BloggingStocks

Closing bell: Dow closes below 11,000; LEH nearly wiped out, AIG, WB, TTWO plunge

Jon Ogg — Mon, 15 Sep 2008 16:35:00 EST

Filed under: After the Bell, Major Movement, Deals, Market Matters, NYSE Euronext (NYX), Amer Intl Group (AIG), Wachovia Corp (WB), S and P 500, DJIA, Lehman Br Holdings (LEH), Housing, NASDAQ

Today was easy to focus on. And it was highly unpleasant. It was all about financial stocks and the meltdowns and the merger and the bailouts. The huge drop in oil after Hurricane Ike didn't kill off the oil infrastructure didn't amount to anything at all. The beatings will continue, regardless of morale. The VIX hit 30 and that only helped for a brief bit.

Here are today's unofficial closing bell levels:
Dow 10,954.07 (-504.48; -4.42%)
Nasdaq 2,186.66 (-81.36; -3.60%)
S&P500 1,198.32 (-59.01; -4.71%)
10YR T-Note 3.483% (-0.247%)
52-Week Lows

Lehman Brothers (NYSE: LEH) led the carnage today. Richard Fuld held out for solid merger terms too hard and it now looks like he made the entire firm pay the ultimate price. It is filing for Chapter 11 and for all practical purposes is going bye-bye. Shares were down 94% at $0.20 right before the close.

American International Group (NYSE: AIG) is also on the ropes. Its shares were down 60% at $$4.78 immediately before the close. The leading insurance company in the world, or the former one anyway, is on the verge of collapse.

Continue reading Closing bell: Dow closes below 11,000; LEH nearly wiped out, AIG, WB, TTWO plunge

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Wall Street's bulls, bears and pigs

Steven Halpern — Mon, 15 Sep 2008 15:42:00 EST

Filed under: Major Movement, Newsletters, S and P 500, DJIA, Federal Reserve

"Bulls make money; bears make money; in the end, pigs shoot themselves through greed," says Charles Payne in WStreet Commentaries. Here's his cautiously optimistic outlook.

"Let's get this straight; the Fed is willing to take damn near any form of collateral including those prints of Van Gogh's 'Sunflowers'" in the employee dining room, right? So, how much more do financial companies want...or need? They'd love a blank check but that isn't going to happen.

"The total amount available under the Term Securities Lending Facility (TSLF) could increase from $200 billion and there could be an interest rate cut. But, for the most part Wall Street has to fend for itself.

"In the 1969 film They Shoot Horses, Don't They? we witness a Depression-era dance marathon for a grand prize of $1,500 (that's not much money now).

"The emcee of the events eggs on the contestants, already desperate to win at any cost. Throughout the film the main character is reminded of a time during his childhood when a horse was put down after breaking its leg.

"Many would say that Wall Street was egged on by an overly accommodative Federal Reserve or an administration reluctant to regulate the industry.

"As a result, the financials have been in a marathon dance for survival this year, but just like that horse at some point putting down for the count those with the largest fractures may be most humane.

Continue reading Wall Street's bulls, bears and pigs

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Tumbling oil price seen assisting U.S. recovery

Joseph Lazzaro — Mon, 15 Sep 2008 15:22:00 EST

Filed under: Forecasts, Commodities, Oil

With the latest credit market jolts leading to Lehman Brothers Holdings Inc. (NYSE: LEH) decision to file for bankruptcy and the Bank of America Corporation's (NYSE: BAC) move to acquire Merrill Lynch & Co., Inc. (NYSE: MER), it may seem like a misapplication of analysis to discuss oil.

Not so, says one energy trader. "Oil can be a factor in righting the markets and the U.S. economy," Energy Trader Jim Dietz told BloggingStocks Monday afternoon.

How so? "A substantially lower oil price will increase disposable income, help put a lid on rising business costs for transportation and heating, and lower the U.S. trade deficit. These are all good things, shots in the arm for the U.S. economy," Dietz said. "And right now we'll take any shot in the arm we can get." Dietz added that he was currently short oil, with a monthly contract.

Oil Monday afternoon was down $4.25 to $96.93 per barrel, continuing a two-month trend of lower oil prices. Oil hit a record high of $147.27 per barrel in July 12.

Continue reading Tumbling oil price seen assisting U.S. recovery

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The Wal-Mart Weekly: No rollback on gas prices

Brian White — Mon, 15 Sep 2008 15:01:00 EST

Filed under: Wal-Mart (WMT), Columns

Welcome to the 76th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.

