Yes Sir, Stagflation here we come. We all best keep our liquid assets short-term cause interest rates are going UP!
I bought some I bonds this week, but funny thing, only individuals can now buy these and one can only buy a maximum of $5,000 dollars worth per year. Last year the limit was $30,000. A couple can buy $10,000 as long as they put the bonds into separate names. For those not familiar with these they are the inflation adjusted bonds. The government will continue to lie about the CPI but these pay better than C.D.’S or other treasuries.
July 31 (Bloomberg) -- Inflation in Europe accelerated to the fastest pace in more than 16 years in July, restricting the European Central Bank's room to bolster the economy even as unemployment starts to increase. The inflation rate for the 15-nation euro region rose to 4.1 percent from 4 percent in June, the European Union statistics office in Luxembourg said today. The rate, the highest since April 1992, matched the median estimate of 36 economists in a Bloomberg News survey. A separate report showed unemployment was 7.3 percent in June, exceeding the 7.2 percent median forecast.
NEW YORK: Inflation in the US could hit 6 per cent by the fall, CIBC World Markets' chief economist said on Wednesday.
Consumer prices for June were up 5 percent from the year before, the fastest one-year change since 1991. Jeffrey Rubin, chief economist of Toronto-based investment bank CIBC, predicts a 6 per cent rate for overall inflation, a level last seen in 1982.
`The last time we saw 6 per cent inflation in 1990, the federal funds rate was running at around 7.5 per cent _ over three times today's setting. And a 10-year Treasury bond was yielding 8.5 per cent _ over double what it yields today.''
"The bill also creates significant liabilities and risks for taxpayers, that are virtually impossible to calculate."
Not if your liability is small, very small. This is one of the reasons why we must reduce our individual tax exposure. Any and every tax dollar collected by our fed, state, local govts. is money taken directly out of your pocket and it is used to promote things that most folk don't support in the first place so reduce your tax exposure. Every cent counts as there are maybe 50 million of us paying in and 50 million times anything is something.
Kind of like taking public transportation as an example. I was paying about $400 a month to drive my car 20 miles to work every day at about $18/day. That $18 covered $4 gas each way (fuel tax), $2.50 in tolls, $4 parking, and about $3 in maintenance when spread over a year.
Now, I ride public transportation in and out for $1 each way (my tax money comin' back to daddy), I pay very little fuel tax, no tolls, no parking, very little maintenance, and I'm getting some of my tax money back. I figure I'm making about $16 a day at this. So, $16 X 21 days, a total savings of about $336 a month or a little less than a half oz of gold every month just for being a little adaptable. Yes, you CAN win at this game but you gotta play to win.
Next is the cell phone...look at all the taxes, fees, charges that you pay that have nothing to do with you making a phone call. Go ahead, look at your bill, you will be shocked. So, there is a new $10 disposable phone that you charge up with cash and you can transport your number. So, you get no bill, pay no goofy fees and taxes (other than the sales tax) and you skip out on a bunch of charges from the agencies and utility commissions. You got to reduce your tax exposure every chance you get.
Look at smoking. I used to smoke, the state/fed gets about $3 of the $5 a pack they sell for. They say it's to help pay for health care from related diseases to smoking. So, is there any chance that those fees would ever come back to help me, am I going to get subsidized medical care...nah, not a chance, I was just paying for someone elses medical care. $3 a day in taxes/31 days $100 less a month in taxes and I breathe much better.
So, $400 for the car, $150 or so for smokes, we've got a nice half oz saved up already, just for a little behavorial change and that's every month.
There are many ways to stop paying for someone elses comfort and pleasure and to keep those buks in your own pocket. The thing about taxes and fees is that they may be touted as being for the greater good but if your're a workin' stiff that does it every day, they aren't going to be doing you any good. The thing about taxes is that they are pervasive and seemingly innocuous (2 cents here, 50 cents there) but they add up quickly and are used for things we don't want anyway so you got to pay attention to what you're doing with your money or change will not be possible.
Those are just a few examples but one thing for sure, if you keep doing the same thing over and over and expect the results to change, you're on Darwin's list. That's the key to successful evolution; you must be adaptable, try different things, and not be afraid to change your response. As long as people keep voting for the same people and keep paying more and more taxes and expecting different results this time...well, that's how we come to find ourselves in our current situation; we've been stupid. Now, let's be prosperous!
The I bond is a savings bond with a variable-rate component that's meant to offset inflation. The inflation component for the current bond is 3.06 percent; which is 64 basis points above the previous inflation component of 2.42 percent. The inflation rate changes every six months when the bond is repriced on Nov. 1 and May 1.
But the bond also has a fixed-rate component that stays with the bond for its 30-year life, and the current fixed rate is 1.2 percent; 10 basis points lower than the previous fixed rate. Experts say that a investor's attention should be focused solely on the fixed rate when considering this bond as an investment.
High-yield alternatives A fixed rate of 1.2 percent is not a good deal for consumers when there are high-yield alternatives available. The I bond can't be sold for one year, and if you sell it in less than five years there's a penalty of three months' interest.
William Larkin, fixed-income portfolio manager at Cabot Money Management Inc. in Salem, Mass., recommends the iShares exchange-traded TIPS bond fund (NYSE: TIP), which invests in inflation-protected Treasury bonds. It currently yields 3.74 percent but has a year-to-date return of 6.2 percent.
The housing bill may not cost as much as predicted. I dont think many will opt for the new financing, as they will have to give up most or all of any eventual profits if they sell their house. Of course FRE and FMN will still suck up hundreds of millions of taxpayer dollars.
The Bill seeks to backstop the GSEs with unlimited financing, create and give considerable strength to an oversight office of the GSEs, provide quasi recoupable homeowner assistance via a $300 bln in mortgage refinancing plan and federal tax credits, both largely aimed at reducing foreclosures... This bill has large implications on the GSEs (FRE and FNM). Specifically, the bill will un-cap the current line of credit to allow virtually unlimited short term borrowing from the current $2.25 bln. The removal of the cap would expire on 1/09. The bill also will allow the Treasury to take an equity stake in either co if their financial conditions become critical.
Additionally, caps on mortgages available for purchase will be lifted to $625.5K, and restrictions on the size of loans will be modified. Specifically, the size of loans available for purchase by the GSEs will be adjustable according to the asset's location, or bigger loans in areas with higher housing costs. Explicitly they will be able to buy loans up to 115% of the local median house price... On homeowner assistance: The bill will allow some homeowners to cancel their old mortgage obligations in exchange for a 30yr fixed, with the amount of the new loans no more than 90% of current property value. Cut-off for inclusion is for loan generation on or before 1/08 on primary residences, and current payments must be deemed less-than-affordable (> 31% of current monthly income). This is mainly designed to assist distressed sellers (on the cusp of foreclosure).
