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Today change of Dow Jones Industrial

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GM was replaced by Cisco; Citi replaced by Travellers. Source: WSJ. (you may need to get the full article via Google).

Interesing part (for me), quote WSJ:

Why choose a tech company, Cisco, to replace an automaker?

We did not need another consumer goods company after adding Kraft Foods when we removed AIG. In looking around, we were struck by the fact that Cisco makes products that pave the Information Highway – computer networking equipment, things that enable high-speed data and video transmission, and so on. We saw Cisco helping the economy and culture adjust to the digital age, much as automobiles influenced economic and social changes in the 20th Century.

Well, why not Apple (AAPL) or Google (GOOG)?

Those companies certainly qualify as blue chips, but we chose Cisco this time.

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GM, Jay Leno

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GM is going to file bankrupcy. This was not expected 6 months ago. But it’s a reality now. Many people blame the UAW, the management for the problems at GM, which I think only tells part of the story. GM was doing fine after Sept 11, remember the 0% “Keep America rolling” Ad campaign? (Paula Gardner opinion, Nov 20, 2008 ) The main problem, I think, is GM increasingly dump cars like cabbage, while trying to make money from the finance division (GMAC). This business model is not sustainable because it’s mostly relying on cheap credit (and arguably GM car buyers have worse cosumer credit compared to foreign make buyers). When credit dried up after Lehman bankrupcy last fall, GM’s car sales plummeted.

Keep America Rolling GM Ad Sept 11

Jay Leno

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GM is NOT too big to fail?

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(update) CNNMoney appears to agree with me. When did I sound like MSM (main stream media)?

Obviously, that’s how the US goverment thinks. When bailing out the AIG, they were saying AIG is a systematic important institution, and they just could not let it fail. And here is the bailout (handout details).


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Should we bailout the big 3 car makers?

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Obviously the big 3 auto makers came back to news with the Congressional hearing today. This big 3 Washington show started before the Thanksgiving with the “corporate jet gate”, in which the reporters and some congressmen questioned the 3 CEOs taking corporate jets to ask for money: it like one begs for money while wearing George Armani. But I think the media coverage and the US congress acted (reacted) too much on this show.

In my mind, this is not about politics, unions vs. the car company, mid-west (Detroit, or Michigan) vs. southern states. I am thinking saving big 3 (GM, Ford, Chrysler) is critical to the US economy and manufacturing. If the big 3 fails:

1) Midwest states, esp. Michigan will be hit big. Michigan is already in trouble with declining domestic car makers, the fall of one auto maker will devastated the state.

2) American will lose the icons such as Chevrolet Corvette or Ford Mustang. Don’t think that as a minor thing, as psychology does play a role in economy, consumer sentiment and the financial market.

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GM, China 3G standard

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We all know GM is in trouble financially. Its stock (NYSE:GM) is around $6, a 50 years low. A lot pundits made fun of GM and its stock on TV or the web space. But I have a different feeling for GM. Among many reasons, I think of two:

1) In graduate school I worked in project for an automotive supplier (supplier for the Detroit big three GM, Ford and Chrysler). I went to Detroit and the Renaissance center twice because of the project. I still remember the GM engineer always asks tough technical questions.

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Weekend review w/e 080208

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What recession?
Last Friday evening we went to local Red Lobster restaurant at around 6:30, and we were told there could be 25 min wait as we saw a large crowd. Being impatient as I was, we decided to try Olive garden. When we went there, same thing: we were told the wait time is 25 to 30 min. It seems to me the mid range restaurants, because people still eat in this economy recession. So buy Darden Restaurant (parent company of Red Lobster & Olive Garden) stock (NYSE: DRI)?

Software glitches
AA baggage handling system broke down on Monday, and the problem persisted more than 1 day. Read this ABC news. How could this happen?

AA baggages handling system break down JFK pic

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Bottom fishing time?

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Yesterday was another brutal day in the Wall Street, or the Bay Street (Toronto), or SSE (Shanghai Securities Exchange). According to the number, the Dow is now officially in bear territory. General Motor (NYSE:GM), a Dow component and an American icon, hit 53 years low. It closed at $11.43. So, should we go bottom fishing?

I am not a market timer, nor do I like to predict the market trend. But I noticed another interesting article from my friend Wang Jianshuo’s blog: Stock Market Big Drop. Note Jianshuo is not into stock market, a rare type in Shanghai. In other words, when people like Jianshuo started to pay attention to the market, things are either really good or bad (noteworthy). So, the 1 million dollar question: should we go bottom fishing? My answer is be careful, because if we don’t we will catch some falling knives instead 🙁

Some ideas for bottom fishing

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Weekend thoughts w/e 053108

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Gas and Panera: more saving tips
Yeah, the $4 a gallon gas is finally coming, it’s $3.899 in recent 3 days here in STL. I tried to stretch the gas I put last time at $3.699 as much as I could, but it seems like I will need to put gas either tomorrow or Monday. Meanwhile, I tried to walk to and from Panera this morning and afternoon, maybe I saved a dollar or two on this 🙂

Seriously, I think my last car tune up worked in terms of improving gas mileage.

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I sold MXB six hours too early

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Stocks in review week of Dec 16 to Dec 22

1) I bought some MXB shares on Dec 19. After I read its prospectus more carefully, I found two things I don’t like: it will use the proceeds of the IPO ($225 m) and borrow some $425 m to pay the dividend to its parent, Morgan Stanley; Morgan Stanley still controls more than 90% of its share. So I put up a limited sell order at 29.30 for Dec 21.

On Dec 21 the stock opened at $29.50 and had a huge run from 3:00 PM EST till close. It closed at $33.72. This reminded me 3 years ago I sold my 51job (JOBS) two days too early.

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