***Official*** 2008 Stock Market Thread

[bonkers325]

GS up $8 in pre-market

 

[ponyo]

Originally posted by: bonkers325
GS up $8 in pre-market

I know. Nothing I could do as afterhours trading closed at 7pm yesterday and stock was trading up at $8 in premarket trading at 8am even before the report at 8:30am.

 

[bonkers325]

Originally posted by: Naustica

Originally posted by: bonkers325
GS up $8 in pre-market

I know. Nothing I could do as afterhours trading closed at 7pm yesterday and stock was trading up at $8 in premarket trading at 8am even before the report at 8:30am.

seems liek yesterday's $140 was the low... kudos to those who got in at that price

 

[ponyo]

Goldman is up $15 and Lehman is up $6.5. You had people piling on yesterday to the downside. Talk about coiled spring.

 

[sniperruff]

everything's up so far today.

 

[Ricochet]

Holey Sh!t! What is happening to BSC? $6.48 high. D@mn.

 

[bonkers325]

$2/share was an offer made by JPM backed by the Fed. many people believe it is worth much more than $2/share and that someone else will bail out BSC.

 

[Ricochet]

Okay BSC went over $8 today. Are these people nuts? Hail Mary?

 

[TruePaige]

Bear-n-Stern Bears.

 

[imported_Lothar]

75 basis point cut

 

[TheoPetro]

sure hope 75 was enough for the market to not kill itself. It sounds like a fine number to me, not too high where you start getting diminishing returns but not lower than what has been priced in.

 

[ponyo]

Lehman and Goldman just killed some shorts today. Sharpest and the most vicious rallies occur in bear markets and with how hard people will pressing down on these brokerage stocks, it doesn't take much good news or not as bad news to get things going. It's all about expectation and the bad news was for the most part priced in. Good news or even somewhat decent news wasn't. Combine that with bears pressing and you get this violent explosion. I think this rally has some legs because of the sentiment and the belief of the successful retest crowd. I think too many were pressing and not enough have inventory here. I don't think we're out of the woods by any means and I do believe we'll go lower levels than after the Bear Sterns blowup in the coming months as financials come under pressure again. The higher Goldman and Lehman rebounds, the more attractive shorts they become. I've my eye on Lehman and Bear for shorts but I'm just watching for now since I think this rally has potential for longer than one day move.

 

[bonkers325]

there will probably be some pullback tomorrow as people start taking profits, but nothing too drastic... i think natural resource / energy stocks will do well this week, financials will probably lose 3-5% of today's closing price by end of week

 

[Aharami]

Combine that with bears pressing and you get this violent explosion

mind explaining this sentence? most of what you said completely went over my head. Granted, I'm just starting to learn about the stock market though...

 

[ponyo]

Originally posted by: Aharami

Combine that with bears pressing and you get this violent explosion

mind explaining this sentence? most of what you said completely went over my head. Granted, I'm just starting to learn about the stock market though...

People tend to trade with herd mentality. When the market was nervous late last week and yesterday, lot of people were shorting and buying puts. Well these positions eventually have to be unwound and bought back. They were hoping they could buy it back at lower price. But when the market got better than expected news from Goldman and Lehman this morning and took off. The bears who pressed were caught with their hands in the cookie jar and got squeezed like an orange juice today. They bought back stocks to cover their short position and sold their puts in panic. This buying coupled with sideline people without much inventory buying in fear of missing out on a rally, you get this violent explosion up. Combine this with Fed cutting rates at decent 75 basis point, you get what you saw today.

 

[Ricochet]

UPDATE: Bear Debt Holders May Be Buying Shares To Try To Sway Deal Vote
8:16 AM ET - Dow Jones News
By Alistair Barr
SAN FRANCISCO (Dow Jones) -- Bear Stearns debt holders are so keen on the J.P. Morgan Chase acquisition that they may be resorting to an extreme measure to ensure the deal goes through, analysts said on Tuesday.

Investors in the bonds and other debt of the beleaguered broker may be snapping up shares of the firm. As shareholders, they'll be able to vote for the deal, giving it a better chance of closing.

Bear shares jumped 23% to $5.91 on Tuesday. That's considerably more than double J.P. Morgan's offer price, which stood at $2.34 a share at the close of trading on Tuesday.

Bear shareholders, shocked by the sudden drop in the value of the firm's stock, may be considering voting against the deal, hoping that if credit markets calm down in coming months they can extract a higher offer from J.P. Morgan or woo another bidder.

