Around the world, governments are flooding the market with new currency in order to stem the tide of bank collapses and slippery stock market slopes. They are taking over financial institutions, absorbing debt, lowering interest rates, nationalizing some private companies, investing in others, and rebating taxes through stimulus packages to increase liquidity and spending.
So far all we can say is that the world is still open for business, but it is a different world. Even gold and oil are down significantly.
In concert with world markets, the stocks in my daring (maybe fool hardy) story I posted a few months ago Serious Money: Tempting fate with 10 financials -- buying into a pool of financial stocks at a time when the "hate 'em" factor was at a peak, or so I thought -- are down even more. I think I am turning into the web's leading glutton for punishment by posting such stories. However, while my stock ideas have taken a beating now and then, I hope my integrity has remained intact.
I took some major lumps during the collapse of Washington Mutual (NYSE: WM) as I candidly posted, Chasing Value: Not -- WaMu one week later - ouch!, and I lost some money also.
Nine of the ten financial stocks I wrote about are down or out at this point. When I last reported, the portfolio was losing 4.8%, and now it is losing 47% to date, not counting dividends. Only MBIA Inc. (NYSE: MBI) is up and there are question marks about this company too.
The original prices are from July 29, 2008 and the follow-up is from October 24.
Total Failures:
- Lehman Bros. Holdings (NYSE: LEH) -- $16.88 down 75% from its 52 week high of $67.73; down and out -100%. Barclays bought assets in bankruptcy.
- Washington Mutual (NYSE: WM) -- $4.43 down 89% from its 52 week high of $39.48; down and out -100%. FDIC took over the collapsing company and sold assets to JPMorgan Chase (NYSE: JPM) for $1.9 billion.
Treading water -- awaiting acquisitions:
- Merrill Lynch (NYSE: MER) -- $26.25 down 67% from its 52 week high of $79.72; closed Friday at $15.86, down 39.58%. Being acquired by Bank of America (NYSE: BAC).
- Wachovia Corp. (NYSE: WB) -- $15.70 down 70% from its 52 week high of $53.10; closed Friday at $5.80, down 63%. Being Acquired by Wells Fargo (NYSE: WFC) -- captured by a vulture.
- E*TRADE (NASDAQ: ETFC) -- $3.06 down 84% from its 52 week high of $19.39; closed Friday at $1.97, is down 35.62% -- from questionable to only a matter of time.
- Gramercy Capital (NYSE: GKK) -- $6.72 down 77% from its 52 week high of $29.45; closed Friday at $0.93, is down 86.16%.
Questions exist:
- Citigroup Inc. (NYSE: C) -- $18.45 down 63% from its 52 week high of $49.90; closed Friday at $12.15, is down 34.15%
- Newcastle Investment (NYSE: NCT) -- $5.88 down 72% from its 52 week high of $20.88; closed Friday at $3.24, is down 44.9%
Successes:
- East West Bancorp (NASDAQ: EWBC) -- $12.46 down 67% from its 52 week high of $30.42; closed Friday at $12.46, exactly even, 0.0%. Was up a lot but there is something to be said for not losing in this market.
- MBIA Inc (NYSE: MBI) -- $4.92 down 93% from its 52 week high of $68.98; closed Friday at $6.52, is up 32.52%.
President Bush, the last to capitulate about the sad state of the economy is finally acting in the waning days of his tenure and still things are going from bad to worse. The Congress has finally capitulated as Details of $700 Billion Plan Emerged. Interestingly, the ideas surrounding the allocation of this fund keep changing.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of MBI, NCT & did own WM.
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Reader Comments (Page 1 of 1)
11-19-2008 @ 10:03PM
J. Hyatt said...
When Wachovia CEOs take huge salaries from the bank they have ruined, aren't they to be considered bandits?