It’s funny when I stop to think about our collective circumstance. If you’ve yet to feel the pinch of the economic contraction happening on a global scale, all I can offer is “be prepared”. My old scout motto finds me well worn. I lost my job today.
I’ve written before about the economy and it’s over reaching contraction. Some of my friends commented about my negative stance and I can’t help but feel a bit vindicated today. Even if it is inherently wrong of me. This is an eerie feeling I dare not wish upon you. It will subside eventually, the uncertainly and surprise of it all.
I just returned from my vacation and prepared breakfast in an attempt to get back into the swing of things. I can’t say the writing wasn’t on the wall, as our morning chatter invoked a “what if” mentality. Across the country, the upper crust has utterly mis-managed the last 30 years. My employer of just over two years unfortunately cant be excluded. The race for growth during my tenure there has left a bad taste in my mouth. As the phone calls keep pouring in offering solace and support, I find that I cannot be counted as a victim in this mess. I foreshadowed the first and second round of layoffs months before senior management could possibly come to grips with what was happening. I even went so far as to send an article to the CFO on how to minimize the damage to the stability of the workforce once the realization hits, that not only are their friends no longer around, they have to work even harder to keep up. This would suggest I was in fact prepared for the failures of grey-haired nitwits in charge.
I’m comforted by the knowledge that I can pick myself up off the ground, as I have many times past. For those of you that know my background, I’ve always come from unsuspecting places to race past the commonly held mentality that what go’s up must come down. There is no up or down! There is out, in and around.
It was an intriguing day on the street today as Lehman Bros. filled for bankruptcy and Merrill Lynch struck a deal with Bank of America. These actions remain a continuation of the turmoil surrounding credit, investment banks and the economy as a whole. What’s left after a 500 point index decline is Goldman Sachs and Morgan Stanley as the last investment banks on Wall St. The U.S. dollar is entering yet another phase of consolidation as dire predictions foreshadow even more collapses from smaller regional banks.
Lehman’s inability to strike a deal with Bank of America or Barclay’s or to receive some form of government assistance was a deliberate tact. Let the invisible hand take care of Lehman and the market is supposedly better for it. So who decides, exactly, what companies get bailed out, and which are left out to dry? The Fed itself has said “Given the exceptional pressures on the global economy and financial system, the damage caused by a default by Bear Sterns could have been severe and extremely difficult to contain.” So how is Lehman’s bankruptcy any different? The general consensus is the Bear Sterns collapse and Fed mandated bail out bought everyone enough time to attempt a rescue of the inevitable. Although the Fed was unwilling to assist in saving Lehman they were willing to lower their credit standards for the last remaining investment banks.
So what does this mean for you and I you might ask? The answer is you should probably get used to living on a budget. You most likely won’t be able to renew that lease on your BMW. You should probably start making your own coffee at home. You should definitely be thankful for what you have, because America is officially for sale! I won’t even begin to speak of the overwhelming number of job cuts in the banking industry alone. Some predict upwards of 200,000 people out of work by this time next year. Just don’t go out on any monetary limbs anytime soon.
What a great kitschy title. It’s about as dry as I am on drugs. Please, keep in mind, that while I provide the following information to gather your thoughts. I am no investment professional and can hardly consider myself a blogger, let alone decent investor.
However, that said, I choose to recently manage my own 401k and in the pursuit of knowledge and learning, I’m posting my experiences here you for you to examine.
Much of the investment advice/learning material I’ve been able to find on the internet is focused on the ever evaluation of practically living stocks. The market breathes, if not by some imaginary force, also by an invisible pulse. I follow day traders, penny stockers, investment and portfolio managers, angel investors and hybrid media/investment types. Hardly ever can I find the static long investor, eager to share his wisdom. The breed of my fathers age, who in a time of deep perspective decided it would be a good idea to develop money, just doesn’t care about the little investor. Obvious reasons for this could be lazy investors don’t bother with the internet. They are after-all, baby-boomers, utterly inept when it comes to blending technology. And yet another reason could be disclosure. If your not trading your not shouting.
The first trade I ever performed was a buy of NVDA at 18.29 and a sell at 24.52. I had nailed a 52 week low and sold at near it’s peak. I held my investment for 2 months and made a 34% return. Beginners luck? I’m willing to think so.
As so eloquently detailed in my first post, I bought into BCS thinking it would be immune to the U.S. Economic slowdown and my naiveté got the best of me. I had been watching BCS since the March decline and decided, because it was a European bank, and it was minimally invested in the sub prime mortgage debacle, it should remain a sound investment. I bought in at 28.30 and after watching my pick loose envious amounts of steam, I decided it was time to cut my losses. I sold @ 25.80 for a loss of 8.6%.
I’m under the impression that because I have a smaller amount of capital to invest, I should invest more often. However, that too may eventually lead to false logic. Not to discount my own analysis, but I feel as though larger portfolio’s have more to loose. I for one would be cautious, so would you. As I look to tomorrow morning with the knowledge that there WILL be a rally, I’m attempting to decide which of my P/E winners that are at or near their 52 week lows AND have decent analysis, will be my monetary development. Round 2 anyone?
With the recent relaunch, I’ve decided to take the site in a more focused direction to issues that pertain to my life. One of the topics I regularly find myself monitoring is the economy and finance. I recently transfered my 401k to a rollover IRA and began managing the investment myself. I’ll provide some background and context to this matter in the near future. However, in keeping with the title of the post, here’s my notes on a recent purchase of BCS.
I picked up Barclays Bank last week during decline @ 31.40. I had been waiting for the drop since March, and upon falling past 31.70, it’s been a very attractive stock in my eyes. While practically all financials have had write downs and reevaluations, Barclay’s was forthcoming quite early, and didn’t hesitate to take action. As a result, they’ve ridden a very fine line against losses. BCS has also not taken the opportunity to raise capital, something I believe would help the stock. It has some great upside potential in my eyes. Should they choose to raise capital, I expect a buyout of an undervalued M&A or equities capital markets broker. The decline was an expected bump in the road, but of all banks Barclays calls peers (notably UBS and RBS), they were the most attractive.