However, this will create a payable to the US government, because once homes are sold, owners that had received the revised mortgages will have to pay back anywhere from 50-100% of the price appreciation above the new principal. The FHA is provided a $300 bln limit on these restructured loans. However, the option to offer the refinancing is still up to lenders, who will have to subsequently write down the value of their loans by the principal and foregone interest rate difference...
On tax credits, first time home buyers are eligible for a maximum of a $7,500 federal tax credit, net of any income taxes that the owner may owe the IRS. Phase out of this credit starts to phase out at +$75,000 annual income ($150,000 if file jointly with a spouse). The credit is then paid back interest free over 15 years. Annual payments are to be netted against income tax filings. There are also benefits when it comes time to pay for taxes. The bill offers an additional deduction for homeowners who only take the standard deduction (do not itemize) in the amount of $500 (single); $1,000 (jointly).
"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S." - President F.D. Roosevelt, 1933
With all the respect and special care taking of our money and governmental systems you wouldn't possibly think the government would reach this far do ya?
<< <i>"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S." - President F.D. Roosevelt, 1933 >>
<< <i>Infrastructure is money that stays in the USA.
Don't count on it...
Cintra Concessions de Infraestructuras de Transporte, S.A. of Spain plans to recover through tolls an investment that is estimated to exceed $180 billion for the full 50-year build-out of the TTC 4,000-mile network.
TTC stands for Trans-Texas Corridor, a 1/4 mile wide right of way heading from Mehico northward. >>
The corridor is now dead! Officially canceled. All contracts null and void.
Too much pressure from State Reps and Senators and the general Texas public.
Governor Goodhair looses and he's facing more losses in the near future.
It's a small victory perhaps, but it is a victory for the regular folks and taxpayers.
Yeah, we're still getting killed on property taxes, but that is the next big battle.
My property taxes exceeded my mortgage this year and I have a hearing set up for tomorrow to battle the bastages.
The fact is, my home has lost 30% of it's value and the taxes are based on a value that exceeds it's actual value by well over 70K.
They are clinging to the concept that property taxes are based on 80% of actual value. That has now been exposed as a flat out lie!
They have been exposed recently. Those arbitors who side with the county are receiving bonuses and get paid on time. Those who side with the homeowners are fighting to get paid at all. A recent lawsuit has exposed this smarmy practice.
I've got my pitchfork and torch at the ready.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
"The corridor is now dead! Officially canceled. All contracts null and void. Too much pressure from State Reps and Senators and the general Texas public."
Excellent! Bad idea from the start, why do you think we have borders?
Yep, looks like they took care of just about all the places you could put your money, and have it stay safe....They want your money bad! They want you to lose your middle class status and become a poor folk! They want your money and they want you to produce in the future little warriors to fight in their world order campaign...I can see the uniforms a commen! Now they have a policy that will help you keep your home, but in the end they will own it! UM HJM I can see it now...Now the sending of money out of the country...I understand it ...Now what about that Boston Tea Party!
I have to say in honesty though, that those who purchased those homes knowing they could not afford them, were poor to begin with...now in some way all of us are going to end up paying for what the greedy Banks and Real Estate Brokers should have never been able to do and that was to make illegal loans and sells knowing what the out come would be! They should have to do jail time and made pay back their comissions on such illegal sales.
My home never appreciated and I still pay 4% of the assesed value---100% valuations. Now my Governor says he doesnt have enough money to run the state cuz Wall Street isnt making any money.
I live in an older neighborhood. The thoughts of the city were to build $750K homes...well how they started out is that they would buy one on the block and knock it down and build one of those monsters on the block...well know that house has been there for two years and the people will have to pay taxes this year...so my point is we have a new 7% property tax increase because of this house!
And my house has lost value!
On top of that Cook county just got a new sales tax hike..almost 11% sales tax...highest in the nation.
Their debt is from our debt they all bought into the lies...Feeding the rich and starving the poor is what it is going to come to....no one will own anything, Except the Rich!
With all the respect and special care taking of our money and governmental systems you wouldn't possibly think the government would reach this far do ya?
<< <i>"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S." - President F.D. Roosevelt, 1933 >>
I think the market is a long way from a bottom. Cramer will be wrong on this one...everyone wishes but it is not gong to happen.....years of abuse will take years to repair!
Where would we be today if Nixon had not removed us from the gold standard? Any guesses! Could we have prospered as we have, or did he lead us to our demise? There are Countries richer than us and not in debt at all...and you know who they are...Saudi Arabia, Iran all your oil countries...the only thing we have is The Strongest Military in the World...so will condition guide us to our future, yes according to the new Security Jobs the Justice Department has just created, it is just the beginning! We are the little ants who will protect the Queenie's! GUN's FOR HIRE!
The Green Theme, If we continue our quest for solar power and wind power and reduce our need for oil...How is this going to effect our ties with our good ole Oil Buddies! Will they retaliate, just what will they do!
I guess that is why we will be under terriorest threats for decades to come!
Who started this want for a New World Order, how long has the White House been working on this...Somehow I think it started back in Daddy Bushes time...Jr just saw that it happened! All our jobs taken over seas, we build ourselves bankrupt, then you have the destruction of the middle class, left with people who are dependent on the government...and the Rich create the Rules!
Somehow all of this takes away from the concept that ALL MEN ARE CREATED EQUAL! OR does it!
It will leave a few families around the world in power...really like it has always been but more money will be transferred into their hands.
Remember MONEY RULES!
We will be he Police of the world, china will manufacture the worlds needs, I haven't figured what the other countries piece of the puzzle will be but I bet it will be a goodie...We Need a Banker and I guess that might be England and then we are going to need a new world currency!
Russia, Humm, now that is going to be a problem I bet!
If this is what we are becoming at least I hope we manufacture our own arms!
If the Banks start going down the States, Cities, counties, and schools could go belly-up. Are there even enough banks in the country to spread billions of dollars into $100,000 deposits at each bank?
I suppose if the bigger banks continue to go down we will have to see another bail out as the FDIC will be broke!
Billions in tax deposits uninsured
Thursday, July 31, 2008 3:22 AM BY BILL BUSH THE COLUMBUS DISPATCH Your bank account is insured up to $100,000, but you still have a lot at stake in the event of a major failure: hundreds of billions of state and local tax dollars in accounts nationwide that are not insured by the Federal Deposit Insurance Corp.
Franklin County currently has $300 million of taxpayer money in banks; the city of Columbus easily has tens of millions; and local school districts hundreds of millions more, officials said.
That's why last year the Olentangy schools started using a program called Certificate of Deposit Account Registry Service, which takes the district's roughly $40 million in bank deposits and spreads it across hundreds of banks nationwide.
