The ongoing financial turmoil and financial discussion thread

[Mccree]

I like the coin flip theory better.

[Bob]

Wow, looks like the wheel landed on "SELL SELL SELL!" today.

[Azure]

Someone must have mentioned 'sell' on Wall Street today....

[Gozer]

Don't want to post the whole thing, but I love hearing TMQ's take (link below) on such matters.

An example of the exaggerated crisis claim is the assertion that Americans "lost" $2 trillion from their pension savings in the past month, while equities "lost" $8 trillion in value. "Investors Lose $8.4 Trillion of Wealth" read a Wall Street Journal headline last week. This confuses a loss with a decline. Unless you cashed out stocks or a 401(k) in the past month, you haven't "lost" anything. Nor have most investors "lost" money, let alone $8.4 trillion -- crisis-mongering is now so deeply ingrained in the media that even Wall Street Journal headline writers have forgotten basic economics. People who because of financial need have no choice but to cash out stocks right now are really harmed. Anyone who simply holds his or her ground with stocks takes no loss and is likely, although of course not certain, to come out ahead in the end. During the housing price bubble of 2003 to 2006, many Americans became much better off on paper, but never actually sold their homes, so it was all paper gains. Right now many Americans holdings stocks or retirement plans are much worse off on paper, but will be fine so long as they don't panic and sell. One of the distressing things about last week's media cries of doomsday is that they surely caused some average people to sell stocks or 401(k)'s in panic, taking losses they might have avoided by simply doing nothing. The financial shout-shows on cable tend to advise people to buy when the market is rising, sell when the market is falling -- the worst possible advice, and last week it was amplified by panic.
http://sports.espn.go.com/espn/page2...4&sportCat=nfl

[Table 5]

A nice little opinion piece from Warren Buffett in todays New York Times. He even talks a little hockey....who are you to resist?

http://www.nytimes.com/2008/10/17/op...=1&oref=slogin

[Phanuthier]

3rd quarter VC's report is in, and as expected, dropped. Internet companies down 36%.

http://www.sfgate.com/cgi-bin/articl...BU3T13JKK5.DTL

[Claeren]

I was impressed to read that Apple, a company I had kind of been ignoring at their old valuation and with all that hype, is actually holding $20.8-Billion in cash, with no debt(!) and the strong potential to be holding $30-Billion in cash by 2009 (as per NYTimes today).

In this market/world of insolvent companies, insolvent consumers and insolvent governments that is pretty impressive!?


Westjet and Southwest (Southwest despite their big write-down this quarter due to accounting rules in regards to their fuel hedging more so than fundamentals) are another two I was looking at. Lots of cash reserves and no/little debt, very used to recession-type mentalities in their operations, and benefitting from the big drop in oil prices.


NOTE: I haven't actually looked at their current stock prices, I have just been poking around looking for companies with no debt and lots of cash on hand - I'll get to the stock pricing later but can assume they are at or close to 52-week lows.

Who else has some companies worth mentioning?

I still think the market is far from done its bear-tumble as there is still tons of debt destruction that needs to take place and the US, in my humble opinion, is more bankrupt/insolvent than it is illiquid, but still good to know the potentially good companies from the bad.





Claeren.

[Phanuthier]

Originally Posted by Claeren

I was impressed to read that Apple, a company I had kind of been ignoring at their old valuation and with all that hype, is actually holding $20.8-Billion in cash, with no debt(!) and the strong potential to be holding $30-Billion in cash by 2009 (as per NYTimes today).

I had read somewhere they were holding that back for "MacBrick" ?

[DementedReality]

Originally Posted by Claeren

....been poking around looking for companies with no debt and lots of cash on hand -.Who else has some companies worth mentioning?

id like to know how to find this information?

[Claeren]

^ Not necessarily easy to do at a quick glance but if you randomly look at financial reports for different companies you can hit and miss here and there.

I find I listen to people around me and read a lot of news and then follow-up on companies I am hearing/seeing a lot about (to get my own verified facts versus rumours or poor reporting).


And of course whatever you find you have to reconcile against the reality of a specific company. Like $1B in cash for one smaller company is waaaaay different than it is for another much bigger one. And a lot of solid debt at one company may be better/worse than a lot of 'liabilities' at another similar sized one depending on the details behind each scenario.





AS an aside to that, here is a report from the UN labour office:
http://news.yahoo.com/s/nm/20081020/...financial_jobs
U.N. agency says crisis to cost 20 million jobs

It was alarming that global unemployment had stayed at the same levels despite the strong economic growth seen between 2002 and 2007, said Somavia, who files to New York this week for talks with the heads of all U.N. agencies, chaired by U.N. Secretary-General Ban Ki-moon.

He said resources should be pumped into the economy to stave off or mitigate recession, concentrating on employment-intensive sectors including small enterprises. The financial sector should also be steered back to its fundamental function of lending to entrepreneurs, according to the Chilean lawyer and diplomat.

Somavia said the financial sector's share in the profits of U.S. companies had risen to 41 percent last year from 5 percent in 1980. As a result, banks preferred to invest in financial transactions rather than lending to other productive sectors.
"So this system began to siphon off resources from the real economy process," he said.

It seems that an argument could be made that any part of the additional financial services sector's 36% of above-historical-average economic weighting that does not add true value to the economy will have to disappear before a true bottom can be hit in that sector.

