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AIG IS too big to fail

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At least that’s what Fed chairman Bernenke and Treasury secretary Paulson think, and the congress and president agree with them. But how about the shareholders and we the tax payers? The AIG shareholders are almost wiped out (slightly better than Fannie and Freddie), and the price tag is $85 billion for now.

So summary, the price tag of recent big financial firms fallout.

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Cramer was wrong on BSC last week

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As you may know, the Bear Sterns (BSC) was bought by JP Morgan for $2 a share as of this afternoon March 16 US time (Reuter News). And here was Cramer’s take on Bear Sterns on Mad Money just last Tuesday (March 11).

Dear Jim: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? –Peter

Cramer says: “No! No! No! Bear Stearns is not in trouble. If anything, they’re more likely to be taken over. Don’t move your money from Bear.”

Yeah, the Bear IS in trouble and they are taken over, but at $2 (it may go slightly higher if another buyer emerges), it is virtually go under as far as shareholder concerned.

The following is a list of Investment services companies:

Investment services companies pic
(Source:Google Finance, Mar 14, 2008, full size pic is here)

Bottom line: if you have BSC stocks and listened to Cramer’s advice and hold it through last week. I felt very sorry for you 🙁

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Bear, liquidity, soft commodity

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Bear Stern (NYSE:BSC) spoiled the market today. There was some confusion about Citic Securities recent agreement. As far as I know, according to Bloomberg, there was a small stock swap deal and potential JV. But lately they are under a talk to revise the deal. So nothing like the China Invest Co. Blackstone IPO fiasco.

Liquidity in my little portfolio
Interestingly, I found when market is in panic selling, big name stocks such as China Mobile (CHL), Research in Motion (RIMM) usually got down, and small name stock such as GSI Technology (GSIT) did not go down too much, sometimes it even went up. How come small stock got the power to fight against the market? Well, the answer lies in liquidity. When the big guys got panic, and decided to sell, they will usually sell the Microsoft, the Google, the Pizer,…because those stocks are traded millions of shares a day, and they could find buyer easily, without too much discount. This is not the case for GSIT, which trades about 50,000 shares a day. It takes a few buyer for my 500 shares.

Soft Commodity
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