Stock Talk
- Thread starter BoyGenius
- Start date
Tilted
..
Was anyone brave enough to buy financials on this latest ride down?
Bank of America CEO Kenneth Lewis bought about $1.2 million worth of BCA stock and JP Morgan CEO Jamie Dimon bought more than $11 million worth of JPM stock today. These were open market purchases, not exercising of options. Those revelations played a strong role in the late day run up of their stocks.
For various reasons, I don't mess around with financial stocks very often. But, if I did, I would have probably bought some long-term speculative positions yesterday or this morning.
One of the things that drove their steep declines yesterday, was the whispers that were floating around yesterday that some of the major banks might end up being 'nationalized' (an obviously vague and not clearly defined fate). For whatever reason, those fears seemed to evaporate today.
BoyGenius
Cyber Bully Victim
I was following the same stuff. I purchased quite a bit of various financials in the last two days, but was afraid to touch any of C, the most likely candidate for nationalization. Bought mostly preferred shares.
This was a fascinating and profitable event for those that played it right. Today produced up to 30% gains in some of those stocks.
The interesting fear catalyst, especially in the case of C and BAC, is the fact that the common stock dividend has been cut to .01 cent for the next three years, as a result of taking TARP money multiple times. That drove the hysteria in addition to the worry of the common stock being wiped out in all these bank stocks. So while C and BAC might look dirt cheap, you have to ask if holding them for all this time with no dividend will be worthwhile or not? My guess is the rally in the common of these two will be short-lived. Even CNBC was errant in their reporting of the dividend status regarding C. Did you catch the corrections they were making after the market close?
Tilted
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No, I usually tune them out for a while after the closing bell. I was more concerned with listening to Apple's conference call this afternoon.
Cletus_Vandam
New Member
I read the same thing....
Isn't it great how a CEO can make ridiculously poor decisions, get a government bail out because of these decisions, drive the price of their stock into the ground, then buy $1.2 in the Co's stock....
All the while, I like many others who I have spoken to, are predicting that BAC will recover and their stock will climb and his $1.2 million will likely be worth ten times what it is now in two years.
Gotta love it. Classic example of the "rich get richer".
BoyGenius
Cyber Bully Victim
Wirelessly posted (Mozilla/4.1 (compatible; MSIE 6.0; ) 400x240 LGE VX10000)
If you're not worried that BAC might not survive, here's my play I'm betting on:
BAC-L - Bank of America Corp. PRFD 'L' - Google Finance
It's a $1,000 preferred note selling for .43 cents on the dollar at the moment. Couple of days ago it was even sweeter when it was $356 per share.
With the common stock paying only a .01 cent dividend this thing is ripe with an annual dividend of $72.50 per share. Also, this is a convertible share, meaning down the road you can convert it to common stock.
"SECURITY DESCRIPTION: Bank of America, 7.25% Non-Cumulative Convertible Preferred Stock, Series L, liquidation preference $1000 per share, and with no stated maturity. Non-cumulative distributions of 7.25% ($72.50) per annum are paid quarterly on 1/30, 4/30, 7/30 & 10/30 to holders of record on the first day of the month in which the payment is due (NOTE: the ex-dividend date is at least 2 business days prior to the record date). The dividends are non-cumulative and if the board of directors does not declare a dividend or the company fails to pay a dividend declared by the board for any quarterly dividend period, the holder will not be entitled to receive any dividend for that quarterly period and the undeclared or unpaid dividend will not accumulate. Dividends paid by the preferred are eligible for the 15% tax rate on dividends under normal holding restrictions and are also eligible for the dividends received deduction for corporate holders (see page S-40 of the prospectus for further information). The preferred shares are convertible any time at the holder's option into 20 common shares of Bank of America Corp. (NYSE: BAC), an initial conversion price of $50 per common share (a 25% premium of the initial price). On or after 1/30/2013, if the price of the common stock exceeds 130% of the conversion price for 20 of any 30 consecutive trading days, the company may, at their option, force the preferred shares to be converted into common shares at the then prevailing conversion price. In regard to the payment of dividends and upon liquidation, the preferred shares rank equally with other preferreds and senior to the common shares of the company. See the IPO prospectus for further information on the convertible preferred stock and the conversion provisions by clicking on the ‘Link to IPO Prospectus’ provided below."