This week, I'll be taking a look at Wal-Mart Stores Inc.'s (NYSE: WMT) apparent unwillingness to lower gasoline prices along with the thousands of other price rollbacks on its store shelves. In fact, a possible price hike was on tap for the retailer's Murphy USA gas stations just last week in Texas as thousands of residents were urged to evacuate their homes as Hurricane Ike roared towards the U.S. shoreline in the Gulf of Mexico.

As oil barrel prices dropped last week and hurricane situation became worse and worse for South Texas, Wal-Mart gas stations saw a $0.12 per gallon price increase in less than 12 hours. On the day the official call was made for South Texas residents to flee their homes, gas was raised another $0.10 per gallon. While Murphy USA is the actual gas provider (not Wal-Mart itself), how could such a drastic increase in such a precarious position come to pass? The evacuating folks sure were not given a break on this one. In fact, the word "gouging" comes to mind. Was it really that severe?

Continue reading The Wal-Mart Weekly: No rollback on gas prices

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Free market capitalism: A 'peek behind the curtain'

Steven Halpern — Mon, 15 Sep 2008 14:41:00 EST

Filed under: Newsletters, Bank of America (BAC), Merrill Lynch (MER), Federal Natl Mtge (FNM), Amer Intl Group (AIG), Federal Reserve

"It is a popular myth that financial markets are based on principles of capitalism," observes Ron Rowland in his All Star Investor newsletter, adding, "but the opposite is closer to the truth."

Assessing what he calls the Federal Reserve's moves to "buy Wall Street," he offers a straight-forward overview of the current situation and a "peek behind the curtain" of free markets and Wall Street.

"Banks, brokers and insurance companies are assisted and protected by a wide variety of governmental mechanisms.

"Wall Street propagates the myth of 'free markets' because it serves to obscure the truth, which is that their profits are earned at the expense of those with less sophisticated and well-funded Washington lobbying operations. You are now getting a peek behind the curtain.

"Yes, it is true that Lehman Brothers (NYSE: LEH) was denied government assistance and is being allowed to fail. In fact, Lehman is now serving as a kind of scapegoat that allows those in power to appear firm in their resolve not to put taxpayers at risk.

"If it were more than mere appearance this would be good news, given that taxpayers have already taken on plenty of risk with Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). The reality, however, is that the bailouts are continuing through other, less obvious means.

Continue reading Free market capitalism: A 'peek behind the curtain'

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Easy credit and rising home prices are not engines of economic growth

Joseph Lazzaro — Mon, 15 Sep 2008 14:19:00 EST

Filed under: International Markets, Forecasts, Industry, Employees, Economic Data, Housing, Recession

Many economists, analysts, traders and others agree it's way too soon to assess the impact of this latest, mortgage-related jolt on the stock and bond markets, and on the U.S. and global economies.

There are too many moving parts, and too many unknowns to form meaningful, enduring conclusions. The reason? The financial world order we see today may not, in fact, be the financial world order we see tomorrow. The Dow was down about 256 points to 11,165 early Monday afternoon.

But there is one conclusion U.S. investors / citizens can form regarding the U.S. economy, so says an economist: expanding credit and rising home prices, in and of themselves, are not engines of economic growth.

Now, everyone's recognizing 'the obvious'

"We have now entered the age of recognizing the obvious," economist Richard Felson said. "Almost everyone knew that the booming housing market would slow down as soon as all potential buyers had been tapped and as the American economy slowed. But few foresaw the impact the slowdown would have on mortgage bonds, their owners, and the financial system. We now have to rebuild the American credit market, and global credit market, as well, to a degree. It will be a major task."

The primary source of all the above, in Felson's interpretation? Structural problems in the U.S. economy, primarily a lack of jobs, or low job growth, he said.

"For the better part of four years, America went blithely along, confident that the fundamentals of the [U.S.] economy were sound. Yet all the while, job growth and its companion, rising median wages, were inadequate. But they were ignored because corporate earnings were up and home values were rising. But it was a building constructed on quicksand," Felson said. "The boom was not sustainable. The [U.S.] economy did not have growth engines in place for sustainable growth. "

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What the financial meltdown means to you -- if you're not in finance world

Amey Stone — Mon, 15 Sep 2008 14:00:00 EST

Filed under: Bad News, Market Matters, Merrill Lynch (MER), Amer Intl Group (AIG), Lehman Br Holdings (LEH)

Over the weekend and on Monday, the population of the country suddenly divided. On one side are average folk who aren't involved in financial markets, except for maybe their 401(k), credit card, mortgage or checking account.

