Diamonds and Dogs
February 21, 2009It is time for you to shine.
The markets struggled this week to a six percent loss, and that is thankfully with only four trading days, as major markets were closed for the presidents' birthdays. One additional day like these, may have done us in! The financial crisis is moving full steam ahead and the headlines are as negative as we have seen in two generations. This is the opportunity for true governmental leadership to be on display. Our leaders may not be able to stem the tide of foreclosures, stop the daily job loss announcements, or correct the health care cost crisis. But they can be leaders and they can get us through this crisis in confidence. Restoring confidence would go a long way to helping us through this time. For those of you keeping track, the Dow is now down to 2002 levels, a bear market low, and is off about 16% year to date, that coming on top of last year's rout. For bulls, there will be a bounce in our offering, but not until historic leadership shines.
Friday, February 20th, 2009
Gold (GLD) hit $1000 per ounce in trading on Friday as investors ran for the safety of the precious metal. GLD closed the session at $97.80 as gold may once again be the standard for currency and the prospect of inflation after the government throws everything but the kitchen sink at this market.
Financial stocks cratered today as the government told us they were not thinking of nationalizing the banks and no one believed them. There's a shocker! Citigroup (C) fell to $1 handle and Bank of America fell to a $2 handle before showing a bit of life at the end of the day. These stocks are down 60-70% this year alone, but there may be some interest in their preferred issues. Death by a thousand knives.
Thursday, February 19th, 2009
Surprising many investors, Whole Foods (WFMI) delivered a 37% pop on the news that things were not as bad as expected at the organic grocer's stores last quarter. Earnings were down 17%, but that was not as bad as expected and traders cheered, taking the stock to $12.75, a $3.46 gain.
Hewlett Packard (HPQ) computed an almost 8% loss after announcing earnings the previous night. HPQ fell $2.69 to close at $31.39. Profit was only down 13% at the technology leader, but in this environment, everything is bad. Look for a bounce in HPQ next week.
Wednesday, February 18th, 2009
After a three day loss, stocks finally posted a gain today, albeit a 3 point-gain on the Dow. Weatherford International (WFT) rallied after they were beaten down the day before, and closed today at $9.75, up 53 cents. WFI is an oil field services provider and that sector, oil and commodities in general, is in major disarray. Jed Clampett would take the 53 cent gain today.
Even the utilities get hit in bear markets as Constellation Energy (CEG) fell today, losing $1.97 to close at $22.30. Higher losses combined with one-time costs related to their failed sale to MidAmerican can be the blame for the lights going out at CEG. CEG is a large Warren Buffett favorite and is priced to yield 8%.
Tuesday, February 17th, 2009
By the way, has anyone ever said that finding diamonds when the Dow is down 300 points is easy? How about the one shining star of the industrials, Wal-Mart (WMT)? WMT gained $1.71 to check out at $48.24 on the close. WMT actually had their best quarter ever. And ever is a very long time for the Arkansas retailing giant. It does represent a sign of the times&
No signal at Research in Motion (RIMM). The blackberry maker fell to $44.64 after losing $3.87 today. The stock has been hammered over the last 52 weeks and today's almost 8% drop doesn't help. Not only has business slowed a bit, their executives are still dealing with an options back-dating scandal that is close to settling with the SEC. Greed is not good, Mr. Gekko.
Monday, February 16th, 2009
Markets closed for the Presidents birthdays.