If you're not worried that BAC might not survive, here's my play I'm betting on:
BAC-L - Bank of America Corp. PRFD 'L' - Google Finance
It's a $1,000 preferred note selling for .43 cents on the dollar at the moment. Couple of days ago it was even sweeter when it was $356 per share.
With the common stock paying only a .01 cent dividend this thing is ripe with an annual dividend of $72.50 per share. Also, this is a convertible share, meaning down the road you can convert it to common stock.
"SECURITY DESCRIPTION: Bank of America, 7.25% Non-Cumulative Convertible Preferred Stock, Series L, liquidation preference $1000 per share, and with no stated maturity. Non-cumulative distributions of 7.25% ($72.50) per annum are paid quarterly on 1/30, 4/30, 7/30 & 10/30 to holders of record on the first day of the month in which the payment is due (NOTE: the ex-dividend date is at least 2 business days prior to the record date). The dividends are non-cumulative and if the board of directors does not declare a dividend or the company fails to pay a dividend declared by the board for any quarterly dividend period, the holder will not be entitled to receive any dividend for that quarterly period and the undeclared or unpaid dividend will not accumulate. Dividends paid by the preferred are eligible for the 15% tax rate on dividends under normal holding restrictions and are also eligible for the dividends received deduction for corporate holders (see page S-40 of the prospectus for further information). The preferred shares are convertible any time at the holder's option into 20 common shares of Bank of America Corp. (NYSE: BAC), an initial conversion price of $50 per common share (a 25% premium of the initial price). On or after 1/30/2013, if the price of the common stock exceeds 130% of the conversion price for 20 of any 30 consecutive trading days, the company may, at their option, force the preferred shares to be converted into common shares at the then prevailing conversion price. In regard to the payment of dividends and upon liquidation, the preferred shares rank equally with other preferreds and senior to the common shares of the company. See the IPO prospectus for further information on the convertible preferred stock and the conversion provisions by clicking on the ‘Link to IPO Prospectus’ provided below."
Tilted
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I hope you got all that you wanted, because you can expect a decent pop this morning. Just a temporary rally? Who knows?
MMDad
Lem Putt
I bought Freddie and Fannie right after they dove hard. They are just about my only investments that are in the green today. Freddie is up 65% since I bought it, and Fannie is up 6%.
I also bought auto stocks, AIG, and some food producers that got slammed last year. If they survive I get to retire early. If they fail, it's like a few bad days in Vegas.
I also bought auto stocks, AIG, and some food producers that got slammed last year. If they survive I get to retire early. If they fail, it's like a few bad days in Vegas.
Beta84
They're out to get us
Are you up? Down? Scared to death? Had enough? Or just stuck with a work related portfolio that you have no control over and get to watch in horror?
Was anyone brave enough to buy financials on this latest ride down?
not yet, but it's gettin very tempting!
BoyGenius
Cyber Bully Victim
Most of what I own at the moment is financials I bought at or near the recent lows. They popped so bad today I've got a nose bleed. I'm wrestling with the decision of when to unload them.
BoyGenius
Cyber Bully Victim
Cramer Laughs
A couple of notable Cramer laughs today:
Jim Cramer’s Mad Money
February 9, he recommended to buy Alcoa, Symbol AA.
Today S&P downgraded Alcoa to one notch above junk:
UPDATE 1-S&P cuts Alcoa to one notch above junk,stock drops | Markets | Markets News | Reuters
January 30th, Cramer recommended buying Molson Coors.
Today they reported a 44% drop in earnings and lost 7.9% of their value:
Molson Coors Profit Falls 44% as Volume Slips 4.2% - WSJ.com
A couple of notable Cramer laughs today:
Jim Cramer’s Mad Money
February 9, he recommended to buy Alcoa, Symbol AA.
Today S&P downgraded Alcoa to one notch above junk:
UPDATE 1-S&P cuts Alcoa to one notch above junk,stock drops | Markets | Markets News | Reuters
January 30th, Cramer recommended buying Molson Coors.