For those people -- the great majority of the population -- Monday started the week pretty much like any other. If they glanced at the news, it was to note more headlines predicting financial ruin for investment banks and institutional investors (the news is of the actual ruin of Lehman Bros. (NYSE: LEH) and probably Merrill Lynch (NYSE: MER) and AIG (NYSE: AIG), but after months of such news, that may have been lost on many people). Wall Street may not have been front of mind to most people going about their day today.

Latest Developments:
o. Stocks Sink on Lehman News
o. Will Fed Resume Rate Cuts?
o. An Unprecedented Bankruptcy
o. Banks Establish Emergency Fund
o. Bank of America to Buy Merrill
o. Future of AIG Uncertain
o. SEC to Rein in Naked Shorts

Then there is the other side of the new dividing line: People involved professionally in the financial markets. For us, the events of the weekend and today are a sea change. Huge investment banks failing, securities trading opened on a Sunday to allow firms to unwind their positions, the government finally saying no to massive bailouts. There are going to be multiple thousands of finance professionals who lose their jobs. What will that do to the economy?

For me, a New York City resident and editor of BloggingStocks, I've felt the kind of nervous anxiety all day where I don't know if I'm going to cry or laugh. Among our team there has been plenty of gallows humor -- two actually quoted the same R.E.M. lyric in messages to me before 8 a.m.: "It's the end of the world as we know it."

That sounds dire (indeed, today feels very dire to me). But when I put aside my anxiety and wonder what all this means to folks that aren't engaged in the financial world professionally, here is how I see things shaking out:

For investors: The stock market will no doubt be extra-turbulent through the end of the year (on top of the financial sector's meltdown, we have election uncertainty and a weakening economy to worry about). I don't expect stocks to trade higher by the end of the year and think we may see a dramatic sell-off in the weeks to come. If we get a sell-off, you should use it to buy some strong stocks on the cheap. If you expect to need cash in the next year that you currently have invested in stocks, I would suggest gradually using rebounds in the market over the next few weeks to exit some positions. This is a good time to have an extra cash cushion.

Continue reading What the financial meltdown means to you -- if you're not in finance world

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Best Buy nabs Napster

Tom Taulli — Mon, 15 Sep 2008 13:46:00 EST

Filed under: Deals, Apple Inc (AAPL), Amazon.com (AMZN), Best Buy (BBY)

Beleaguered Napster (NYSE: NAPS) shareholders got a nice surprise today. That is, Best Buy (NYSE: BBY) agreed to buy the online-music operator for $2.65 per share. On the news, the stock price surged 86%. Although, it's still a relatively small deal - amounting to about $121 million.

Something else: Napster already has about $67 million in the bank.

All in all, it looks like a good move for Best Buy. After all, the music CD market is evaporating.

For the most part, Napster has about 700,000 subscribers (there is a monthly fee), which should get a nice boost from the huge distribution of Best Buy. In fact, the platform could eventually allow for other digital offerings, such as videos.

Of course, there is tremendous competition in the space, such as from Amazon.com (NASDAQ: AMZN) and Apple (NASDAQ: AAPL). However, Best Buy can certainly find creative ways to bundle products and services -- making things compelling for its customers.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

Best Buy nabs Napster originally appeared on BloggingStocks on Mon, 15 Sep 2008 13:46:00 EST. Please see our terms for use of feeds.

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The George W. Bush economic plan?

Sheldon Liber — Mon, 15 Sep 2008 13:32:00 EST

Filed under: Rants and Raves, Berkshire Hathaway (BRK.A), Politics, Headline News, Recession

This is my 800th post, so I thought I would have to mark the occasion with something very serious, and R. P. Overmyer once again supplied the kindling for my fire.

Many comments we receive ask why George W. Bush should be blamed for the dire state of the economy; that the President is just one more victim of circumstance. Others think the legislature should take the blame, or that it's a Democratic vs. Republican dilemma.

As I have tried to do in each of my posts that stray into politics, I will try my best to focus on the financial issues. If anyone cares, I tend to vote independent of party affiliation and tend to follow a moderate path. Interestingly each party tries to paint the other as more extremist in an attempt to get my vote.

