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Monday, December 28 2009 |
03:52 EDT |
DJIA (DIA)
S&P 500 (SPY)
- The eye-popping run-ups of some companies considered essentially bankrupt can only mean one thing: Already, speculation's back. Possibly signaling the end of the up cycle.
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This news story has 17 comments:
I'm not saying that continued gains would make sense, just that those gains haven't felt the need to make sense in the past, so why should they start to make sense now?
Rarefied air, indeed. We seem to be cresting the Himalayas!
meanwhile check out a chart of any solar stock, so much for campaign promises "get this country of foreign oil"... lol...
> it is truly amazing to see companies that have made the worst mistakes
> in the history of capitalism rallying when in fact they should be
> on the pink sheets trading as bankrupt entities... Obama has failed
> us by allowing the banksters to take our national wealth without
> so much as an argument...
>
> meanwhile check out a chart of any solar stock, so much for campaign
> promises "get this country of foreign oil"... lol...
Yep, instead of oil that everyone knows and that we have enough to last for decades we are putting our future in the hands of Lithium (as in electric car batteries) that is only found in Russia and South America in significant quantities. Then at todays usage rate we only know of 10 years supply. If we double the sales of electric cars that becomes 5 years supply.
Another Obama, "I did not know!" moment. Welcome to hope and change.
So this is your argument?
On Aug 27 06:06 PM D_Virginia wrote:
> Sure, but weren't people saying that in May? And again in July?
>
>
> I'm not saying that continued gains would make sense, just that those
> gains haven't felt the need to make sense in the past, so why should
> they start to make sense now?
Talk of Li shortages affecting electric car development is baloney.
Just as a couple examples: AIG's three-year high (accounting for the reverse 1-20 split) is somewhere around $1400. Does anybody think it's in the stratosphere at $47? Or, Citibank was selling at $55 at its recent high. Now, it's off the charts at under $5?
It's precisely this kind of limited thinking that blinds people to value and leaves them muttering about the "unfairness" of it all. If more attention were paid to the radically negatively skewing effects of mark-to-market nonsense that has been passing for "accounting," then, perhaps some would realize that the banks, and many other financials, are in much, much better shape than they realize and that today's prices, even after a small absolute surge seen recently, are near giveaways.
It doesn't matter what the charts say because they LOST the money by selling puts to the likes of Goldman Sachs.
The stock can go to infinite based on hype but the fact is they have negative net worth.
The value of AIG before the meltdown was predicated on fallacies like "housing prices never go down"
On Aug 27 09:32 PM Tack wrote:
> I read in so many thread about the "rarefied" heights at which various
> stocks are selling after their "huge" run-ups, measured in near-meaningless
> percentage terms from pennystock base prices. Instead of wondering
> how some of these stocks could be up 100 or 200%, maybe, one should
> examine where the current "too high" prices are versus the companies'
> values before this meltdown.
>
> Just as a couple examples: AIG's three-year high (accounting for
> the reverse 1-20 split) is somewhere around $1400. Does anybody
> think it's in the stratosphere at $47? Or, Citibank was selling
> at $55 at its recent high. Now, it's off the charts at under $5?
>
>
> It's precisely this kind of limited thinking that blinds people to
> value and leaves them muttering about the "unfairness" of it all.
> If more attention were paid to the radically negatively skewing effects
> of mark-to-market nonsense that has been passing for "accounting,"
> then, perhaps some would realize that the banks, and many other financials,
> are in much, much better shape than they realize and that today's
> prices, even after a small absolute surge seen recently, are near
> giveaways.
That is why this rally has been so persistent.
And, the constant preoccupation with "paper solvency," based on mythical "market value" also serves to occlude vision. The reality is that many financials --lenders, in particular-- are making record amounts of cash flow, both due to the steep interest-rate spreads and due to the fact that most of those "toxic" assets are, in fact, throwing off lots of cash, despite the fact that the market wishes to value them at giveaway prices that bear no sensible relationship to their economic performance.
Those that choose to ignore this factual reality, to focus instead on the "politics" of it all, are just watching the boats from the pier.
On Aug 27 10:03 PM Harry Tuttle wrote:
> Or maybe we should review some basic accounting. AIG is NOT the same
> company it was when it reached $1400. Just like GM is not the same
> company.
>
> It doesn't matter what the charts say because they LOST the money
> by selling puts to the likes of Goldman Sachs.
>
> The stock can go to infinite based on hype but the fact is they have
> negative net worth.
>
> The value of AIG before the meltdown was predicated on fallacies
> like "housing prices never go down"
>
> On Aug 27 09:32 PM Tack wrote:
On Aug 27 06:21 PM Professor Dumbassio wrote:
> Great question! They always end up making sense. May wasn't that
> long ago. This was a nice little sucker's rally, but the smart money's
> already sitting on the sidelines again.
On Aug 27 10:33 PM Whippet wrote:
> Right on- this is evidenced by the fact that Treasuries have almost
> completely de-correlated with the markets. A runup in equities with
> a coincidental flatline in near record-low yields tells you where
> the bulk of the money is...
Seems like a pretty sweet business model. Probably exactly what I would do if I had an unlimited supply of free money. What would you do with it?