In 2006, FDIC-insured commercial banks held $289.7 billion in cash for state and local governments nationwide, of which only 24 percent was insured, according to an FDIC report issued this year.
Um, I type with great trepidation here...but I gotta say from a contrarian viewpoint: There are some pretty amazing buys in the stock market right now. There are some companies, like (gasp!) Ford and GM that are at historic lows...and after a few more hits, may be 3-and 4-baggers, easy, and long-term 10+-baggers. People tend to get myopic when things are bad, but both of these companies are heavily invested in overseas markets, and will soon introduce products doing well there in the US. Same in the financial sector, the MFG sector, the housing sector: many companies are thinking globally and are retooling/rethinking/making moves. The trick is finding the ones that will survive, but I'm certain there will be survivors.
So, please forgive me if I don't buy this "The Rich will get richer, and the poor will get poorer" business. My mantra will instead be "The uninformed will get poorer, and the informed will get richer." Regardless if you're currently rich or poor. And no, information is NOT fully censored, but it's not fully available, either: You gotta dig (read: work). Oops...didn't mean to swear.
This is the land of opportunity, and I still see some...but you gotta act (work...oops! Swore again). Burying your head in the gold "sand" may preserve a certain portion of your wealth (then again, it may not), but for me it's time to look for the bargains.
Don't Ford and GM have debts that far exceed their ability to ever pay? They might be good buys if they didn't have all that debt. It is quite possible that common shareholders will be wiped out if they are re-capitalized in Ch11. I would buy preferred or their debt and stay away from the common but your premise on good buys is still sound.
Investors Intelligence bearish sentiment at 50, and consumer confidence at 30 year lows, There is no doubt most people feel this is a sign of futher pain and despair, but could it be something different?
Warren Buffet has said:"Be fearful when others are greedy and be greedy when others are fearful" so while it's clear this thread is dominated by economic doomsayers and gold bugs, it has to be said, with the weak dollar, recession and bear market, being negative on the dollar and bullish on gold has been the correct side of the trade and rewarded. But now I ask you, do you think this a time to be greedy or fearful? Picking the bottom is not a science and it is never prudent nor wise to have 100% conviction and place big bets, but for those that follow contrary technical sentiment indicators, It seems clear that the biggest risks would be being short not long the stock market, short not long the dollar and long not short Gold..at least for the time being and of course, that will change again at some point. ....BTW imho Cramer is a fool, although he makes so many calls occasionally one or two turn out to be right.....kind of like a broken clock.
My biggest risk is being long and a downturn in the stock market like 2000. I'm 52 with an unstable job so perserving capitol is my goal at this time in my lfe. I'm good even if I miss out on some gains (doubtful) but it depends on your age doesn't it? The biggest lie on Wall Steet is the buy and hold thinking. I'm in the stock market but have half my money in Money Markets at present. I've always bought and sold on the way up or down so I've never made the max in any market but I've done well with much less risk. It comes down to each persons risk acceptance IMO.
tt, it is more prudent to let the market tell you it's past the bear market, which it certainly hasn't yet. Nothing wrong with keeping powder dry and missing the absolute bottom is not important because no one knows where it is. Plus imho, peace of mind and sleeping at night are more important than market timing or gains for that matter. Everyone has to always temper the emotions of fear and greed, to be a successful investor.
<< <i>Investors Intelligence bearish sentiment at 50, and consumer confidence at 30 year lows, There is no doubt most people feel this is a sign of futher pain and despair, but could it be something different? >>
Historically, investor sentiment has been a fairly reliable (but not perfect) contrarian indicator. The periods of maximum bullishness often presage a correction or worse, and periods of maximum bearishness often presage a market recovery.
As I said, it's not perfect and some may say "this time it's different" (which usually proves false), but at least historically it's right more often than not.
My home never appreciated and I still pay 4% of the assesed value---100% valuations. Now my Governor says he doesnt have enough money to run the state cuz Wall Street isnt making any money.
Sounds like a fellow Upstate New Yorker. It will be interesting to see if he holds the line on spending as he is saying, or raises taxes in the great tradition of our state. I can tell you what I expect...
So, please forgive me if I don't buy this "The Rich will get richer, and the poor will get poorer" business. My mantra will instead be "The uninformed will get poorer, and the informed will get richer." Regardless if you're currently rich or poor. And no, information is NOT fully censored, but it's not fully available, either: You gotta dig (read: work). Oops...didn't mean to swear.
This is the land of opportunity, and I still see some...but you gotta act (work...oops! Swore again).
Very well said! The true gap between the rich and poor today is education, which is really information. And that is available to everyone, for free, 24/7 if you're willing to make the effort. Spend your time complaining about how the powers that be are keeping you down, or use that time to read about economics, politics, history, etc. Your choice.
I for one hope that gold never rules, but it still does not hurt to have some...You have to admit we are in a position that we have never been and where we are going is anyones guess...Yes you can choose to play the market if you wish, but if the nation is in a liquidity shortage...how secure is your brokerage account? The money has to come from somewhere and if there isn't any....WELL!
<< <i>Um, I type with great trepidation here...but I gotta say from a contrarian viewpoint: There are some pretty amazing buys in the stock market right now. There are some companies, like (gasp!) Ford and GM that are at historic lows...and after a few more hits, may be 3-and 4-baggers, easy, and long-term 10+-baggers. People tend to get myopic when things are bad, but both of these companies are heavily invested in overseas markets, and will soon introduce products doing well there in the US. Same in the financial sector, the MFG sector, the housing sector: many companies are thinking globally and are retooling/rethinking/making moves. The trick is finding the ones that will survive, but I'm certain there will be survivors.
So, please forgive me if I don't buy this "The Rich will get richer, and the poor will get poorer" business. My mantra will instead be "The uninformed will get poorer, and the informed will get richer." Regardless if you're currently rich or poor. And no, information is NOT fully censored, but it's not fully available, either: You gotta dig (read: work). Oops...didn't mean to swear.
This is the land of opportunity, and I still see some...but you gotta act (work...oops! Swore again). Burying your head in the gold "sand" may preserve a certain portion of your wealth (then again, it may not), but for me it's time to look for the bargains.
FWIW...and I guess flame on... >>
How dare you post something rational.
And BTW, you're required to use at least ten exclamation points when you post here.
“When the people find that they can vote themselves money, that will herald the end of the republic.” — Benjamin Franklin
My icon IS my coin. It is a gem 1949 FBL Franklin.
Does anyone know what the current P/E ratios are for the Dow, and S&P 500? Or the Wilshire 5000? Historical P/Es will usually give you a good indication as to relative values.
There is a reason that GM stock is at a longtime low. Actually, there are a bunch of reasons.