Today they reported a 44% drop in earnings and lost 7.9% of their value:
Molson Coors Profit Falls 44% as Volume Slips 4.2% - WSJ.com
T
toppick08
Guest
Nucor Announces One-Hundred Forty-Third (143rd) Consecutive Cash Dividend
CHARLOTTE, N.C., Dec 09, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- The Board of Directors of Nucor Corporation (NYSE: NUE) increased the regular quarterly cash dividend on Nucor's common stock by 9.4% to thirty-five cents ($0.35) per share from thirty-two cents ($0.32) per share. This cash dividend is payable on February 11, 2009 to stockholders of record on December 31, 2008, and is Nucor's one-hundred forty-third consecutive quarterly cash dividend.
BoyGenius
Cyber Bully Victim
Nucor Announces One-Hundred Forty-Third (143rd) Consecutive Cash Dividend
CHARLOTTE, N.C., Dec 09, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- The Board of Directors of Nucor Corporation (NYSE: NUE) increased the regular quarterly cash dividend on Nucor's common stock by 9.4% to thirty-five cents ($0.35) per share from thirty-two cents ($0.32) per share. This cash dividend is payable on February 11, 2009 to stockholders of record on December 31, 2008, and is Nucor's one-hundred forty-third consecutive quarterly cash dividend.
Did you catch Nucor on 60 minutes last night?
We can probably expect an Obama Rally over the next few months -- perhaps back up to DOW 11000. But expect it to be rough and choppy. If you are still hold non-commodity-based equities, use the strength to get out and stay out.
Unless you're a seasoned trader, I can't see any reason to be in the stock market for the next several years. There are few safe places to be...maybe cash, until inflation hits and the bottom falls out of the dollar. $1 Trillion plus deficit this yr on top of a $10Trillion debt. To pay for all this debt, they can either 1) raise taxes tremendously (not likely), 2) default on the debt (not likely), or 3) print money out of thin air, debase the currency, and foster inflation and high interest rates. It's a global depression and the typical buyers of US debt may be too broke to continue to do so. My money is on #3.
After the Obama rally, look for the major indices to dive below last year's lows. How low is anyone's guess. You can probably look for a bottom when the price of the DOW divided by the price of an ounce of gold is around 2, maybe even par. Par means gold is at $5000 and the DOW is at $5000, as an example...as long as X/Y=1.
We can recheck this thread this coming fall to see how accurate this turns out to be.
P.S. If you take Jim Cramer's advice seriously, you deserve to lose your money.
Unless you're a seasoned trader, I can't see any reason to be in the stock market for the next several years. There are few safe places to be...maybe cash, until inflation hits and the bottom falls out of the dollar. $1 Trillion plus deficit this yr on top of a $10Trillion debt. To pay for all this debt, they can either 1) raise taxes tremendously (not likely), 2) default on the debt (not likely), or 3) print money out of thin air, debase the currency, and foster inflation and high interest rates. It's a global depression and the typical buyers of US debt may be too broke to continue to do so. My money is on #3.
After the Obama rally, look for the major indices to dive below last year's lows. How low is anyone's guess. You can probably look for a bottom when the price of the DOW divided by the price of an ounce of gold is around 2, maybe even par. Par means gold is at $5000 and the DOW is at $5000, as an example...as long as X/Y=1.
We can recheck this thread this coming fall to see how accurate this turns out to be.
P.S. If you take Jim Cramer's advice seriously, you deserve to lose your money.
Tilted
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Did you catch Nucor on 60 minutes last night?
Sorry I didn't answer this before. No, I didn't catch that.
Alright Tilted, what's your prediction for this week?
Looking at the Asian and European market news, I'm betting we continue to take another leg down.
I don't think the stimulus is going to right the leaning ship, or even if it does, it will be very short-lived.
I generally don't bother worrying about near term trends. Usually, I only care about 2 time frames - the immediate term (minutes, hours, maybe even a day) and very long term. I'll trade for the first, and invest for the later.
