, another ratings company, jumped on the bandwagon and downgraded WaMu too. Who are these people? I’d like to see what their stock would do, if they had any. A MarketWatch article that my friend sent me earlier in the day, before all the stories and ratings hit, stated that Washington Mutual is currently trading at just 17% of its book value, so I’m hanging on. If WM crawls back, I think it will pull my other financial stocks back up with it.
In today’s afterhours, WM broke $3 a share. Sure I’m seeing the glass half empty, but in this bear market, there are only two possible scenarios: go bust or get up. I’m betting on my stocks getting up.
In much graver news than losing money, Hurricane Ike is headed straight to Galveston, Texas. This island was completely wiped out on September 8, 1900 by an unnamed hurricane that killed an estimated 10,000 to 12,000 people, and which made the storm the deadliest natural disaster the Unites States has ever seen. Today, the mayor of Galveston ordered a mandatory evacuation of the island. The National Weather Service stated that staying in Galveston would bring “certain death” as a storm surge of 20 feet is expected to blanket the island and the hurricane is expected to morph into a category 3 by the time it makes landfall tomorrow night.
Despite the impending storm, which some are already predicting to be “catastrophic”, crude oil lost $1.71 to close at $100.87, nearly breaking the $100/barrel psychological barrier. The Dow gained 164 points, all of which were tacked on between 3:30PM and 4PM, and closed the day at $11,433. The dollar hit a year-high; it would now take just $1.39 to get one euro. Thanks to WaMu, I closed the day up $37.
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!
