Bear Stearns Companies Inc. (BSC)

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  • commenter
    Chuck LeBeau
    Sep 17 09:03 PM
    My Website
    Nine Months Later: Some Annual Predictions from the Financial Press [view article]
    Avoid Financial Disasters with SmartStops

    In less than a year six widely held financial stocks have cost Buy and Hold investors more than $840 billion dollars. (Yes, that’s “billions” with a “B”).

    $840 billion in losses is a number that might even get Warren Buffet’s attention. Think of all the retirement funds and college tuition money that got needlessly flushed down the drain in these few months. It’s a sad scenario but the saddest part is that the investors who lost all these billions could have avoided this disaster by simply using a “SmartStop” trailing exit.

    Let’s look at the individual stocks and see what might have happened if some prudent stops were set rather than relying on a “buy and hold”. (You will notice that I did not refer to “buy and hold” as a strategy. It doesn’t qualify to be a strategy – its actually the absence of any intelligent exit strategy.)

    Fannie Mae (FNM): The Sept/Oct 2007 high was $68.60 and FNM dropped to a recent low of $6.68. This 97% decline cost investors a total of $66 billion dollars. A SmartStop exit was triggered on Oct. 17, 2007 that would have limited the loss from the peak to less than 10%.

    Freddie Mac (FRE): The Sept/Oct 2007 high was $65.88 and in less than 12 months FRE dropped all the way down to a pitiful 36 cents. When Freddie took that leap off the cliff it cost “buy and hold” investors $42 billion dollars. However a SmartStop exit was triggered on Oct. 16, 2007 at a price of $58.05 that might have preserved enough equity to get the grandkids through college.

    Lehman Brothers (LEH): The Sept/Oct 2007 high was $66.98 and now they have filed for bankruptcy and the shares recently closed at a value of 21 cents. This painful disaster cost LEH shareholders $46 billion from the referenced high. Where was the SmartStop exit on LEH? It was triggered on Oct. 19th at $57.47 a share. Those funds could have been reinvested and earning money toward a comfortable retirement. Where is all that money now?

    American International Group (AIG): The Sept/Oct 2007 high was $70.13 and now the stock is trying to stabilize somewhere below $5 after hitting $3.50. For the unfortunate shareholders who still own AIG that’s a whopping loss of $179 billion (give or take a few dollars). How smart was the SmartStops exit? It was triggered on Oct. 15, 2007 at $66.41 and there have been 28 more SmartStops sell signals since then.

    Washington Mutual (WM): The Sept/Oct 2007 high was $39.25 and the SmartStop exit was at $34.30 on Oct. 15th. WM hit a recent low of $1.75; not even enough to buy a Starbucks latte. In less than a year WM shareholders lost more than $63 billion. Maybe if they hold long enough WM will eventually recover. (Although it will require a gain of more than 2000% to make back that 95% loss.)

    Bear Stearns (BSC): It’s hard to believe that the Sept/Oct 2007 high for this ancient and respected brokerage firm with over 3 billion shares outstanding was $133.20 a share. Now they are gone and even with the government assisted bailout their unfortunate shareholders have lost more than $440 billion in equity. This one can never recover. That’s $440 billion of hard earned savings that’s now gone forever. (In case you are wondering, the SmartStops exit was at $110.11 on October 24, 2007. There were 17 more SmartStops exit signals prior to the takeover.)

    I wonder if the Bear Stearns account executives told their clients that the best way to invest was to buy and hold?

    Reply
  • commenter
    dr55mac
    Sep 17 03:51 PM
    Big Banks: Too Big To Fail, Too Big To Bail [view article]
    We ought to creat a class of banks that are" too big to fail" and watch them much more closely like limiting their ability to leverage their accets more than 10 to 1. There are also big companies like GM and GE that need to be treated to constant daily checking by the government . Thgis would limit the total growth because some companies would like to have their credit sheets below the radar . Reply
  • commenter
    kmca1989
    Sep 17 01:17 PM
    Nine Months Later: Some Annual Predictions from the Financial Press [view article]
    yep - i'm getting spanked - having only invested @ august 1, i've still managed to catch up w/ the rest of the market's hideous downturn by being overly optimistic (and overweight) concerning financials. Reply
  • commenter
    pochovilla
    Sep 17 11:11 AM
    Will Lehman's Bankruptcy End the Moral Hazard? [view article]
    Fewer morals, more hazards. Reply
  • commenter
    No Moss
    Sep 17 10:36 AM
    Buyouts and Shakeups: How the Financial World Is Changing [view article]
    The role of the GSEs made them incredibly vulnerable. Although they have been saved, it's unlikely that they will resume their role as freely as before, meaning that commercial banks will take up more of the "burden" of mortgage lending. Without mortgage guarantees, money will be tighter and loans will have higher standards and bigger down payments. Securitization will be reduced. The clear beneficiaries of this will be commercial banks, who have large deposit bases to use as a source of loans (in the absence of securitization).

