Trillions of dollars have been introduced into the world economy since last July, when I thought it would be interesting to jump in and pick stocks prior to the carnage in the financial sector taking complete hold.
For the past eight months our government has been 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. The Federal Reserve has essentially dropped the interest to zero.
The government was the last to announce that we are in a recession. Well, duh! However, recession or not the world is still open for business although less of it. Gold is down 30% from it's highs and oil having totally collapsed from $147 a barrel at the time of the original story to the low $30's now.
The original story was Serious Money: Tempting fate with 10 financials -- buying into a pool of financial stocks at a time when these stocks went unloved by all.
There are many analysts suggesting that we finally have arrived at the time to invest in financial stocks. Perhaps that is true, but do you invest in the downtrodden or the blue chips?
The original prices are from July 29, 2008 and the follow-up is from December 19.
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 $11.89, down 54.7%. 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 $5.66, down 64%. 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 $1.19, is down 67% -- 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 $1.55, is down 77%
- Newcastle Investment (NYSE: NCT) -- $5.88 down 72% from its 52 week high of $20.88; closed Friday at $3.24, is down 79.25%
Questions exist:
- Citigroup Inc. (NYSE: C) -- $18.45 down 63% from its 52 week high of $49.90; closed Friday at $7.02, is down 62%
Some success:
- East West Bancorp (NASDAQ: EWBC) -- $12.46 down 67% from its 52 week high of $30.42; closed Friday at $15.38, up 23.43%.
- MBIA Inc (NYSE: MBI) -- $4.92 down 93% from its 52 week high of $68.98; closed Friday at $5.07, is up 3%. Was not up a lot but there is something to be said for not losing in this market.
President Bush, as anticipated was the last to capitulate about the recession. He is finally acting as he works with the Treasury, Federal Reserve and Congress to prevent the auto companies from collapsing under the weight of shrinking demand for their products and only modest movement on the part of the UAW and management.
I wish that the congress slashed their own perks when they cut those of auto executives.
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)
12-22-2008 @ 6:05PM
dwbartn said...
NCT has suspended it's dividend and has traded around $1 today. Off it's low of 20 cents, but I'd put it in the "pushing up daisys" category