I try to let the Fed and the Secretary of the Treasury guide me in my investment strategy. Right now, they are telling me that a few select banks and their incompetant managers are too important to fail (whatever that means), that private mortgage operations that lose money hand-over-fist are too important to fail, and that a bunch of folks who never should have qualified for home loans in the first place should get preferential treatment now that they can't pay their bills. And the kicker - is that since I have managed my affairs without crashing & burning, I will be called upon to carry the burden of debt for these incompetant shysters, ripoffs and hopeless basket cases who are now even more dependent than ever on government freebees.
It's really very simple. I try to stay out of their way, and gold looks alot better than paper to me - at least it's "real". Yeah, even the "top tier" paper like T-Bills are now screwed. You are kidding yourself if you think that T-Bills aren't being diluted with all of these inflationary bailouts, in addition to the continuing war. After awhile, that all becomes the status quo, and the newbies don't even know any different. That's the bad part - when I read on another post how the government is to blame for the slowing economy because they haven't provided enough stimulus for consumers, in order to keep the economy pumped!!!! Amazing, the lack of understanding.
We won't start seeing any positive upticks until the losers are allowed to fail and suffer the consequences. Bad decisions and bad management at all levels require a learning curve in order to prevent bad decisions and bad management from happening all over again. That isn't being allowed to happen. Problem is, it will happen at some point regardless of what the government is able to do. That's not gloom & doom - that's history.
At some point, we might see new production plants being built, but I'm not sure it will be in my lifetime. A country with such a rich heritage and abundant natural resources as ours simply has no excuse for making so many millions of people dependant upon Big Government. The founding fathers had it right, and we've got it completely wrong, at this point.
Q: Are You Printing Money? Bernanke: Not Literally
Sounds like a fellow Upstate New Yorker. It will be interesting to see if he holds the line on spending as he is saying, or raises taxes in the great tradition of our state. I can tell you what I expect...
I'm so glad I escaped from New York three years ago....
<< <i>Does anyone know what the current P/E ratios are for the Dow, and S&P 500? Or the Wilshire 5000? Historical P/Es will usually give you a good indication as to relative values. >>
I think P/E10 ratios are more useful for judging valuation -- the price divided by the inflation-adjusted average yearly earnings over the last 10 years. Using straight P/E as a valuation model in an economic slowdown is often a bad idea, because relatively sound companies with negative earnings would otherwise be valued as worth less than zero using just P/E.
And if a solid company temporarily has earnings reduced by 80% because of an economic slowdown, using just P/E as a measure of valuation would suggest that the company was worth 80% less than last year. Using something like PE10 smooths out the bumps.
I think P/E10 ratios are more useful for judging valuation -- the price divided by the inflation-adjusted average yearly earnings over the last 10 years. Using straight P/E as a valuation model in an economic slowdown is often a bad idea, because relatively sound companies with negative earnings would otherwise be valued as worth less than zero using just P/E.
And if a solid company temporarily has earnings reduced by 80% because of an economic slowdown, using just P/E as a measure of valuation would suggest that the company was worth 80% less than last year. Using something like PE10 smooths out the bumps.
Respectfully, Ziggy - the P/E ratio for a given stock is meaningful both in terms of comparison to it's peers within its industry, and in terms of comparison to itself on a historical basis.
A downturn in company performance may be reflective of a one-time charge, or a general trend. That is part of valuation assessment. If a downturn in a stock's performance is due to general trend, and if the P/E is higher than its historical average and/or the P/Es of comparable firms in the same industry - then your risk capital is better deployed in other areas.
In the case of GM - Cramer was talking about this the other day (and in this case, he is correct) - the stockholders are in a bad spot. The company is in bad enough shape, that in the case of a forced liquidation, the bondholders will always get priority and the stockholders may not get zip. This is just the law as it relates to most U.S. corporations in bankruptcy proceedings.
Q: Are You Printing Money? Bernanke: Not Literally
First, we had the checks that were mailed out this spring/summer.
Then, they just passed the second one to help bailout the homeowners and the mortgage companies.
NOW.... they are talking about a THIRD one to come out in the first of 2009.... perhaps ANOTHER check.
I believe Bear is correct in that there is a desperate attempt to convince everyone that we are on the bottom and now is the time to jump back in the stock market, go buy a new car, a new house, etc. I am not convinced we are at a bottom yet..... because NONE of the underlying problems have been corrected. Are there still a huge amount of derivatives out there? Are there still many more bad mortgages out there that have not yet come up to their balloon payment due dates? Are there still countries that desperately waiting for a chance to unload their huge accumulations of U.S. IOU's and paper debt? Is there still the overhanging inflation that is continuously creeping up, with the not unrealistic possibility of much greater increases? Are people still losing their jobs? Are any more financial institutions going to write off any more huge losses? Is anything being done about possible fraud and corruption and manipulation in the market to protect me as an investor (and, actually, the silver markets also, etc).?
All that has been done to this point is the Ben Bernanke Magic Money Machine has been cranked up to full speed to spit out the dollar bills to bail out the failing entities up to this point. None of the underlying problems have been corrected, and still exist. Although I do believe there will be a time when it will be very wise to jump back into the market, I am not yet convinced now is that time (but I do want to get back in, and am watching for a time when I have more comfort about doing so).
These are not quite normal times. Rules of thumb used in the past may or may not apply right now. In the past, when there was a down market, usually it was one or two sectors or bubbles that caused the downturn. Now...... every sector is in it's own problem area, and they have all converged. I am not aware of any recent past time when this has occurred before. So what rules of thumb can you go by?
Now wait just a minute, they had 32 BILLION in assets in March and now they have 50 to 100 million??????
IndyMac Bancorp files for Chapter 7 bankruptcy
Friday August 1, 10:02 am ET By Jonathan Stempel
Chief Executive Michael Perry, the company's sole remaining employee, in a court filing said he didn't have information normally required to file for bankruptcy protection because the FDIC has sole possession of IndyMac's books and records.
IndyMac Bancorp, the holding company, has between $50 million and $100 million of assets, between $100 million and $500 million of liabilities, and fewer than 50 creditors, according to the bankruptcy filing.
The collapse of IndyMac was the largest U.S. banking failure since the 1980s savings-and-loan crisis. Regulators said IndyMac ended March with about $32 billion of assets and about $19 billion of deposits, most of which were insured."
<< <i>In the case of GM - Cramer was talking about this the other day (and in this case, he is correct) - the stockholders are in a bad spot. The company is in bad enough shape, that in the case of a forced liquidation, the bondholders will always get priority and the stockholders may not get zip. This is just the law as it relates to most U.S. corporations in bankruptcy proceedings. >>
Except that I was referring to valuations of relatively sound companies with decent balance sheets.