    Homes will be harder to finance, but worthy borrowers will still be able to get a home loan. Savings rates will go up as people save for down payments, home prices will stabilize to modest appreciation, dampening the rampant speculation that made them so unafforadable in the first place. HELOCs will be reduced as equity climbs more slowly. Things will return, for a time at least, so a slower, more stable pace.

    Securities will replace homes as the investment vehicle of choice, and the stock market will go up.

    It's not a new world, we're just going to rearrange things a bit.     Reply
  • commenter
    RCK
    Sep 17 09:10 AM
    Buyouts and Shakeups: How the Financial World Is Changing [view article]
    You are right. Capital world is reshaping itself. To those who whine that taxpayers money should not be used for bailouts, I say. come on guys, WAKE UP AND SMELL THE COFFEE". Throw away the cloak of 1800's capitalism. You are still trembling in the memories of 1929. Downing of AIG would have been a tsunami the world over. Nobody has yet jumped out of wall streets windows. If AIG is to go under, it will, no matter what but in an orderly way. taxpayers money is going nowhere. It will comback to taxpayers. Reply
  • commenter
    neeb??
    Sep 17 07:43 AM
    Moody's, Fitch, S&P, SEC Are All Useless [view article]
    Dleverage, are you sure that his broad brush call was as abusive? Or are you loaded to the gills with long positions and got caught out?
    I do believe that if the only one's who got it right were the naked shorts because the rest of us were caught up in our own portfolios to see the bigger picture then what?     Reply
  • commenter
    D-leverage
    Sep 17 07:01 AM
    Moody's, Fitch, S&P, SEC Are All Useless [view article]
    Were you dialed into this past weekend's meetings from your Wisconsin gardin? Barclay's will pick up a significant number of the LEH employees and pay several billion to do so. Your broad brush slams of the agencies and the SEC are as abusive as naked short selling. Reply
  • commenter
    helplessobse
    rver
    Sep 17 06:51 AM
    Financial Landscape: Writedowns, Losses and Capital Raised [view article]
    Two fin companies not on your list, BBT and BRK. Smart investors soar with the eagles and avoid being the road kill. Sounds like HSBC will soon be spotted on the highway. Reply
  • commenter
    carey_jim
    Sep 16 11:02 AM
    The Fed's 'Suez Crisis' [view article]
    Most people think that the Fed should play the role of referee in a game whose rules are fixed and based on experience, intelligence and do I dare say wisdom?

    Without the ability to call fouls and make real punishments for too many fouls, (five fouls and you are out of the game) referees are of no use.

    Your metaphor of fleas giving orders to the dog fits our present financial situation, unfortunately.

    Woof, woof.     Reply
  • commenter
    Tinman
    Sep 16 09:36 AM
    My Website
    Lessons From the Banking Meltdown [view article]
    house of cards indeed, nym, and the 3rd-party insurance scam was the joker in the deck Reply
  • commenter
    TraderGreg
    Sep 16 02:24 AM
    The Fed's 'Suez Crisis' [view article]
    What happened to the second half recovery? Reply
  • commenter
    nym
    Sep 16 12:52 AM
    Lessons From the Banking Meltdown [view article]
    "...3rd-party insurance on your account so that, if they fail, your assets are safe." Who insures the insurers? It's all one house of cards. Reply
  • commenter
    madasiwannab
    e
    Sep 15 11:37 PM
    Moody's, Fitch, S&P, SEC Are All Useless [view article]
    The credit rating agencies are all masters of the obvious. Downgrading a company after it falls says it all. Where were they 6 months ago when the market figured it out.

    SEC is very good at sitting on their hands. Naked shorts are not killing stocks, bad policy and greedy companys are. As you alluded to, LEH was a victim of long selling, not short. Also include Paulson's confidence building backstop scheme. All it really did was make everyone question the real health of the market. You know it's time to worry when everyone tells you not to.     Reply
  • commenter
    Dawson Lodge
    Sep 15 10:51 PM
    Moody's, Fitch, S&P, SEC Are All Useless [view article]
    Absolutely correct !!! The ratings agencies and the SEC should be abolished and indicted for constructive fraud, racketeering, and money laundering. They are all corrupt, and a worthless sham designed to part the ignorant from their assets. Of course it all stems from the original grand fraud, the private Federal Reserve System, the greatest Ponzi scheme ever invented, designed to transfer the wealth of the American citizen to the state. Karl Marx, your shell game worked. Welcome to the United Soviet States of America!
    Reply
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