January 22, 2009

Let me get this straight. Bank America borrows $25 billion from the TARP bail-out program in the fall. They agree to purchase the plummeting Merrill Lynch and close on the deal January 2, paying $19.6 billion for the humbled brokerage. For some reason, they believe that they need to pay RETENTION BONUSES of an estimated $4-$6 billion to keep the brokers there. Doesn't that add up to close to $25 billion? Did the government just finance the legion of brokers at Merrill? Didn't BAC go back to the government for another $25 billion or more this past week? John Thain, the former NYSE head, is now gone from Merrill, unceremoniously let-go today. Where is the outrage?

Diamonds and Dogs
Thursday, January 22nd 2009 (Happy Birthday Alan!)

Diamonds
Google (GOOG) the one and only search engine it seems, traded up over $17 in after hours trading as they reported earnings of about $5 per share (not counting one-time charges). GOOG slipped for the first time, but with all that is happening in the financial and economic markets right now, beating expectations was worth some upside today. Revenue advanced 18%, although it is the first time revenue has come in at less than 30% growth. GOOG gave us a nice boost today.

Dogs
My sympathy is for Mr. Softy. Microsoft (MSFT) is trading at 10 year lows today after they pre-announced lower earnings (a day early) and then let us know they have no idea how this year is going to turn out. MSFT traded down $2.27 on the day, closing at $17.11 after the announcement. Computer sales are down, tech spending down, interest rates are down (they have $20 billion plus in cash), and nothing seems to be going right for Mr. Gates and friends. This may be the buying opportunity of a life-time, for those of us patient enough to wait.

Wednesday, January 21st, 2009

Diamonds
Now it is Obama to the rescue. During his first day in office, Bam-Bam's stimulus plan received a warm welcome on the street as financial stocks rocketed higher. Morgan Stanley (MS), now stuck with Smith Barney, gained $3.76 to close the session at $16.86 after falling hard on Tuesday. Financials have been virtually wiped out over the past six months, and MS did not escape the bear's claws. Is this a dead cat bounce? Time, and a few more billion in TARP money, will only tell.

Dogs
How can you do it? AMR reported a larger than expected loss today, as the airline blamed higher than expected fuel costs for the wider than expected fourth quarter loss. What were they expecting, crude oil at $10 per barrel? Crude had fallen from $140 per barrel to about $40 per barrel since July (that's about six months). Maybe the airlines are just destined to always lose money; they certainly as a group have never made any.

Tuesday, January 20th, 2009

World attention, including over 2 million people in Washington, had their attention on the new president of the US as he accepted the oath of office for president. The challenges facing this country appear to be daunting. In my humble opinion, the challenges are certainly daunting, but the rewards for innovation and for saving for a rainy day way over shadow the short term pain we are about to receive. Once we get through this "thank you sir, may I have another" period, true long-term investors in real estate, businesses, and yes, even stocks and bonds, will be greatly rewarded. Skate to where the puck is going to be, not where it is.

Diamonds
Stocks were hammered today, as investors greeted Obama with sell orders. Financial upheaval in Europe and all parts foreign started the selling pressure and it never let up. Gold stocks, Newmont (NEM) and Barrick Gold (ABX) both rallied almost 4% and almost 2% respectively as investors sought the safety of gold and considered the possible chance of inflation when all is said and done.

Monday, January 19th, 2009

Happy Martin Luther King Day, the markets are closed.