driftwood2

Next Up: Dow 10,000? Does Anyone Care?

For precisely the reasons you state, the dow isn't a very a useful index. It's ridiculous that it gets higher billing that the s&p500 or the Wilshire 5000.

What to Buy and Why: Barron's 2009 Roundtable, Part II

Abby's picks are laughable as usually. It's especially funny that she pick BAC which of course veritably imploded last week. AMAT's PE is 14.5 which is not cheap at all in this environment. Everyone knows that semis are cyclical and AMAT even more so.

S&P 500 Financial Sector Market Cap Continues to Sink

The size of these losses, especially for companies like C, BAC, MS, GC, and etc is a rough indicator of how much money will ultimately be needed to bail them out. Some optimistic individuals are of the opinion that the bailout funds already provided by the government will be enough to fix our financial system. If that were the case, why would Citi, who received a mere $45B from the government, have lost $246B in market cap? If Citi had only lost on the order by $45B, wouldn't their market cap have fallen a similar amount? The truth is, Citi alone will probably require hundreds of billions of taxpayer dollars to be made solvent. Tarp is only the beginning.

AIG Now Fed's Vehicle for Buying Toxic Assets

The moment AIG took that initial loan from the government, I don't see how anyone can have expected AIG to be a real independant company anymore. It is to be expected that they are now simply a tool of the government. Once the government is done with them, if there is anything left, the shareholders may get it back but the government obviously cares more about rescuing the economy than getting it's $150B back.

Valuing Assets: The Clueless Cadre

HSB was bought for roughly 5 pe. A bargain by any measure for a reliable business like boiler insurance. It was obviously sold at such a low price because so few people are looking to buy in this environment. The thing that is causing people to price assets at such a low point is fear of an economic collapse. That's what's affecting people's pricing models. It's not about pricing the business, it's about pricing the economy and the future as a whole. Of course, no body has a real crystal ball unfortunately.