GM is neither. A "relatively sound" company is going to be fine when the economy recovers. It will not be in a death spiral like GM. I still contend that for generally solid companies (again -- NOT GM), PE5 or PE10 is probably a more meaningful way to value a stock. Yes, you still need to compare it to its peers and historical PE5/PE10 and perhaps expect it will be a little higher in a weak economy.
jmski52----You may be suprised to find that PEs are oftentimes the lowest at the tops and highest at the bottom. This is the result of corporate profits being the highest at market tops and lowest at market bottoms. Personally, I prefer to measure value via price to sales and price to tangible book value. Many times while markets are in turmoil a company--especially smaller tech companies, will trade at 1x cash. Many of these companies have no debt and can be amazing trades. A classic example that I traded in the last few months is ADPT. While currently not profitable, the company has about $5 per share in cash. It traded down to about $2.50 with the market swoon in March. It is now $3.70. Thats a 50% return in 4 months. There are a few more examples that I currenly own. Like Tomohawk said, do your homework and profit.
And the biggest reason why GM, F and the airlines are in such distress can be summed in one 6-letter word-----UNIONS.
EDITED to add---- Many times the company with the lowest PE in an industry is the worse performer. The markets do not reward a company with a high multiple if earnings are erratic or if mismanaged. There are reasons why some stocks are cheaper than their peers.
Now wait just a minute, they had 32 BILLION in assets in March and now they have 50 to 100 million??????
IndyMac Bancorp files for Chapter 7 bankruptcy
Friday August 1, 10:02 am ET By Jonathan Stempel
Chief Executive Michael Perry, the company's sole remaining employee, in a court filing said he didn't have information normally required to file for bankruptcy protection because the FDIC has sole possession of IndyMac's books and records.
IndyMac Bancorp, the holding company, has between $50 million and $100 million of assets, between $100 million and $500 million of liabilities, and fewer than 50 creditors, according to the bankruptcy filing.
The collapse of IndyMac was the largest U.S. banking failure since the 1980s savings-and-loan crisis. Regulators said IndyMac ended March with about $32 billion of assets and about $19 billion of deposits, most of which were insured." >>
Wow. And after the FED bailed them out. GOLDSAINT, all I can think of is all investor/depositors got their money from the FED and split..... left town..... so the bank has nothing left.
As mentioned earlier, I am not confident we have seen the bottom of the market yet. More tragedies and pain to follow......
Speaking of GM, their market cap is now about 7 WEEKS of ExxonMobil's *profits*. If you set 7 weeks of XOM's profits aside, you'd have enough cash to theoretically buy GM outright with its current market cap.
Not that XOM would want to touch that dog, but still...
Comments
I bought some I bonds this week, but funny thing, only individuals can now buy these and one can only buy a maximum of $5,000 dollars worth per year. Last year the limit was $30,000. A couple can buy $10,000 as long as they put the bonds into separate names. For those not familiar with these they are the inflation adjusted bonds. The government will continue to lie about the CPI but these pay better than C.D.’S or other treasuries.
July 31 (Bloomberg) -- Inflation in Europe accelerated to the fastest pace in more than 16 years in July, restricting the European Central Bank's room to bolster the economy even as unemployment starts to increase.
The inflation rate for the 15-nation euro region rose to 4.1 percent from 4 percent in June, the European Union statistics office in Luxembourg said today. The rate, the highest since April 1992, matched the median estimate of 36 economists in a Bloomberg News survey. A separate report showed unemployment was 7.3 percent in June, exceeding the 7.2 percent median forecast.
NEW YORK: Inflation in the US could hit 6 per cent by the fall, CIBC World Markets' chief economist said on Wednesday.
Consumer prices for June were up 5 percent from the year before, the fastest one-year change since 1991. Jeffrey Rubin, chief economist of Toronto-based investment bank CIBC, predicts a 6 per cent rate for overall inflation, a level last seen in 1982.
`The last time we saw 6 per cent inflation in 1990, the federal funds rate was running at around 7.5 per cent _ over three times today's setting. And a 10-year Treasury bond was yielding 8.5 per cent _ over double what it yields today.''
Not if your liability is small, very small.
This is one of the reasons why we must reduce our individual tax exposure. Any and every tax dollar collected by our fed, state, local govts. is money taken directly out of your pocket and it is used to promote things that most folk don't support in the first place so reduce your tax exposure. Every cent counts as there are maybe 50 million of us paying in and 50 million times anything is something.
Kind of like taking public transportation as an example. I was paying about $400 a month to drive my car 20 miles to work every day at about $18/day. That $18 covered $4 gas each way (fuel tax), $2.50 in tolls, $4 parking, and about $3 in maintenance when spread over a year.
Now, I ride public transportation in and out for $1 each way (my tax money comin' back to daddy), I pay very little fuel tax, no tolls, no parking, very little maintenance, and I'm getting some of my tax money back. I figure I'm making about $16 a day at this. So, $16 X 21 days, a total savings of about $336 a month or a little less than a half oz of gold every month just for being a little adaptable. Yes, you CAN win at this game but you gotta play to win.
Next is the cell phone...look at all the taxes, fees, charges that you pay that have nothing to do with you making a phone call. Go ahead, look at your bill, you will be shocked. So, there is a new $10 disposable phone that you charge up with cash and you can transport your number. So, you get no bill, pay no goofy fees and taxes (other than the sales tax) and you skip out on a bunch of charges from the agencies and utility commissions. You got to reduce your tax exposure every chance you get.
Look at smoking. I used to smoke, the state/fed gets about $3 of the $5 a pack they sell for. They say it's to help pay for health care from related diseases to smoking. So, is there any chance that those fees would ever come back to help me, am I going to get subsidized medical care...nah, not a chance, I was just paying for someone elses medical care. $3 a day in taxes/31 days $100 less a month in taxes and I breathe much better.
So, $400 for the car, $150 or so for smokes, we've got a nice half oz saved up already, just for a little behavorial change and that's every month.
There are many ways to stop paying for someone elses comfort and pleasure and to keep those buks in your own pocket. The thing about taxes and fees is that they may be touted as being for the greater good but if your're a workin' stiff that does it every day, they aren't going to be doing you any good. The thing about taxes is that they are pervasive and seemingly innocuous (2 cents here, 50 cents there) but they add up quickly and are used for things we don't want anyway so you got to pay attention to what you're doing with your money or change will not be possible.
Those are just a few examples but one thing for sure, if you keep doing the same thing over and over and expect the results to change, you're on Darwin's list. That's the key to successful evolution; you must be adaptable, try different things, and not be afraid to change your response. As long as people keep voting for the same people and keep paying more and more taxes and expecting different results this time...well, that's how we come to find ourselves in our current situation; we've been stupid. Now, let's be prosperous!
