All Posts Tagged With: "Stocks"

Panic

My mother called me this morning.  “I’ve been worried about you.  Are you okay?”, she asked.

I told her that I was fine; that you only lose when you sell.  Which got me thinking…What rules should investors employ in this market?

  1. You only lose when you sell.  The same fundamental reasons for investing in the first place should apply.  No one subscribes to a “buy high, sell low” philosophy.
  2. Stock-based investments are now on sale.  Everyone one loves a sale.  I tell my wife that “sale” is my favorite four-letter word.
  3. A bear market is defined as a decline of 20% or more from a market high.  See #2 above.
  4. Since 1900, a bear market has occurred once every 3 1/2 years on average and

Market Panic

All right, perhaps panic is too strong a word, but my goodness, it certainly does feel like one.  The Dow Jones Industrial Average fell 5% today and is now down 30% since January 1.  The S&P 500 is down 33.7% year to date and the NASDAQ is off 35.6%.  This is indeed a bear market, but there is nothing rational about it whatsoever.

The sell off appears to be about nervousness investors are feeling about the future, the global economy, the bailout, corporate earnings.  I try to keep a cool head, but the Dow is down 800 points in two days and even I wonder where it’s going to end.  Then I remember what Warren Buffet said:  “It’s never as good as it appears and …


Are Treasury and Congress Doing The Right Thing?

I’m surprised there has not yet been a run on my bank.  The way that Bush, Paulson and Congressional Leaders are reacting to the liquidity angst on Wall Street would make you think there’s no money left, and we only have days or perhaps hours to get our money safely out of the hands of our bankers.

Of course, nothing could be further from the truth.

But wrapped up in that fear is some of the reality that our economy is dependent upon the use of credit throughout the business and consumer world to keep things moving.

When you think about it, that sounds a little more scary than I thought it would.

In other words, if we all had plenty of cash, could easily …


Is The Crisis Abated?

On Sunday I shared some initial thoughts about the Fed take-over of Fannie Mae and Freddie Mac. If you read it, you know I’m not exactly happy about the outcome.  My friend Bithead shared some great thoughts Monday, and I don’t disagree that something needed to be done.   He and I both agree dumping the CEOs was necessary.

And on Monday the Stock Market reacted very favorably to the news, with a huge rise in the Dow (500 points, settling up 289), with a strong positive impact to the banking industry.

But I’m still convinced that the solution divides the interests of those in the government now set to manage the affairs of these companies.  Everyone who looks at this right now is breathing …


Government Mortages: The New Balancing Act

Today US Treasury Secretary Henry Paulson announced plans for the new Federal Housing Finance Agency (FHFA) to take Freddie Mac and Fannie Mae into conservatorship.   The power to do this was provided in HR 3221 which was passed in July.

The move includes replacement of the CEO of both organizations, and an infusion of about $200 billion.  In return, the Treasury gets $1 billion in preferred stock from each company without providing the cash for it up front (I’m assuming this will work like a stock option).

From the Wall Street Journal:

It is unclear how much the government’s intervention will ultimately cost taxpayers. In exchange for agreeing to provide as much capital as needed to the companies as they cope with heavy losses on


AT&T Profits Mean We Must Be In A Recession

AT&T this morning reports an increase in quarterly profit.  From the Reuters story:

AT&T’s first-quarter profit rose to $3.46 billion, or 57 cents per share, from $2.85 billion, or 45 cents a share in the same quarter a year earlier.

The positive report results mostly from strong growth in AT&T’s wireless business.  Traditional phone subscriptions were down.

One could read different messages from this.  Wireless products are still what I consider a luxury, though more and more people see it as a necessity.  However, I find it hard to believe that anyone would cling to their cell phone if it meant skipping meals to afford it.  So is this a sign that we’re not in a recession after all?

Although that is one view, …


It’s the Stupid Economy

It’s odd how Retail Sales could have the nerve to be up when everyone knows it should be down.  How does it do that?

Simple, really, higher prices where demand is not going to retreat quickly.  Gasoline.  And the stuff that uses it.

The problem is that the only really meaningful measure of Retail Sales (year-to-year) is gross dollars.   I don’t know one way or the other, but I suspect the dollars are not adjusted for inflation.

Interestingly enough, the Wall Street Journal Online (in the subscriber area) was good enough to run a graph showing Increase in Retail Sales against another showing the same without gasoline station sales.  The .3% increase (compared to an anticipated .4% decrease) appears to be slightly impacted by gasoline …


Asian Markets Dive…

According to the WSJ, on fears that the US will experience a recession (perhaps due to the possibility of Ron Paul getting elected president), the major Asian indexes fell anywhere from 4-8%.

Evidently Bush’s stimulus package did not impress. Let’s hope this doesn’t create a circular reaction event (US Markets drop, Asian Markets drop, lather, rinse, repeat). I’m assuming the White House is working on something to help calm the international markets, but at least (I think) he cares about what happens in those markets, unlike Mr. Paul who would rather ignore the rest of the world.

Also glad to see the Journal is up and running even through they didn’t need to print a paper today (Happy Martin Luther King, Jr. Day everyone!).…


    Log in