But if rival bidder doesn't materialize and J.P. Morgan (JPM) stands firm, the alternative may be bankruptcy for Bear. That may be the worst outcome for debt holders. Buying Bear shares, even at elevated levels, to vote for the current deal, may be worthwhile to avoid that messy outcome, according to some analysts.

"Bear debt holders may be buying Bear shares to ensure that the proposed transaction, which is favorable from their perspective as compared to a standalone Bear, closes," Chris Young, head of M&A at RiskMetrics, said in a note to clients on Tuesday.

"I have heard that rumor too. It reflects the desire of bondholders to see the deal go through," Kathleen Shanley, an analyst at Gimme Credit LLC, said. "That's certainly the preferred solution for the bondholders."

J.P. Morgan has guaranteed all of Bear's (BSC) trading obligations, but the giant bank is not guaranteeing the firm's debt.

While unsecured Bear bondholders didn't get a guarantee from J.P. Morgan, the bank stressed that it plans to acquire and assume the firm's entire capital structure, David Hendler, an analyst at CreditSights, wrote in a note to clients on Monday.

"Bear bondholders should receive at a minimum implicit J.P. Morgan support if/when the deal closes," he explained.

But it may be difficult for bond holders to buy enough Bear shares to influence the vote, Shanley noted.

"The stock is widely held by employees and there are a number of large shareholders of record too," she said in an interview.

However, Bear shares have traded heavily since the J.P. Morgan bailout was announced on Sunday evening, suggesting the firm's investor base may be changing rapidly.

"Extremely high trading volume since announcement implies a significant change in the

company's shareholder base, with a likely shift to shorter-term traders from longer-term

investors," Young said.

This is the reason why Bear Stearns stock price is well above $2 right now. Add the opportunistic traders to the equation and you got yourself some heavy trading right there. The hammer will eventually fall if it's not already doing so. You can forget about shorting this sucker though. Last I check there are no shares left to short (at least from Scottrade anyway).

 

[imported_Lothar]

Originally posted by: Naustica
I was looking at Buffett's holding and one name that really caught my eye was CarMax. I've been thinking about this name the past two days and it's a name I should definitely own in my longterm account. It's a classic Peter Lynch stock. Buffett started to buy this name in the 2nd half of the year and now owns almost 10% of the company. At the current price, I can buy it cheaper than the price Buffett bought in. At little over 4 billion market cap, it has plenty room to grow and I can see this company doubling it's revenue and net income in about 4 years. Company has plenty room to expand as it's not in every market right now. Even in the market where it currently operates, it could easily open more stores before worrying about saturation. Best time to buy a retailer is while it's in the expansion phase and this company is definitely expanding. With the credit market uncertainty and current bear retail climate, this stock could definitely go lower and hopefully will. Lot of people must think so as it has around 17% of the float short as of Jan this year. I'm planning on establishing a position and accumulating on major weakness.

I'll follow you but open a different play book.
I'm looking at opening a small stake in AmeriCredit Corp., preferably in the low $10 range.

Everyone seems to be running away from this stock but I see valuation.

 

[Nitemare]

putting most of my investments into global funds until the dollar starts to recover

 

[fLum0x]

I haven't really ever watched the market, although I need to start as I am about to start investing and I have a 401k rolling. What recommendations and advice would you give to a new person looking around? What sites do you watch and where do you get all of your expert advise?

 

[GML3G0]

.75 point drop and gold goes down to $940?

 

[ponyo]

Originally posted by: Lothar

Originally posted by: Naustica
I was looking at Buffett's holding and one name that really caught my eye was CarMax. I've been thinking about this name the past two days and it's a name I should definitely own in my longterm account. It's a classic Peter Lynch stock. Buffett started to buy this name in the 2nd half of the year and now owns almost 10% of the company. At the current price, I can buy it cheaper than the price Buffett bought in. At little over 4 billion market cap, it has plenty room to grow and I can see this company doubling it's revenue and net income in about 4 years. Company has plenty room to expand as it's not in every market right now. Even in the market where it currently operates, it could easily open more stores before worrying about saturation. Best time to buy a retailer is while it's in the expansion phase and this company is definitely expanding. With the credit market uncertainty and current bear retail climate, this stock could definitely go lower and hopefully will. Lot of people must think so as it has around 17% of the float short as of Jan this year. I'm planning on establishing a position and accumulating on major weakness.