The upside of forcing that reversion, versus covering it up and letting it build up again, is that real companies that add real value may be better positioned to thrive again long term?

Or maybe financial services merely for the sake of perpetuating yet more layers of financial services/schemes are totally valid value adders to the real world? (Worthy of its own debate I am sure)


Claeren.

[MoneyGuy]

Originally Posted by Table 5

I'm glad I made the switch into leveraged-index etfs last week, it sure makes me less nervous about this whole market.

Less worried? Really?

[Table 5]

Originally Posted by MoneyGuy

Less worried? Really?

yes, because i'm not tied to just one company during a period where it feels there are several falling out of the sky every week (bankrupcy, failed mergers, horrible quarterly reports) and I have time on my side. I dont really need the money for the next few years so i can afford to wait it out and keep investing on lows.

I wanted to get into some financials but didnt really want to hitch my wagon to anyone in particular, and going into a sector index helps me do that. My ETF's are leveraged to perform roughly twice the performance of the market, so while they are all down at the moment (and most likely will go down still), i know that the upside will eventually be there. They are all basically a 1/4 to 1/8th of their 52 week high....its just a matter of time before these things recover, unlike an individual business, which always has the chance of just sinking into bankrupcy. Once things calm down, I will venture into individual stocks again.

Honestly, whether is wise or not, I do sleep much easier because of it.

[MoneyGuy]

Originally Posted by Table 5

yes, because i'm not tied to just one company during a period where it feels there are several falling out of the sky every week (bankrupcy, failed mergers, horrible quarterly reports) and I have time on my side. I dont really need the money for the next few years so i can afford to wait it out and keep investing on lows.

I wanted to get into some financials but didnt really want to hitch my wagon to anyone in particular, and going into a sector index helps me do that. My ETF's are leveraged to perform roughly twice the performance of the market, so while they are all down at the moment (and most likely will go down still), i know that the upside will eventually be there. They are all basically a 1/4 to 1/8th of their 52 week high....its just a matter of time before these things recover, unlike an individual business, which always has the chance of just sinking into bankrupcy. Once things calm down, I will venture into individual stocks again.

Honestly, whether is wise or not, I do sleep much easier because of it.

Okay if you have a long-term view. Anyone with a short-term view of things should not be doing this, but otherwise good on ya. In fact, I think it's a better idea than individual stocks.

[Table 5]

well, at least that's the plan. I would also like to supplement it with individual stocks once things settle down a bit. The good (or bad) news is that I really don't have that much money to lose at the moment, so honestly, I'm fine. While watching a 1/3rd of my value dissapear this last little while was not fun, it's not like I lost a house-worth of money, unlike people with more years to their name surely did.

You mentioned before that you would recommend emerging markets and technology. Anything specific you've had in mind? Would you stick to BRIC?
Any thoughts on Warren Buffet's purchase of a stake in an electric-car battery manufacturer (BYD, ticker symbol 1122 on HK) in China?

[Phanuthier]

Alan Greenspan: we are in a credit tsunami

Also, if you wouldn't mind, some opinions on Teck Comico?

Also interested in BRIC too

[bluejays]

Listening to the radio this morning, and the words "Black Friday" came up today more than once describing today's upcoming market opening. If the thing closes down today, expect Monday to be another day in the red.

[Nancy]

Asian and European markets down around 10%
American futures index trading halted after falling more than 6%.
C$ lost another cent.
Oil around $62/bbl. (Guess we're headed for $50's soon.)
Market opens in 2 minutes, expected to open down at least 5%.

Meanwhile:
CREB statistics show SFH inventory now close to 7 months. A month ago it was around 5 months. (As was it in Oct. 2007.)

[Table 5]

Originally Posted by fleury

Listening to the radio this morning, and the words "Black Friday" came up today more than once describing today's upcoming market opening. If the thing closes down today, expect Monday to be another day in the red.

What I find annoying is that the media gets hysterical every single chance they get...everything either "plummets or "soars". It seems like they are coming up with nicknames and armageddon scenarios before things even happen. They were calling today's events on Wall Street to be a Bloody Friday even before markets opened. Dow just closed down 314 points...not great, but hardly unheard of.

Sure, things are not rosy right now by any means, but it's a bit of a self fullfilling prophecy. Joe Sixpack sees this stuff on the news on every day and no wonder everybody is pulling money out of everything, and not spending a single penny.

[Slava]

^ Not exactly "bloody Friday" in Canada either. Down about 37 points last time I looked. Personally I think that this is the bottom, or 9000 is basically the bottom anyway. Everytime the market has crossed below that it has come back quickly.

Oh well, only one more week to go in "Red October"! (I'm planning on copyrighting that one as soon as I find the time, so don't bother stealing it for your headlines National Post!!)

[Nancy]

Originally Posted by Slava

^ Not exactly "bloody Friday" in Canada either. Down about 37 points last time I looked. Personally I think that this is the bottom, or 9000 is basically the bottom anyway. Everytime the market has crossed below that it has come back quickly.

Oh well, only one more week to go in "Red October"! (I'm planning on copyrighting that one as soon as I find the time, so don't bother stealing it for your headlines National Post!!)

Doh!

http://news.google.ca/news?hl=en&tab...ber%22+markets