OK, I think I'm done now.
But the bond also has a fixed-rate component that stays with the bond for its 30-year life, and the current fixed rate is 1.2 percent; 10 basis points lower than the previous fixed rate. Experts say that a investor's attention should be focused solely on the fixed rate when considering this bond as an investment.
High-yield alternatives
A fixed rate of 1.2 percent is not a good deal for consumers when there are high-yield alternatives available. The I bond can't be sold for one year, and if you sell it in less than five years there's a penalty of three months' interest.
William Larkin, fixed-income portfolio manager at Cabot Money Management Inc. in Salem, Mass., recommends the iShares exchange-traded TIPS bond fund (NYSE: TIP), which invests in inflation-protected Treasury bonds. It currently yields 3.74 percent but has a year-to-date return of 6.2 percent.
The Bill seeks to backstop the GSEs with unlimited financing, create and give considerable strength to an oversight office of the GSEs, provide quasi recoupable homeowner assistance via a $300 bln in mortgage refinancing plan and federal tax credits, both largely aimed at reducing foreclosures... This bill has large implications on the GSEs (FRE and FNM). Specifically, the bill will un-cap the current line of credit to allow virtually unlimited short term borrowing from the current $2.25 bln. The removal of the cap would expire on 1/09. The bill also will allow the Treasury to take an equity stake in either co if their financial conditions become critical.
Additionally, caps on mortgages available for purchase will be lifted to $625.5K, and restrictions on the size of loans will be modified. Specifically, the size of loans available for purchase by the GSEs will be adjustable according to the asset's location, or bigger loans in areas with higher housing costs. Explicitly they will be able to buy loans up to 115% of the local median house price... On homeowner assistance: The bill will allow some homeowners to cancel their old mortgage obligations in exchange for a 30yr fixed, with the amount of the new loans no more than 90% of current property value. Cut-off for inclusion is for loan generation on or before 1/08 on primary residences, and current payments must be deemed less-than-affordable (> 31% of current monthly income). This is mainly designed to assist distressed sellers (on the cusp of foreclosure).
However, this will create a payable to the US government, because once homes are sold, owners that had received the revised mortgages will have to pay back anywhere from 50-100% of the price appreciation above the new principal. The FHA is provided a $300 bln limit on these restructured loans. However, the option to offer the refinancing is still up to lenders, who will have to subsequently write down the value of their loans by the principal and foregone interest rate difference...
On tax credits, first time home buyers are eligible for a maximum of a $7,500 federal tax credit, net of any income taxes that the owner may owe the IRS. Phase out of this credit starts to phase out at +$75,000 annual income ($150,000 if file jointly with a spouse). The credit is then paid back interest free over 15 years. Annual payments are to be netted against income tax filings. There are also benefits when it comes time to pay for taxes. The bill offers an additional deduction for homeowners who only take the standard deduction (do not itemize) in the amount of $500 (single); $1,000 (jointly).
Knowledge is the enemy of fear
Governor Zoolander (aka Rick Perry). The man who sees himself as the next Vice President. His hair was especially perfect that day, I might add.
What kind of expert would say that??? A logical non-expert would focus on the same thing as any other investment: Risk, Return, Taxes, liquidity, etc.
I-bonds were great. At one time, I bonds payed more interest than my mortgage interest rate. I Bonds purchased today don't, but hey things change.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
With all the respect and special care taking of our money and governmental systems you wouldn't possibly think the government would reach this far do ya?
<< <i>"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S." - President F.D. Roosevelt, 1933 >>
<< <i>Infrastructure is money that stays in the USA.
Don't count on it...
Cintra Concessions de Infraestructuras de Transporte, S.A. of Spain plans to recover through tolls an investment that is estimated to exceed $180 billion for the full 50-year build-out of the TTC 4,000-mile network.
TTC stands for Trans-Texas Corridor, a 1/4 mile wide right of way heading from Mehico northward. >>
The corridor is now dead! Officially canceled. All contracts null and void.
Too much pressure from State Reps and Senators and the general Texas public.
Governor Goodhair looses and he's facing more losses in the near future.
It's a small victory perhaps, but it is a victory for the regular folks and taxpayers.
Yeah, we're still getting killed on property taxes, but that is the next big battle.
My property taxes exceeded my mortgage this year and I have a hearing set up for tomorrow to battle the bastages.
The fact is, my home has lost 30% of it's value and the taxes are based on a value that exceeds it's actual value by well over 70K.
They are clinging to the concept that property taxes are based on 80% of actual value. That has now been exposed as a flat out lie!
They have been exposed recently. Those arbitors who side with the county are receiving bonuses and get paid on time. Those who side with the homeowners are fighting to get paid at all. A recent lawsuit has exposed this smarmy practice.
I've got my pitchfork and torch at the ready.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Too much pressure from State Reps and Senators and the general Texas public."
Excellent! Bad idea from the start, why do you think we have borders?
BTW---Welcome back Deadhorse. Where ya been?
Knowledge is the enemy of fear
And my house has lost value!
On top of that Cook county just got a new sales tax hike..almost 11% sales tax...highest in the nation.
or read i should say
Negative-equity spectre haunts 1.7 million homeowners in Britain, says report
Knowledge is the enemy of fear
of the market and after two days of up market we are
being told that the worst is over. It is my opinion that we
are the subject of a desperate manipulation. With the economic
numbers being massaged and our auto industry being dismantled
I wonder if we aren't on a small patch before the next decline in the
roller coaster of life. I still plan to hope for the best while still planning
for the worst.
Camelot
<< <i>Hey trouble maker,
With all the respect and special care taking of our money and governmental systems you wouldn't possibly think the government would reach this far do ya?
<< <i>"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S." - President F.D. Roosevelt, 1933 >>
>>
I think they will do ANYTHING for money.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Wrong on this one??
He's always wrong!!
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
I guess that is why we will be under terriorest threats for decades to come!
Somehow all of this takes away from the concept that ALL MEN ARE CREATED EQUAL! OR does it!
It will leave a few families around the world in power...really like it has always been but more money will be transferred into their hands.
Remember MONEY RULES!
We will be he Police of the world, china will manufacture the worlds needs, I haven't figured what the other countries piece of the puzzle will be but I bet it will be a goodie...We Need a Banker and I guess that might be England and then we are going to need a new world currency!
Russia, Humm, now that is going to be a problem I bet!
If this is what we are becoming at least I hope we manufacture our own arms!
Are there even enough banks in the country to spread billions of dollars into $100,000 deposits at each bank?
I suppose if the bigger banks continue to go down we will have to see another bail out as the FDIC will be broke!