I'll follow you but open a different play book.
I'm looking at opening a small stake in AmeriCredit Corp., preferably in the low $10 range.

Everyone seems to be running away from this stock but I see valuation.

Man, you're have more guts than I. You want to buy pure subprime auto lender in this market? I know CarMax uses AmeriCredit as it's second tier lender along with others like Capital One and Wells Fargo. I don't know if I would touch this even if looks cheap given the auto loan delinquency is up huge and only likely get worse. Car repos are supposedly like at 12 year high. Auto and credit cards have been feeling the effects of the subprime mess and will only likely get worse. CarMax Auto Finance is the only thing that's making me uneasy about my CarMax holding. But I'm not as worried because CarMax main business of selling used cars will keep the company float. Once the credit market settles down in the future, CarMax Auto Finance division will boost their earnings tremendously. But right now, their Auto Finance division along with the general bearish retail climate is what's keeping this company stock down.

I thought CarMax short float at around 17% was high. But AmeriCredit has 30% of the float short. :Q AmeriCredit looks like it has some insiders buying and Leucadia National Corp has taken pretty big position recently. I believe they used to be in the auto lending business some time back and might be looking to get back in the business. I dunno know. I much rather own CarMax. CarMax gained 2.5% of the total used car market sales in 6.5 years. Wait until they control like 10% of the total used car market in the future. They're going to do what Home Depot did for the home improvement industry and consolidate all the fragmented and family owned car dealerships across the nation. You just wait and see.

 

[imported_Lothar]

Originally posted by: Naustica

Originally posted by: Lothar

Originally posted by: Naustica
I was looking at Buffett's holding and one name that really caught my eye was CarMax. I've been thinking about this name the past two days and it's a name I should definitely own in my longterm account. It's a classic Peter Lynch stock. Buffett started to buy this name in the 2nd half of the year and now owns almost 10% of the company. At the current price, I can buy it cheaper than the price Buffett bought in. At little over 4 billion market cap, it has plenty room to grow and I can see this company doubling it's revenue and net income in about 4 years. Company has plenty room to expand as it's not in every market right now. Even in the market where it currently operates, it could easily open more stores before worrying about saturation. Best time to buy a retailer is while it's in the expansion phase and this company is definitely expanding. With the credit market uncertainty and current bear retail climate, this stock could definitely go lower and hopefully will. Lot of people must think so as it has around 17% of the float short as of Jan this year. I'm planning on establishing a position and accumulating on major weakness.

I'll follow you but open a different play book.
I'm looking at opening a small stake in AmeriCredit Corp., preferably in the low $10 range.

Everyone seems to be running away from this stock but I see valuation.

Man, you're have more guts than I. You want to buy pure subprime auto lender in this market? I know CarMax uses AmeriCredit as it's second tier lender along with others like Capital One and Wells Fargo. I don't know if I would touch this even if looks cheap given the auto loan delinquency is up huge and only likely get worse. Car repos are supposedly like at 12 year high. Auto and credit cards have been feeling the effects of the subprime mess and will only likely get worse. CarMax Auto Finance is the only thing that's making me uneasy about my CarMax holding. But I'm not as worried because CarMax main business of selling used cars will keep the company float. Once the credit market settles down in the future, CarMax Auto Finance division will boost their earnings tremendously. But right now, their Auto Finance division along with the general bearish retail climate is what's keeping this company stock down.

I thought CarMax short float at around 17% was high. But AmeriCredit has 30% of the float short. :Q AmeriCredit looks like it has some insiders buying and Leucadia National Corp has taken pretty big position recently. I believe they used to be in the auto lending business some time back and might be looking to get back in the business. I dunno know. I much rather own CarMax. CarMax gained 2.5% of the total used car market sales in 6.5 years. Wait until they control like 10% of the total used car market in the future. They're going to do what Home Depot did for the home improvement industry and consolidate all the fragmented and family owned car dealerships across the nation. You just wait and see.

Yes. I am well aware of it being a subprime auto lender.
Granted, they have a lot of debt, but they're also trading at a significant discount to their book value.
Better I buy them in this market now while they're on the cheap.

The insider buying of this thing is just too much.
Ian Cumming is practically fishing at the bottom of the barrel. Leucadia just appointed 2 directors to this company a few weeks ago and have almost upped their stake to 29.9%
I have full faith in Ian Cumming and Leucadia in turning this company around.
It might take a while, but it should be worth the wait.

