Monday, November 10, 2008


I did make my add today of Emerson, as discussed in my prior post, at 33.33. I will reinvest the dividends in additional shares. I am going to stick to my plan outlined earlier on this one, as well as the adds previously mentioned in connection with LNC, GXP, MDT, and WAG. See generally, Emerson Electric Great Plains Energy & Trust Certificate DividendsEmerson Electric and the Goodyear Tire TC XKK

I may be getting to old for this.

I noticed that Goldman Sachs traded down over 8% today to a new 52 week low, closing at 71.21, down from its 52 week high of over 240. Barclay's cut its estimate to a loss of $2.5 for the quarter ending November 30th. Yahoo! Finance I would not place much reliance on anyone's estimate for an investment bank's quarter. A loss would not surprise me, but who knows whether it is $.50, $2.50 or $5.00. The current price for GS is getting close to the IPO price back in May of 1999. While I consider Goldman best in breed among the investment banks, I have other stocks that I plan to buy before making a nibble on any investment bank. It is almost impossible to have any confidence in the competence of the big money crowd. For me, I am convinced that investment bankers are morons at worse and incompetent at best until proven beyond a reasonable doubt otherwise.

This is the summary of AIG's new deal with the government.  MarketWatchReuters I did note that Fitch downgraded American General Finance to BBB, which is a subsidiary engaged in consumer loans and finance.  Yahoo! Finance American General Insurance is a separate unit. I did notice today that a TC, which I do not own and will not buy, that contains an American General Finance long bond maturing in 2045, a junior subordinated debenture, did rise 32% today (MKS).

Among the walking dead is a company called Sunrise Senior Living, SRZ, which I have never owned. I just happened to notice today that it was on the leading loser list, trading at slightly over a buck after hitting a 52 week high of almost 35. This company owns assisted living centers Yahoo! Finance At one time, this seemed like a promising company to me and I feel fortunate now in just having dodged another bullet by not investing in it. I may look into what caused its downfall, but I suspect that it was just another set of less than competent managers who were paid a great deal of money to run an enterprise six feet under ground.

Is GM worth saving? An analyst predicted a zero share price. MarketWatch  ReutersOr, will it be one of these deals where the U.S. pours 25 or 30 billion to bail it out and then be left holding a wet paper bag with an anvil ready to bust through, falling on Uncle Sam's big foot. There is something to be said about allowing firms to fail who deserve to fail. Let management and the unions suffer the consequences of what they have sowed. The American car companies always averted a long strike by basically giving the unions everything that they wanted and now they really can not pay for it. Nonetheless, some sort of bailout will be undertaken notwithstanding the wisdom of it. State and local governments have been doing the same for years, promising higher pension and retiree health benefits, with no thought about how to pay for it. It is all disconcerting that promises of future benefits are made in both industries and all levels of government unrelated to the ability to pay for them and without much, if any, thought about funding those commitments- now or any time in the foreseeable future. When I start thinking this way, about the rampant irresponsibility, I start thinking about buying me some Swiss Francs (FXF).

GM did say that there was substantial doubt that Residential Capital, the mortgage unit of GMAC, would survive as a going concern. Yahoo! Finance

One stock that I previously mentioned, Rockwell Automation (ROK) reported after the close and I will need to review this report and read the earnings call transcript. This is a stock that I sold before the meltdown and I have been looking at it to decide when and if to jump back into it. Reuters

I would anticipate that the Circuit City bankruptcy will ultimately benefit Best Buy, Reuters
However, even though Best Buy has undergone a significant pull back, I am still too queasy about consumer spending to own any retailer, although Best Buy is on my stocks to monitor list. It is currently selling for around $25 down from its 52 week high of 53.90. Part of the success of Best Buy came from consumers using their houses as ATMs. Those days are over and the wisdom of those kind of spending decisions was never in doubt. Circuit City is the second major electronics retailer to go bust in the past year, with Comp USA closing its doors late last year. Another retailer that I am monitoring is Cabelas (CAB), now selling for less than 7. Seeking Alpha CAB: Summary for CABELAS INC - Yahoo! Finance I do not own it but I may take a nibble before the end of this year if it continues to slide. While who knows what a retailer will earn this year or next, the current estimates have Cabelas selling at about 7 times projected earnings.CAB: Analyst Estimates for CABELAS INC - Yahoo! Finance

I am not a financial advisor but an individual investor trying to navigate my way through a mind field. In these posts, I am acting as an unpaid financial journalist and an occasional ornery political commentator. I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine. Any discussion made by me of particular securities is not a recommendation to buy or to sell. Trade at your own risk. Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons. The sale may before or after the post. Before buying or selling any stock, even one recommended by a trusted financial advisor, please research it and make up your own mind which is what I always try to do. Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news. In this post, and all others by me, I am merely describing my reasons for purchasing or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale. The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.

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