Stock Market Tanking on News of AIG Bailout.

[stephendare]

Following the announcement of the nationalization of the world's largest insurer, The dow has taken a nosedive in early trading.

http://www.marketwatch.com/

Todays front page of the WallStreetJournal's online site is a virtual horror show of news leads.

This on the heels of what is being dubbed Black Monday to describe the historic failure of investment banks Lehman Brothers and the wipeout of Merril Lynch, one of the most trusted and recognizeable names in the world for generations.

These are truly historic times. 

I hope everyone is taking note of the details they will want to pass on to their grandchildren.

Trust me, they will ask you what this period was like.

[Driven1]

i like GE - 11 year low price

S - 20 year low price

also, C and BAC and AIG ($2/share) and WM actually (maybe just the bonds though)

[RiversideGator]

Opportunities abound.   

[chipwich]

Good point guys.

Now who's gonna write the first check back into the market? 

Sure as hell won't be me.

Just FYI, regardless of a sucker's rally.  I would suggest staying the hell away from from financial stocks until the dust clears (which may take another 3-6 months)

It took about 8 years to make this mess.  It can't be undone in a week.  Think of it as a fit person becoming an obese person and then trying to loose all their weight with a 1 week case of bulimia. 

P/Es across the board are low and at first sight most non-financial stocks look like bargains.  However, it would probably be very imprudent not to wait to see if the financial sector will create widespread negative contagion.  Considering most business and customers can't even reach for Kleenex without a bank to finance it, contagion is very likely and the fall-out will be far-reaching and sustained for at least the next 6 months.  More than likely, I imagine we will se another 10-15% drop in equity prices (most likely by mid-January)


If you don't care for my analysis, then by all means have at it.  It's not my dime that is on the line.  I don't have a crystal ball but I  just thought it would be nice to point this out before anyone goes out and starts throwing your money in a market that no one (including myself) really grasps.  That said, yes values are low and over the long run, it won't hurt to own some solid companies like Toyota, Apple, ADM, and GE, but you will most likely get a better bargain in a couple of months.

[Charleston native]

I'm staying away from GE. This organization has corruption written all over it from its ownership of NBC and MSNBC to the propaganda of CFLs, it has become way too influential. I might consider Toyota...

[apvbguy]

I'm staying away from GE. This organization has corruption written all over it from its ownership of NBC and MSNBC to the propaganda of CFLs, it has become way too influential. I might consider Toyota...

I agree with you on GE, I bailed on them a few years ago after the stock never moved up despite some solid fundamentals, you should know that GE is one of the largest lenders in the world and I am surprised nobody has noted any potential problems they might have because of this current credit mess.
I don't know about Toyota, they've been a high flyer but without doing any research I'd say they are at the top end of their curve. I would look at low priced companies that have solid markets and produce real products, Anheuser Busch/Inbev or Molson/Coors might be worth a look, beer sales always are steady in bad times

[Driven1]

Good point guys.

Now who's gonna write the first check back into the market? 

i did yesterday.  today, at least, looking like a great move.  personally, AIG up 22%, BAC up 5 %, WM up 14%, C up 5%, ETFC up 5%, WB up 12.%.

and i don't care if it drops 50% next week.  these are the cos i believe in - and feel that 2 years from now, i will be amazed i got them at the prices i did.  unlike a lot of posters on here, i don't have the ability to predict the immediate (next month) future.

[Charleston native]

I don't know about Toyota, they've been a high flyer but without doing any research I'd say they are at the top end of their curve. I would look at low priced companies that have solid markets and produce real products, Anheuser Busch/Inbev or Molson/Coors might be worth a look, beer sales always are steady in bad times

Toyota has seemed to be the prime favorite amongst car buyers in the country; their sales are always strong across their entire lineup from fuel efficient cars to minivans and SUVs.

Good point about the beer companies. I can't think of a time when they haven't posted strong sales.

[tufsu1]

I agree with you on GE, I bailed on them a few years ago after the stock never moved up despite some solid fundamentals,

Are you saying that GE has solid workers 

[apvbguy]

I agree with you on GE, I bailed on them a few years ago after the stock never moved up despite some solid fundamentals,

Are you saying that GE has solid workers 

Ignoring your silliness of using a truncated quote to try and make McCain look bad, I will add some intelligent ( to me anyway) comments
I am sure that they do some very good workers there as well as some who don't work too well, and some of their divisions are powerful profit centers and some divisions like NBC are embarrassing, they are a huge concern and usually the stronger units pull the weaker ones along, but that wasn't the point.
my concern is that they are one of the largest private lenders in the world and who knows what their exposures are in the current mess

[chipwich]

I am going to retract some of my advise and will drop some solid $$$ into Goldman Sachs tomorrow morning.  It looks like it will have a very good day or week.  I doubt I will hold on to it too long, but I imagine shares of GS will skyrocket tomorrow and probably the rest of the week on news that Berkshire is investing $5 billion into the company.  We could easily see 25-30% gains in stock price this week.

They are probably the most well capitalized financial institution out there right now.  I am still staying away from the rest of the financials.  Yes there is lots of reward to be had right now, but at least for me, there is still way too much risk. 

[Driven1]

I am going to retract some of my advise and will drop some solid $$$ into Goldman Sachs tomorrow morning.  It looks like it will have a very good day or week.  I doubt I will hold on to it too long, but I imagine shares of GS will skyrocket tomorrow and probably the rest of the week on news that Berkshire is investing $5 billion into the company.  We could easily see 25-30% gains in stock price this week.

They are probably the most well capitalized financial institution out there right now.  I am still staying away from the rest of the financials.  Yes there is lots of reward to be had right now, but at least for me, there is still way too much risk. 

JP Morgan & Wells Fargo are in MUCH better shape.  Buffet holds a ton of JPM stock as well.

[chipwich]

I agree on Wells and JP Morgan.  I however fear that they both may still have a few skeletons in their closets.  I also think (pending how the bailout works) that Wells will end up buying parts of WAMU which will burden theme with just awful debt.  JP Morgan has cash, but I don't feel very good about them right now.  I believe that they bought into a lot of junk derivatives.

I have always felt that Goldman has always been the best investment bank in the world.  They give smart analysis and are more conservative than their counterparts.  I am not just saying that because Buffet just bought in.  They were the first to predict the oil price problem and the first to see the rise of China, Brazil, Russia and India.  The fact that GS has also just become a full consumer bank (allowing them to raise cash through deposits) makes them very attractive for long term growth.  I see the value here.  I also see the risks.

The smoke hasn't cleared on financial companies yet.  No one can tell the future, but it doesn't take a PhD economist to see that this crisis is still unraveling.  There will be contagion into other sectors and there will be several casualties.  WE WILL HAVE A RECESSION.  It is unavoidable at this point.  The extent and length of any downturn is still unknown.  A bailout will help tremendously, though it is a giant slap across the face to taxpayers. Personally, I seriously doubt $700 billion is going to fix this problem, but some variant of this plan will have to do for now.  Once approved, I also see financial stocks rallying for a little bit.

[Driven1]

i think Morgan Stanley was the one who identified the BRIC countries first, right?  i think they are actually responsible for creating the acronym.  i love financial stocks right now.  well, for where they'll be in 5 years (not for where they may or may not be 6 months from now). 

[chipwich]

I don't always trust Wikipedia, but here is the best I could do for now:

http://en.wikipedia.org/wiki/BRIC