Leucadia, like Berkshire is sitting on tons of cash.
They thrive in this environment because they're a diversified business and buy assets on the cheap.

My position will only be a small stake, in the $2-3k range.
I won't make it more than 0.5-0.7% of my mom's entire portfolio I can tell you that much.
I also don't really care so much about a company's % short float.

 

[ponyo]

Like I said on Turnaround Tuesday, I think this rally will have some legs. You have the double bottom technical crowd jumping on board calling the double bottom on the S&P. You also have the perception that Fed will save the day like they did with the Bear Sterns. That's a dangerous thought and one that will eventually backfire with terrible consequences later but that's for another time. Whether or not this is true, perception is reality on Wall St. I learned that the hard way over the years. You have to respect people's psychology. You still have the negative sentiment from people thinking Tuesday pop was just one day bear market dead cat bounce. That's positive. Many traders are also light on inventory and sitting on dry powder. Another positive.

The biggest tale today that this rally has legs and the perception has changed was the market and especially the financial's action after the CIT Group news. CIT was halted and stock took a major dive but recovered somewhat towards the end due to the broad market strength. But week ago, the market would've tanked 300-400 points on the CIT news and halt. Financials would've gotten killed. But today, market shook off the news like it was nothing and the rest of the financial stocks ripped to the upside with many scoring double digit percentage gains and most higher price than they were on Tuesday. This is bullish if you're long, and why I think we can trade higher. We'll see if this can continue next week.

 

[Ricochet]

Interesting development for Bear Stearns

NEW YORK (Reuters) - JPMorgan Chase & Co was in talks to quintuple its offer to buy Bear Stearns Cos to $10 per share in an effort to pacify angry Bear shareholders, The New York Times said on Monday.

JPMorgan's original agreement on March 16 to pay $2 per share for Bear was widely considered a fire-sale price for the 85-year-old Wall Street investment bank. Bear collapsed in a liquidity crisis after suffering large subprime mortgage losses and falling confidence in dealing with the company.

The original agreement had won support of federal regulators, but the Federal Reserve is now balking at the new price, the newspaper said, citing people involved in the talks. As a result, the renegotiated merger might be postponed or collapse, it said.

A $10 per share offer would value Bear at more than $1 billion. That price, however, is less than one-third where the stock traded on March 14, the last trading day before the original merger was announced. It is also less than 10 percent where the stock traded in much of 2007.

Representatives of Bear, JPMorgan and the Fed were not immediately available for comment.

Jamie Dimon, JPMorgan's chief executive, grew convinced the merger was in jeopardy after spending much of the last week taking calls from indignant shareholders, the newspaper said, citing people involved in the talks.

Among these shareholders was the British entrepreneur Joseph Lewis, who spent well over $1 billion on some 12.1 million Bear shares, including some as recently as March 13.

Last week, Lewis said he would take whatever action was needed to protect his investment, and may encourage Bear and third parties to pursue other transactions.

Bear shares closed on Thursday at $6.39, reflecting investor expectations that JPMorgan might raise its bid, or another suitor might offer a sweetened price. JPMorgan shares closed at $45.97.

SEEKING SHAREHOLDERS

According to the newspaper, Bear was seeking to authorize the sale of a 39.5 percent stake on Sunday night, which under

Delaware law it can do without shareholder approval. Both companies are incorporated in Delaware.

Citing people involved in the talks, the newspaper said the central bank originally directed JPMorgan to pay no more than $2 per share to assure that it would not appear that Bear shareholders were being rescued.

As part of the original transaction, the Fed also extended a $30 billion credit line to JPMorgan to finance Bear's most illiquid assets.

JPMorgan was in talks Sunday night with the Fed to assume the first $1 billion of losses on Bear assets before the $30 billion cushion kicks in, the newspaper said.

The original agreement called for JPMorgan to swap 0.05473 of its shares for each Bear share.

Some large Bear shareholders have considered opposing the merger to send the company into bankruptcy, where they might hope to get more than $2 per share from creditors, the newspaper said. This is risky, because shareholders often receive nothing in a bankruptcy reorganization or liquidation.

 

[Miramonti]

That adds another $1b to JPM's bid, but I still don't think that's nearly enough to make it fly with the large shareholders.