The easy things first; the Republicans controlled the executive and legislative branches of government for the majority of GWB's term. It is true that the Democrats were less than cooperative these last 20 months and all too eager to watch Bush boil in his own stew, but for half that time everyone has been cooperating to make sure the financial markets do not collapse. All the blame should not fall on Bush or the Republicans, but I think it is not a hard case to make that the leadership and opportunity was theirs this go round and they screwed up -- he screwed up!

Continue reading The George W. Bush economic plan?

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AT&T, Verizon Wireless increasing subscriber leads in wireless

Brian White — Mon, 15 Sep 2008 13:17:00 EST

Filed under: Competitive Strategy, AT and T (T), Sprint Nextel Corp (S), Verizon Communications (VZ)

While AT&T, Inc. (NYSE: T) continues to bask in the sunlight of huge iPhone 3G sales, competitor Verizon Wireless isn't doing too shabby, either. In fact, one analyst says both wireless carriers are stealing all the customers and thunder from the other wireless carriers in the U.S. and riding off into the sunset. Those other wireless carriers? They're stuck eating dust at the moment.

Craig Moffett of Bernstein Research mentioned the U.S. economic slowdown as magnifying the effect, while stating "There simply isn't enough growth left in the market to support all players." He's right -- carriers like Sprint Nextel Corp. (NYSE: S) have been struggling for quite some time (even installing a new CEO), and fourth-largest carrier T-Mobile is just standing by gaining customers as needed. At the same time, AT&T and Verizon Wireless continue to grow. Remember, these are the remnants of the old telco companies that are now becoming monopolistic just as they were in the 1980s with the landline telephone market. Yes, I said monopolistic.

Moffett added that the rapid decline in voice spending with wireless carriers has not been made up, as hoped, with wireless data and texting revenues (even with rising prices). Moffett then added, "That makes subscriber growth -- again -- virtually the sole growth engine for the U.S. wireless industry." With wireless maturing as an industry, are there growth times ahead, or just a consolidation of carriers as all markets are saturated? Growth, especially in 2009, will be hard to come by.

AT&T, Verizon Wireless increasing subscriber leads in wireless originally appeared on BloggingStocks on Mon, 15 Sep 2008 13:17:00 EST. Please see our terms for use of feeds.

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Lehman bankruptcy to wipe out common, gut preferred and bonds

Peter Cohan — Mon, 15 Sep 2008 12:58:00 EST

Filed under: Citigroup Inc. (C), Bank of New York (BK), Mellon Financial (MEL)

Since Lehman Brothers Holdings Inc. (NYSE: LEH) filed for bankruptcy this morning, it means that its assets will be sold and the proceeds will go first to lenders and bondholders. If there's anything left after paying them off, it goes to the preferred shareholders. Finally, the common shareholders get the leftovers of the preferred shareholders.

This bankruptcy is the biggest in history as measured by its $639 billion in assets -- over six times bigger than the former champ, WorldCom. The bankruptcy does not include all Lehman's assets. "The Chapter 11 filing did not include Lehman's broker-dealer operations and other units, such as asset management firm Neuberger Berman. Those businesses will continue to operate, although Lehman is expected to liquidate them. It said it is in advanced talks on selling its investment management division," according to Reuters.

Many big institutions will be first in line for the proceeds of these asset sales. "Its biggest unsecured creditors are Citigroup Inc. (NYSE: C), Bank of New York Mellon Corp (NYSE: BK), Aozora Bank, and Mizuho Financial Group Inc.. Citi and Bank of New York Mellon are trustees for Lehman bonds. As of May 31, it owed about $110.5 billion on account of senior unsecured notes, about $12.6 billion on account of subordinated unsecured notes and about $5 billion on account of junior subordinated notes."

Continue reading Lehman bankruptcy to wipe out common, gut preferred and bonds

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Allstate (ALL) rises as Ike damage is assessed

Brent Archer — Mon, 15 Sep 2008 12:50:00 EST

Filed under: Good news, Allstate Corp (ALL), Options, Technical Analysis

Allstate (NYSE: ALL - option chain) shares are rising today as early reports are showing that the damage from Hurricane Ike over the weekend was not as bad as feared. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ALL.