Billions in tax deposits uninsured
Thursday, July 31, 2008 3:22 AM
BY BILL BUSH
THE COLUMBUS DISPATCH
Your bank account is insured up to $100,000, but you still have a lot at stake in the event of a major failure: hundreds of billions of state and local tax dollars in accounts nationwide that are not insured by the Federal Deposit Insurance Corp.
Franklin County currently has $300 million of taxpayer money in banks; the city of Columbus easily has tens of millions; and local school districts hundreds of millions more, officials said.
That's why last year the Olentangy schools started using a program called Certificate of Deposit Account Registry Service, which takes the district's roughly $40 million in bank deposits and spreads it across hundreds of banks nationwide.
In 2006, FDIC-insured commercial banks held $289.7 billion in cash for state and local governments nationwide, of which only 24 percent was insured, according to an FDIC report issued this year.
So, please forgive me if I don't buy this "The Rich will get richer, and the poor will get poorer" business. My mantra will instead be "The uninformed will get poorer, and the informed will get richer." Regardless if you're currently rich or poor. And no, information is NOT fully censored, but it's not fully available, either: You gotta dig (read: work). Oops...didn't mean to swear.
This is the land of opportunity, and I still see some...but you gotta act (work...oops! Swore again). Burying your head in the gold "sand" may preserve a certain portion of your wealth (then again, it may not), but for me it's time to look for the bargains.
FWIW...and I guess flame on...
Warren Buffet has said:"Be fearful when others are greedy and be greedy when others are fearful" so while it's clear this thread is dominated by economic doomsayers and gold bugs, it has to be said, with the weak dollar, recession and bear market, being negative on the dollar and bullish on gold has been the correct side of the trade and rewarded. But now I ask you, do you think this a time to be greedy or fearful? Picking the bottom is not a science and it is never prudent nor wise to have 100% conviction and place big bets, but for those that follow contrary technical sentiment indicators, It seems clear that the biggest risks would be being short not long the stock market, short not long the dollar and long not short Gold..at least for the time being and of course, that will change again at some point. ....BTW imho Cramer is a fool, although he makes so many calls occasionally one or two turn out to be right.....kind of like a broken clock.
<< <i>Investors Intelligence bearish sentiment at 50, and consumer confidence at 30 year lows, There is no doubt most people feel this is a sign of futher pain and despair, but could it be something different? >>
Historically, investor sentiment has been a fairly reliable (but not perfect) contrarian indicator. The periods of maximum bullishness often presage a correction or worse, and periods of maximum bearishness often presage a market recovery.
As I said, it's not perfect and some may say "this time it's different" (which usually proves false), but at least historically it's right more often than not.
Sounds like a fellow Upstate New Yorker. It will be interesting to see if he holds the line on spending as he is saying, or raises taxes in the great tradition of our state. I can tell you what I expect...
This is the land of opportunity, and I still see some...but you gotta act (work...oops! Swore again).
Very well said! The true gap between the rich and poor today is education, which is really information. And that is available to everyone, for free, 24/7 if you're willing to make the effort. Spend your time complaining about how the powers that be are keeping you down, or use that time to read about economics, politics, history, etc. Your choice.
I guess we could all take IOU'S!
<< <i>Um, I type with great trepidation here...but I gotta say from a contrarian viewpoint: There are some pretty amazing buys in the stock market right now. There are some companies, like (gasp!) Ford and GM that are at historic lows...and after a few more hits, may be 3-and 4-baggers, easy, and long-term 10+-baggers. People tend to get myopic when things are bad, but both of these companies are heavily invested in overseas markets, and will soon introduce products doing well there in the US. Same in the financial sector, the MFG sector, the housing sector: many companies are thinking globally and are retooling/rethinking/making moves. The trick is finding the ones that will survive, but I'm certain there will be survivors.
So, please forgive me if I don't buy this "The Rich will get richer, and the poor will get poorer" business. My mantra will instead be "The uninformed will get poorer, and the informed will get richer." Regardless if you're currently rich or poor. And no, information is NOT fully censored, but it's not fully available, either: You gotta dig (read: work). Oops...didn't mean to swear.
This is the land of opportunity, and I still see some...but you gotta act (work...oops! Swore again). Burying your head in the gold "sand" may preserve a certain portion of your wealth (then again, it may not), but for me it's time to look for the bargains.
FWIW...and I guess flame on... >>
How dare you post something rational.
And BTW, you're required to use at least ten exclamation points when you post here.
My icon IS my coin. It is a gem 1949 FBL Franklin.
There is a reason that GM stock is at a longtime low. Actually, there are a bunch of reasons.
I try to let the Fed and the Secretary of the Treasury guide me in my investment strategy. Right now, they are telling me that a few select banks and their incompetant managers are too important to fail (whatever that means), that private mortgage operations that lose money hand-over-fist are too important to fail, and that a bunch of folks who never should have qualified for home loans in the first place should get preferential treatment now that they can't pay their bills. And the kicker - is that since I have managed my affairs without crashing & burning, I will be called upon to carry the burden of debt for these incompetant shysters, ripoffs and hopeless basket cases who are now even more dependent than ever on government freebees.
It's really very simple. I try to stay out of their way, and gold looks alot better than paper to me - at least it's "real". Yeah, even the "top tier" paper like T-Bills are now screwed. You are kidding yourself if you think that T-Bills aren't being diluted with all of these inflationary bailouts, in addition to the continuing war. After awhile, that all becomes the status quo, and the newbies don't even know any different. That's the bad part - when I read on another post how the government is to blame for the slowing economy because they haven't provided enough stimulus for consumers, in order to keep the economy pumped!!!! Amazing, the lack of understanding.
We won't start seeing any positive upticks until the losers are allowed to fail and suffer the consequences. Bad decisions and bad management at all levels require a learning curve in order to prevent bad decisions and bad management from happening all over again. That isn't being allowed to happen. Problem is, it will happen at some point regardless of what the government is able to do. That's not gloom & doom - that's history.
At some point, we might see new production plants being built, but I'm not sure it will be in my lifetime. A country with such a rich heritage and abundant natural resources as ours simply has no excuse for making so many millions of people dependant upon Big Government. The founding fathers had it right, and we've got it completely wrong, at this point.
I knew it would happen.
I'm so glad I escaped from New York three years ago....
Member ANA, SPMC, SCNA, FUN, CONECA
<< <i>Does anyone know what the current P/E ratios are for the Dow, and S&P 500? Or the Wilshire 5000? Historical P/Es will usually give you a good indication as to relative values. >>
I think P/E10 ratios are more useful for judging valuation -- the price divided by the inflation-adjusted average yearly earnings over the last 10 years. Using straight P/E as a valuation model in an economic slowdown is often a bad idea, because relatively sound companies with negative earnings would otherwise be valued as worth less than zero using just P/E.
