Who’s Next?
Quote:
| Originally Posted by Conrad on Sep 1
It’s hard to see any upside going into October with the DOW, at best, not breaking above 12,000 and at worse, staying above 11,000. IMO, it is highly likely that DOW will close out September at 11,130. |
We’re well below my target 11,130 for September which doesn’t surprise me especially since Sep is reputed to close badly. With only 8 trading days left for Sep and Quad Witch tomorrow, it’s highly likely that we’ll get my April target way before the end of the year.
Irrationality and blind fear are running wild amongst everyone who are realizing that now is too late and after the fact. A call to several of my bankers revealed that they have to cope with the most ridiculous requests as a result of losses suffered by funds and trusts that were underwritten by ill-fated institutions.
Now everyone is running to currencies and “safe-haven” bonds … bad move. If you’re not going to trade it yourself and you choose to purchase a currency fund from a bank, you are asking for more trouble. More so if the fund is not underwritten by the bank you’re buying it from. If you have no idea about what is happening with Treasury Bonds, stay away from bonds and currencies till you get a proper education in the Financial Markets – FYI, this is such a historical moment not seen since WWII!!
If you thought that Banks were safe from the dangers that non-banking Financial Institutions are experiencing, think again. It just hasn’t happened yet. Just because we haven’t heard anything from banks yet, doesn’t mean that no news is good news. And the “silence” from banks are very loud indeed.
As all the dramas unfolded, one investment company at a time, I was sharing with a select group of my students which company to watch and snatch. And every time I mentioned one company, that one was the next to go belly up. Finally, someone was smart enough to ask me how I knew? The answer was as simple as daylight …. EARNINGS!
Note the consistent pattern … as a particular company’s earnings date drew close, more and more highlights about the company’s ailments were brought to light. CFC went down a week before its Q4 2007 earnings, BSC went down with their Q4 2007, LEH “died” just before this week’s announcement and MER’s announcement was to be next week.
MS just announced theirs and they were good numbers as were GS’ results on Tuesday. So it’s obvious that companies that have a chance, will survive their earnings while those in serious trouble will be screaming to death as their earnings date draws close.
It only makes sense because earnings are all about the company’s health and when the company is audited before earnings, this information will reveal the truth.
So who’s next? The hardcore Banks will be “safer” than the non-banking financial institutions while the diversified conglomerates will definitely hurt;
WFC – 16 Oct BMO (Safe, for now)
C – 16 Oct BMO (hmmm … I wonder … strangely quiet …)
BAC – 20 Oct BMO (Safe and strong, for now … still the best bet)
WB – 22 Oct BMO (Starting to reveal some pain)
WM – 22 Oct AMC (Up for sale now)
LM – 24 or 25 Oct BMO (Investment related – could this be next?)
UBS – 4 Nov BMO (also very quiet …)
MIC - 7 to 9 Nov BMO (Watch this one … I suspect this one is next)
If you thought that the bottom was near, let me gently warn you that we are far from the end of this farce. Do you have any idea how many more mid cap and small caps institutions have yet to come to the fore? As sure as their earning date will draw close, you are going to see a lot more downside.
Wait for it. And remember you read about it here first.
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