ALL opened this morning at $44.55. So far today the stock has hit a low of $44.21 and a high of $46.95. As of 12:15, ALL is trading at $45.98, up 75 cents(1.7%). The chart for ALL looks neutral and S&P gives ALL a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $42.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in just five weeks as long as ALL is above $42.50 at October expiration. Allstate would have to fall by more than 7% before we would start to lose money. Learn more about this type of trade here.

ALL hasn't been below $42.50 at all in the past year and has shown support around $45 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in ALL.

Allstate (ALL) rises as Ike damage is assessed originally appeared on BloggingStocks on Mon, 15 Sep 2008 12:50:00 EST. Please see our terms for use of feeds.

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Tyler Perry comes through for Lions Gate

Steven Mallas — Mon, 15 Sep 2008 12:40:00 EST

Filed under: General Electric (GE), Time Warner (TWX), Walt Disney (DIS), Film

So, let's see. Lions Gate Entertainment (NYSE: LGF) had the number-one film last weekend with Bangkok Dangerous. All I can say is what a difference a week makes, because the film dropped to position number eight this past weekend, according to early estimates from ace movie site Boxofficemojo.com. Of course, this wasn't entirely unexpected, since Dangerous' opening was kind of weak. But fear not, shareholders of Lions Gate, because one of the studio's biggest stars, Tyler Perry, opened relatively well.

Tyler Perry's The Family That Preys took in approximately $18 million, which was good for second place. Burn After Reading held a slight margin of victory over Perry's film. It currently is in first place with about $19.4 million to its credit. It's entirely possible the two could switch places once final figures roll in, but I have a feeling this ranking will stay.

However, one sad thing about Perry is that, important as he is to Lions Gate, his opening weekends seem to be falling in strength. According to this chart at Boxofficemojo,The Family That Preys didn't do as well as the previous two Perry features. Meet the Browns and Why Did I Get Married opened with $20 million and $21 million, respectively. The chart also shows that the final domestic grosses on his films have been in a decline.

Continue reading Tyler Perry comes through for Lions Gate

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Hewlett-Packard unveils laptop PC with 24-hour battery life

Brian White — Mon, 15 Sep 2008 12:20:00 EST

Filed under: Products and Services, Launches, Hewlett-Packard (HPQ)

Hewlett-Packard Corp. (NYSE: HPQ) continues to lead the PC market in sales, and the addition of a laptop model that will run an unprecedented 24 hours on a single battery charge may boost its fortunes even more. The holy grail for those who use portable electronics constantly is battery life. Although battery technology has improved in the last decade or so, the ever-increasing demands from portable electronics like cellphones and laptops mean smaller battery times and more recharging.

HP's new EliteBook 6930p will cost anywhere from $1,800 to $2,000 online, and will come with an optional battery and a solid-state disk drive to help it get to the specified 24-hour battery life (which is probably ultra best-cast scenario). Dell's recently-announced Latitude E6400 reportedly sees 19 hours on a single charge. Perhaps the consumer and business PC markets are about to see a shift away from being compared on their commodity parts to something that really matters to most users -- battery life.

With PCs accounting for a third of HP's total revenue, it's the $30 billion question the company has to ask -- how can it keep growing that segment of its business? Desktop PCs, also at work, are slowly being replaced with laptops -- allowing workers to work from anywhere, the goal of the corporate kingdom -- and laptops are slowly but surely making the standard desktop PC irrelevant.

But that comes with a price: battery life really needs a boost. After all, the definition of a laptop basically implies that the customer needn't be tied to a power outlet at all times. In HP's case, the new laptop only costs $1,200 before the optional $150 extended battery and the $900 solid state disk drive. Are those items worth the price to get an entire day of battery life, though? Sales of the new system will tell us.

Hewlett-Packard unveils laptop PC with 24-hour battery life originally appeared on BloggingStocks on Mon, 15 Sep 2008 12:20:00 EST. Please see our terms for use of feeds.

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Analyst calls: AAI, AMR, CAL, POT, AIG, DHI, PHM, GS, JPM, LOW ...