And if a solid company temporarily has earnings reduced by 80% because of an economic slowdown, using just P/E as a measure of valuation would suggest that the company was worth 80% less than last year. Using something like PE10 smooths out the bumps.
And if a solid company temporarily has earnings reduced by 80% because of an economic slowdown, using just P/E as a measure of valuation would suggest that the company was worth 80% less than last year. Using something like PE10 smooths out the bumps.
Respectfully, Ziggy - the P/E ratio for a given stock is meaningful both in terms of comparison to it's peers within its industry, and in terms of comparison to itself on a historical basis.
A downturn in company performance may be reflective of a one-time charge, or a general trend. That is part of valuation assessment. If a downturn in a stock's performance is due to general trend, and if the P/E is higher than its historical average and/or the P/Es of comparable firms in the same industry - then your risk capital is better deployed in other areas.
In the case of GM - Cramer was talking about this the other day (and in this case, he is correct) - the stockholders are in a bad spot. The company is in bad enough shape, that in the case of a forced liquidation, the bondholders will always get priority and the stockholders may not get zip. This is just the law as it relates to most U.S. corporations in bankruptcy proceedings.
I knew it would happen.
First, we had the checks that were mailed out this spring/summer.
Then, they just passed the second one to help bailout the homeowners and the mortgage companies.
NOW.... they are talking about a THIRD one to come out in the first of 2009.... perhaps ANOTHER check.
I believe Bear is correct in that there is a desperate attempt to convince everyone that we are on the bottom and now is the time to jump back in the stock market, go buy a new car, a new house, etc. I am not convinced we are at a bottom yet..... because NONE of the underlying problems have been corrected. Are there still a huge amount of derivatives out there? Are there still many more bad mortgages out there that have not yet come up to their balloon payment due dates? Are there still countries that desperately waiting for a chance to unload their huge accumulations of U.S. IOU's and paper debt? Is there still the overhanging inflation that is continuously creeping up, with the not unrealistic possibility of much greater increases? Are people still losing their jobs? Are any more financial institutions going to write off any more huge losses? Is anything being done about possible fraud and corruption and manipulation in the market to protect me as an investor (and, actually, the silver markets also, etc).?
All that has been done to this point is the Ben Bernanke Magic Money Machine has been cranked up to full speed to spit out the dollar bills to bail out the failing entities up to this point. None of the underlying problems have been corrected, and still exist. Although I do believe there will be a time when it will be very wise to jump back into the market, I am not yet convinced now is that time (but I do want to get back in, and am watching for a time when I have more comfort about doing so).
These are not quite normal times. Rules of thumb used in the past may or may not apply right now. In the past, when there was a down market, usually it was one or two sectors or bubbles that caused the downturn. Now...... every sector is in it's own problem area, and they have all converged. I am not aware of any recent past time when this has occurred before. So what rules of thumb can you go by?
So who is going to jail on this one?
Now wait just a minute, they had 32 BILLION in assets in March and now they have 50 to 100 million??????
IndyMac Bancorp files for Chapter 7 bankruptcy
Friday August 1, 10:02 am ET
By Jonathan Stempel
Chief Executive Michael Perry, the company's sole remaining employee, in a court filing said he didn't have information normally required to file for bankruptcy protection because the FDIC has sole possession of IndyMac's books and records.
IndyMac Bancorp, the holding company, has between $50 million and $100 million of assets, between $100 million and $500 million of liabilities, and fewer than 50 creditors, according to the bankruptcy filing.
The collapse of IndyMac was the largest U.S. banking failure since the 1980s savings-and-loan crisis. Regulators said IndyMac ended March with about $32 billion of assets and about $19 billion of deposits, most of which were insured."
<< <i>In the case of GM - Cramer was talking about this the other day (and in this case, he is correct) - the stockholders are in a bad spot. The company is in bad enough shape, that in the case of a forced liquidation, the bondholders will always get priority and the stockholders may not get zip. This is just the law as it relates to most U.S. corporations in bankruptcy proceedings. >>
Except that I was referring to valuations of relatively sound companies with decent balance sheets.
GM is neither. A "relatively sound" company is going to be fine when the economy recovers. It will not be in a death spiral like GM. I still contend that for generally solid companies (again -- NOT GM), PE5 or PE10 is probably a more meaningful way to value a stock. Yes, you still need to compare it to its peers and historical PE5/PE10 and perhaps expect it will be a little higher in a weak economy.
DAC---you are correct.
Tomohawk---very nice.
jmski52----You may be suprised to find that PEs are oftentimes the lowest at the tops and highest at the bottom. This is the result of corporate profits being the highest at market tops and lowest at market bottoms. Personally, I prefer to measure value via price to sales and price to tangible book value. Many times while markets are in turmoil a company--especially smaller tech companies, will trade at 1x cash. Many of these companies have no debt and can be amazing trades. A classic example that I traded in the last few months is ADPT. While currently not profitable, the company has about $5 per share in cash. It traded down to about $2.50 with the market swoon in March. It is now $3.70. Thats a 50% return in 4 months. There are a few more examples that I currenly own. Like Tomohawk said, do your homework and profit.
And the biggest reason why GM, F and the airlines are in such distress can be summed in one 6-letter word-----UNIONS.
EDITED to add---- Many times the company with the lowest PE in an industry is the worse performer. The markets do not reward a company with a high multiple if earnings are erratic or if mismanaged. There are reasons why some stocks are cheaper than their peers.
Knowledge is the enemy of fear
<< <i>BYE BYE !
So who is going to jail on this one?
Now wait just a minute, they had 32 BILLION in assets in March and now they have 50 to 100 million??????
IndyMac Bancorp files for Chapter 7 bankruptcy
Friday August 1, 10:02 am ET
By Jonathan Stempel
Chief Executive Michael Perry, the company's sole remaining employee, in a court filing said he didn't have information normally required to file for bankruptcy protection because the FDIC has sole possession of IndyMac's books and records.
IndyMac Bancorp, the holding company, has between $50 million and $100 million of assets, between $100 million and $500 million of liabilities, and fewer than 50 creditors, according to the bankruptcy filing.
The collapse of IndyMac was the largest U.S. banking failure since the 1980s savings-and-loan crisis. Regulators said IndyMac ended March with about $32 billion of assets and about $19 billion of deposits, most of which were insured." >>
Wow. And after the FED bailed them out. GOLDSAINT, all I can think of is all investor/depositors got their money from the FED and split..... left town..... so the bank has nothing left.
As mentioned earlier, I am not confident we have seen the bottom of the market yet. More tragedies and pain to follow......
Not that XOM would want to touch that dog, but still...