Diamonds and Dogs

Free the Capitalists!!

Wall Street Firms are making a deal with the devil. With traders hopefully and anxiously waiting for Monday morning's government intervention into capitalism, stocks staged a modest rally late in the week and now, interestingly enough, NASDAQ stocks are in the black for the year. Bernie Madoff can be proud. Government involvement in our business is troubling at best, and it's beginning to feel like Canada around here. Take Bank America for example. BAC was virtually forced by the Fed to bail-out troubled Merrill Lynch and very troubled Countrywide. When Ken Lewis and crew really saw how bad the numbers and exposure was at Merrill in December and indicated they wanted out of the government brokered deal, Paulson and Bernanke put the breaks on that and strongly urged, pushed, and cajoled them into staying with the deal. What next, government approval on individual home loans? BAC finished the week at $6.13, trading as low as $3.77, for all of its efforts. Laissez-faire economics are all but finis!

Friday, February 6th, 2009

Diamonds
Markets shook off the report of another 598,000 jobs lost and rallied up almost 35. Bank and financial stocks rallied as JPM was a big winner, gaining $3.09 to finish at $27.63. I guess this relief rally proves that stocks cannot go below zero. All eyes are on the bank deal for Monday, which appears to involve creating a bad bank holding cell with $500 billion in capital.

Dogs
Lockheed Martin (LMT) fell $2.25 or 2.76% as the nation may be slowing defense spending. LMT is still trading at a 10 P/E and at $79 per share, is still on the low end of its yearly range. LMT was lower even though they launched the final Polar Operational Environmental Satellite today. These satellites had been going up since the first one in 1960. You can't forecast the weather and you can't forecast a stock price.

Thursday, February 5th, 2009

Diamonds
MasterCard (MA), on the heels of solid news from Visa the day before, rallied up 14% to $159 per share. Leverage may have caused the largest financial collapse since the 30's, but the stocks that thrive on consumer leverage are still in play. Trading up $19.60, MA reported a fourth quarter profit of $239 million or $1.87 per share.

Dogs
DryShips (DRYS) sank to $6.43 after they announced a new financing deal that will dilute shareholders to the tune of about $500 million dollars. The new shares will help DRYS navigate the perilous waters of lower energy prices and financial melt-down. DRYS was just starting to show some life. Buoy.

Wednesday, February 4th, 2009

Diamonds
Electronic Arts (ERTS), the leader in the gaming business, rose over 11%, or $1.77, to finish the trading session at $17.27. The positive stock move came on the heels of a huge 11% cut in its workforce. Let me get this straight, an eleven percent drop in employees equals an eleven percent increase in stock price? Should have laid them all off!

Dogs
Disney (DIS) cut the cheese as the entertainment giant founded by a giant mouse, fell to $19 per share. This 7.8% drop was the direct result of their poor earnings report the night before. Profits are down 32% as the recession takes its toll on DVD sales and on advertising. Throw in lower park sales and DIS executives appear a bit cartoonish.

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