Eric Buscemi — Mon, 15 Sep 2008 12:03:00 EST

Filed under: Analyst Reports, Analyst Upgrades and Downgrades, JPMorgan Chase (JPM), D.R.Horton (DHI), Goldman Sachs Group (GS), Amer Intl Group (AIG), Lowe's Cos (LOW), AMR Corp (AMR), Contl Airlines'B' (CAL), Analyst Initiations, JetBlue Airways (JBLU), Delta Air Lines (DAL), Lehman Br Holdings (LEH), Potash Corp. of Saskatchewan (POT)

Analyst upgrades:

UBS believes US airlines estimates are too low and will move higher. The firm upgraded AirTran (NYSE: AAI), AMR Corp (NYSE: AMR), Continental (NYSE: CAL), Delta (NYSE: DAL) and Northwest (NYSE: NWA) to Buy from Neutral and JetBlue (NASDAQ: JBLU) to Neutral from Sell.
JMP Securities upgraded DealerTrack (NASDAQ: TRAK) to OUtperform from Market Perform as they believe 2H08 guidance represents a floor and that 2009 estimates are achievable, among other reasons.
Potash (NYSE: POT) and Mosaic (NYSE: MOS) were raised to Buy from Hold at Soleil.
Argus upgraded Seagate (NYSE: STX) to Buy from Hold on Friday.

Analyst downgrades:

Jefferies downgraded Citrix Systems (NASDAQ: CTXS) to Underperform from Hold as they do not see a catalyst for the company to grow into 2009 consensus estimates. The firm lowered their target price to $25 from $32.
Citigroup said following Lehman's (NYSE: LEH) bankruptcy, they expect a distressed-sale of American International's (NYSE: AIG) MBS portfolio, resulting in the worst quarter yet for the company. Shares were cut to Hold from Buy.
D.R. Horton (NYSE: DHI) was downgraded to Sell from Hold and Pulte Homes (NYSE: PHM) was downgraded to Hold from Sell at Citigroup.
Merrill downgraded Goldman Sachs (NYSE: GS) to Neutral from Buy and JP Morgan (NYSE: JPM) to Underperform from Neutral.

Continue reading Analyst calls: AAI, AMR, CAL, POT, AIG, DHI, PHM, GS, JPM, LOW ...

Analyst calls: AAI, AMR, CAL, POT, AIG, DHI, PHM, GS, JPM, LOW ... originally appeared on BloggingStocks on Mon, 15 Sep 2008 12:03:00 EST. Please see our terms for use of feeds.

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As Dow rebounds somewhat off lows, caution is advised

Joseph Lazzaro — Mon, 15 Sep 2008 11:41:00 EST

Filed under: International Markets, Other Issues, Market Matters, DJIA, Housing, Recession

As of midday Monday, the Dow had rebounded off early-session lows, but if investors / readers are thinking about entering this market now, caution is advised, for several reasons.

First, those familiar with technical analysis know that the Dow's rebound to a loss of 180 points to a level of about 11,233, up from a loss of more than 300 points, could be just short-covering.

Second, major unknowns exist regarding the financial system. And I mean major.

The fate of American Interational Group (NYSE: AIG) remains an enormous question mark. The largest insurer of assets, AIG may face a downgrade that would trigger a collateral call from debt investors who bought credit default swaps, a form of insurance for bonds. Further, if hedge and other institutional investors sense those swaps are not in force, they may seek swaps elsewhere and/or sell assets to reduce market risk / raise capital. That could spark a new round of stock selling. AIG's shares fell $5.33 to $6.81 in late Monday morning trading.

Continue reading As Dow rebounds somewhat off lows, caution is advised

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Can you get your money back if you own LEH, AIG shares?

Jonathan Berr — Mon, 15 Sep 2008 11:26:00 EST

Filed under: Merrill Lynch (MER), Amer Intl Group (AIG), Lehman Br Holdings (LEH)

The bankruptcy of Lehman Brothers Holdings Inc. (NYSE: LEH), the sale of Merrill Lynch & Co. (NYSE: MER) and the strain on American International Group Inc. (NYSE: AIG) have put an unprecedented strain on the financial system. Investors looking for a way to recoup their losses are probably out of luck.

If you lost money owning shares of financial services companies, odds of getting your money back are remote. To prevail in an arbitration hearing, investors need to prove fraud such as the broker bought stock without their knowledge, bought stock just to generate commissions (churn), bought it knowing that it was unsuitable, or misrepresented the risks of the investment. These claims are all difficult to prove and even if an investor is victorious, there is no guarantee they will get a full refund.

According to New York securities attorney Mark Astarita, arbitration cases take between 14 and 18 months to resolve. Investors win about 50% of the time. "Stocks go down every day," he said when we spoke earlier today. "There needs to be wrongful conduct" to win a case.

