Tuesday, January 6, 2009

Buy of PGN/Was there really a Black Swan Event?/ Alcoa

I am currently unable to find any bonds that I wanted to buy.  The only idea that I had late in the day to substitute for the BDNPRC was to buy the electric utility Progress Energy (PGN) at 39.8 with a market order filled late in the day.  I will discuss this stock tonight since I have other tasks to complete this afternoon.   PGN Stock Quote - Progress Energy Inc Stock Quote - PGN Quote - PGN Stock Price  The dividend is about 6.2% at the current price.  

There has been some serious rallies in all of my TC holdings.  Along with some other holdings that have spiked, there might be an argument in favor of just selling everything and start that trip around the world, just returning in time for the economic recovery now predicted by the Fed to start with a whimper in the later half of 2009.   MarketWatch   What I will do now is set a couple of GTC limit orders to sell at least one, possibly two, TCs at above current prices.  The one that I entered today is the same one that I tried to sell with a day limit yesterday, and I will just try now a GTC limit order above the current closing price and then see what happens.  I am choosing another that is in better stead with me, but is at its fair value/exit price.  Both just went ex interest so I am trying to bag the 6 months interest plus more than 20% annualized on the shares, unfortunately short term, and then look later for a lower re-entry point as I have done many times already for both of them.  Building short term gains in the early months of the new year, generally up to June, is used as a basket to catch some mistakes later on, and that basket ended up being positive even in a year as bad as 2008.    

The black swan events that AIG is currently blaming for its predicament are not really matters that were remote or unforeseeable possibilities.  The credit crisis started to build a head of steam starting in early 2007 with unmistakable warnings in February 2007.  One question for Mr. Cassano is whether his unit continued to move forward after February 2007 as if no warning had been given of a developing crisis in the mortgage market.  What changes were made in the models no later than March 2007?  Then you could have models based on likely scenarios that would result after dramatic increases in subprime and no-doc (ALT-A) mortgage loans in a housing market that had experienced parabolic moves in prices over several years, far exceeding growth in incomes.  There is no scenario where that could have a positive outcome for an insurer of mortgage pools. What would a model show assuming  the expansion of mortgage credit on top of a 20% compounded increases in housing prices in many localities, and then why would anyone write insurance  on those pools?  Someone lacking any  bias may ultimately dig deep into the fiasco that Cassano's unit created, and all of the reasons for it, rather than the retrospectives now  being advanced by interested parties which basically contends they were caught in some kind of Black Swan event-yet another innocent bystander- that no one could have anticipated even though plenty of people were warning about it.   You would think that Cassano would be under investigation, by authorities other than the SEC , for the statements that he made to AIG investors about his unit's risks as quoted in both the NYT and Washington Post articles previously referenced.  

The downturn is continuing to impact the operations of Alcoa with an announcement after the close of a 13,500 person reduction in its workforce and reducing its smelting output.  Reuters
The stock is falling in after hours trading but this kind of news should be expected from companies like Alcoa for many months to come.  I bought 50 a few weeks ago and intend to hold for at least 3 years, but I am in no hurry to buy the other 50. Notable News 11 18 08: MDT, AA, C, GS, GE, HD, HPQ, METPRA; Wall Street Bonuses


  I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. In these posts, I am acting as an unpaid financial journalist and an occasional 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.  Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed.  These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities.   All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me. 

No comments:

Post a Comment