Sometimes a very short term technical analysis gives me compelling reason to think one immediate movement is more likely than another - and that's a trading opportunity. Also, sometimes an anticipated happening (e.g. news, earnings report, economic indicator), or what I perceive as an advantage for me in quickly assessing how that happening impacts a particular stock, can create a trading event where I believe the expected value of the trade is positive.
In the long term, I can invest in stocks whose fundamentals I love, or in which I have a lot of faith for some other reason. Because its a long term investment, I don't have to be concerned with the whims and short-sightedness of the market - eventually quality and value has to be fairly priced, and if you have enough faith in a company you can hold on to them until that moment. In addition, sometimes I will invest for the long term even when I don't have the utmost faith in a company, because they are so heavily discounted that the potential upside outweighs the potential downside. That's a bit of a gamble, but a gamble that still has a positive expected value.
So, back to your original question - I don't have a clue. Trying to predict, and then act upon, near term trends is what gets people in trouble, and my brain just isn't wired to do it much anymore. The market is an emotional creature, and it's hard enough to predict an individual's emotions over a short period of time, let alone the emotions of a huge group of people, all with different sensibilities, fears and goals - and all being affected by the demonstrated emotions of everyone else. Add to that the fact that we don't know what news will happen in the near term, so we can't even try to predict how that news will emotionally affect all of those people.
Sure, sometimes you can guess what will or won't happen. Sometimes you will be right - sometimes wrong, but for most people it's mostly just luck. There are other dynamics (like immediate movements and very long term trends) that have a much higher degree of predictability, so there's just not much reason to try to make money guessing what will happen in the near term.
I realize that's not the answer you're looking for - but it's about all I got. I think a flipped coin could do almost as good as I could in predicting the next week, unless you can tell me what the news cycle will look like.
As far as the stimulus plan affecting the market, I don't think it will have any major effect. If the market makes a big move, it will likely be for other reasons. This stimulus package is already baked into the markets for now - they're very much forward looking mechanism and the details of this package aren't news anymore. Eventually, what effects it has will play a role in dictating market conditions, but as a near term market mover its powers are limited.
On a side note, the Sirius situation remains interesting, and it's looking like they are going to strike a deal with Liberty Media. I fear that a significant development will be revealed today, while I'm out of the office for a significant period of time.
Tilted
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I'm not taking issue with any of your general predictions, there are som who take similar positions; and, as I said in my reply to BG, it just doesn't matter that much to me to evaluate what's going to happen in the near term (or even the near term extended).
I just wanted to make a couple of comments on the bold-ed section. The other options are to reduce spending or just let the debt linger into perpetuity (which is the current plan and obviously has its problems). And, (3) usually refers to monetary policy of the Federal Reserve, which isn't really connected to our national debt.
As far as our ability to sell debt - it is greater than it has been in a long time - certainly greater than it is under 'normal' conditions. Yes, it is a global recession, but that makes us even more attractive - at the end of the day, the world still believes that 'the full faith and credit of the United States', is safer and worth more than what most of the world has to offer. People are lined up around the block trying to buy our debt.
Think about this - we are seeing historically high volume in treasury auctions (i.e. U.S. debt issuance), and at the same time we are seeing historically low treasury yields ( we are off the bottom a little bit, but we are still seeing very low yields). That means that supply is very high, yet demand is still so high that the price of that debt remains very high (and the yield of it remains very low). And, the U.S. is paying a discounted yield on its debt issuance when compared to the rest of the world. Our 2 year note is still trading at about a 0.5% yield discount versus the British equivalent, and the 10 year is trading about 0.8% lower. The world is willing to take that much less interest to give us their money instead of Britain.
What a lot of people don't realize is that there is tons of capital on the sideline right now. It is biding its time, sitting in perceived safe harbors, and waiting for the confidence it needs to go back to work. So, I don't think the U.S. is going to have any trouble borrowing money in the short term. And, if it does, then it won't matter anyway, because it will mean that the whole world has fallen apart.
Tilted
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Ya'll better find yourselves a nice high window to throw yourselves from when the stock market goes boom. 1929 all over again. And no I wasn't there. I'm not that old.
Not me - rarely does a lot of my money rest in the market. That which does, is mostly in places where I need not be too concerned with what it does in the next year or five.