Continue reading Can you get your money back if you own LEH, AIG shares?

Can you get your money back if you own LEH, AIG shares? originally appeared on BloggingStocks on Mon, 15 Sep 2008 11:26:00 EST. Please see our terms for use of feeds.

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AeroVironment (AVAV): Stock price defines bullish 'flag' pattern

Larry Schutts — Mon, 15 Sep 2008 11:11:00 EST

Filed under: Earnings Reports, Ford Motor (F), Lockheed Martin (LMT), Technical Analysis, Delta Air Lines (DAL), Stocks to Buy

AeroVironment (NASDAQ: AVAV) is engaged in the design, development, and production of unmanned aircraft systems (UAS) and electric energy technologies for various industries and governmental agencies. The company's small aircraft are used by U.S. Department of Defense customers to deliver real-time reconnaissance, surveillance, and target acquisition to tactical operating units. Its electrical products include recharge systems for industrial vehicle batteries and power processing test equipment. Ford Motor (NYSE: F) and Delta Air Lines (NYSE: DAL) are on the company's commercial customer list. Lockheed Martin (NYSE: LMT) is a major competitor.

The firm pleased investors last week, when it reported fiscal Q1 EPS of 22 cents and revenues of $53.6 million. Analysts had been expecting 18 cents and $49.9 million. Management also maintained its FY09 guidance for year over year revenue growth of 20%-25%, with an operating income margin of 12%-14%. The CEO noted, "Winning the All Environment Capable Variant competition with our Puma AE earned us the fourth Department of Defense program of record for small UAS."

Continue reading AeroVironment (AVAV): Stock price defines bullish 'flag' pattern

AeroVironment (AVAV): Stock price defines bullish 'flag' pattern originally appeared on BloggingStocks on Mon, 15 Sep 2008 11:11:00 EST. Please see our terms for use of feeds.

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GM brings its electric car gamble to market

Douglas McIntyre — Mon, 15 Sep 2008 10:55:00 EST

Filed under: General Motors (GM), Toyota Motor Corp. (TM)

General Motors (NYSE: GM) will introduce its Chevy Volt tomorrow. The Wall Street Journal writes that the car is GM's "most important model in decades -- and possibly the key to its survival."

While the Volt may be the best electric car in the world, it will not be out until late 2010. The rest of this year and 2009 are projected to be the worst in decades and could cut over $1 billion a month from GM's cash reserves.

Will the Volt come too late? The easy answer is no. Toyota (NYSE: TM) and a number of other car companies are already selling hundreds of thousand of hybrids. They get tremendous fuel-efficiency on their own. Whether an "all electric" car will dislodge other companies from their low MGP positions is unlikely.

Of course, most other large car firms are working on electronic vehicles of their own. GM may find the market crowded.

The Volt is GM's "Hail Mary" pass. If management can get the company's expenses down enough and GM can bring in small cars for its Europe operation, the combination may be enough, barely enough, to keep GM independent.

Douglas A. McIntyre is an editor at 247wallst.com.

GM brings its electric car gamble to market originally appeared on BloggingStocks on Mon, 15 Sep 2008 10:55:00 EST. Please see our terms for use of feeds.

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Lower stock prices actually reduce risk -- not the other way around

Zac Bissonnette — Mon, 15 Sep 2008 10:40:00 EST

Filed under: Newspapers

Commenting on the expected carnage in the financial markets today, The New York Times notes that "Now, the risk for the financial firms is that investors will respond by trying to do exactly what they are trying to do - minimize their risk. If enough investors do that and choose to sell, stocks could plummet in markets worldwide, thus increasing the risks rather than easing them."

In reality, it's exactly the opposite. The lower the stock market drops, the lower the risk is. A stock market decline could trigger problems for over-leveraged financial companies dependent upon their credit ratings for their access to capital but, for mom and pop investors, an opportunity to buy stocks at lower prices is good.

In the long run, companies are worth whatever they're worth. Paying 50 cents for an asset is less risky than paying $1, and long-term minded investors should look forward to days like these. There may be other factors that are increasing risk for investors, just as excessive leverage at so many banks has, but lower prices certainly don't qualify as a risk.

Lower stock prices actually reduce risk -- not the other way around originally appeared on BloggingStocks on Mon, 15 Sep 2008 10:40:00 EST. Please see our terms for use of feeds.

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