# Market collapse coming??



## thinze3 (Mar 16, 2008)

Bear Stearns Companies just got bought for pennies on the dollar by JP Morgan. This is a huge collapse that may be only the tip of the iceberg in the financial industry. Are Lehman Brothers, Merrill Lynch, WaMu and Citigroup next?

The stock market may drop like a rock in the near future. If it does, will it be like the dot com bust that began in March 2000? Will the dollar crater to world currencies much worse than we have already seen ?

What are your thoughts?


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## jwq387 (Mar 16, 2008)

*market collapse coming?*



thinze3 said:


> Bear Stearns Companies just got bought for pennies on the dollar by JP Morgan. This is a huge collapse that may be only the tip of the iceberg in the financial industry. Are Lehman Brothers, Merrill Lynch, WaMu and Citigroup next?
> 
> The stock market may drop like a rock in the near future. If it does, will it be like the dot com bust that began in March 2000? Will the dollar crater to world currencies much worse than we have already seen ?
> 
> What are your thoughts?



My thoughts are., the individual I listen to for advice on my 401K is an expert in technical analysis. He has had me totally out of the stock market since early January,2008. Since then my "fixed' portfolio has only gained about one quarter of one percent, while the market in general has nosedived over 10%. He expects a further correction of another 10-15% over the next 6 months. Who knows? But I'm not budging from my position OUT OF THE MARKET until some fundamentals change DRASTICALLY. Its called "preservation of capital."


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## johnmfaeth (Mar 16, 2008)

JP Morgan Chase picked up Bear Stearn at a real bargain, same way they got Countywide for a song. The current Chairman of JP Morgan was a protege of Sandy Weill who made Citicorp the super giant it now is. Weill was the first one to buy when everyone was fleeing.

I'm sure things will be tense for a while, but longterm, this may be the deal of the century. 

Warren Buffett got his megabillions as a contrarian too. Led him to be the world's richest man. Only history can judge.

What's not really being convered much are the deals that so damaged Bear Stearns were subprime mortgages pooled and sold by a Carlyle Group subsidiary chartered for that purpose. 

The Carlyle Group is led by Lee Iococca, savior of Chrysler. Their list of partners/employees reads like a who's who of power brokers in Washington, New York, and abroad. What's ironic is that they are normally incredibly profitable. 

Worth a look on Google.

The Feds did a great job of quickly nipping this one in the bud. And history buffs will remember that JP Morgan personally stopped a Wall Street crises in the 1890's by stepping in when every was running scared.


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## dioxide45 (Mar 16, 2008)

johnmfaeth said:


> JP Morgan Chase picked up Bear Stearn at a real bargain, same way they got Countywide for a song.



Actually I think Bank of America bought Countrywide.


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## dioxide45 (Mar 16, 2008)

Rumours is what did Bear Stearns in. People heard rumored that they had a liquidity issue, when they heard that they worried that they wouldn't be able to pull their money out. So there was a "run on the bank" with Bear Stearns with everyone trying to cash out and they didn't have the cash to cover it.


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## dioxide45 (Mar 16, 2008)

Being out of the market may seem tempting, but being young I think we will hold in there. Our investments still earn dividends that in turn purchase more shares at cheaper prices. The market will rebound and continued growth will happen over time. You can become a very poor person if you attempt to time the market. Continued consistent investment will usually win out in the end.


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## Courts (Mar 16, 2008)

I'm buying solid companies that are undervalued. This may be a bottom and it may not, but I'm not waiting any longer. 

The big guys are buying. They usually know more than me.

http://seekingalpha.com/article/67746-barron-s-looks-at-buffett-s-buys

http://sec.gov/Archives/edgar/data/109694/000120919108003170/xslF345X02/doc4.xml

.


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## Lawlar (Mar 16, 2008)

*Trying To Stay Bullish*

The market may really be under pressure this week (Japan is down 3% as I write this).

But I keep reading my shareholder letters from my best mutual funds, that I have held for many years, and the managers say this is like the after Xmas sale.  They are buying.

I note that the American Ass of Investors survey shows that only 20% of their members are bullish and the survey of investors' newsletters show 30% bullish vs. 40% bearish.  The last time those surveys were that negative was in Oct 2002, the bottom of the bear market.  Everytime I have sold when the market was this scary, I later regretted it.

If there is a market crash, I will have to print out my resume and look for a job.  Bummer.


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## Icarus (Mar 16, 2008)

Bear Stearns had a liquidity crisis on Friday. The Fed backed a short term loan provided by JP Morgan (using old rules, rarely used) to make sure that Bear Stearns wouldn't fail. BS had two hedge funds fail several months ago, and had the most exposure to subprime mortgages.

While JP Morgan might be picking up BS for a low price, they also get their exposure to subprime mortgages along with the purchase. The upside for JPM is that they didn't have a lot of exposure to subprime loans prior to this merger, so they are probably in a far better situation to absorb those losses. (Disclosure: I own a very small holding in JPM stock.)

When large institutions are in trouble, they are often merged into stronger ones. Allowing them to fail would be far worse for the economy then injecting cash and finding a merger partner.

Unfortunately, this probably isn't the end of this. Other institutions will probably be merged into stronger ones in the coming months. I think that the markets will continue to "feel the pain" until all undervalued and worthless assets are completely written off and all write downs are taken.

-David


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## MULTIZ321 (Mar 16, 2008)

John,

and as you probably know,  if we go back 100 years to 1907 - John Pierpont Morgan single-handedly staved off a potential run on US banks by forcing rivals to come together to save their own.

Before there even was a Federal Reserve, financier JP Morgan played a key role during the panic of 1907 in preventing a potential disaster for financial markets.

So his name is linked once again to a teetering financial institution.

Richard


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## TUGBrian (Mar 16, 2008)

cant be good news when the fed cuts the rate again on a sunday no less...


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## SDKath (Mar 16, 2008)

TUG Improvements! said:


> cant be good news when the fed cuts the rate again on a sunday no less...



I agree.  I wasn't the least bit worried about the economy until the news hit today....  Katherine


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## bobcat (Mar 17, 2008)

TUG Improvements! said:


> cant be good news when the fed cuts the rate again on a sunday no less...



They may cut by one point. Problem is, even if you have money market and bonds ,you do not know if it was invested in sub-prime mortages. You have to do what you think is best. I feel we are still in for a wild ride. All the write offs are still not in.  Also, oil up and the dollar fell again.   If you sell you will take a lose. If you stay pat, it could go down. It still is all on paper till you sell. If you try to time the market, that is when you can get hurt. Do not forget, 2004 and 2005 everything was on fire. Went up to fast to soon. The house mess will be out there at least two years.  I could be wrong or right.  You pick.


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## Icarus (Mar 17, 2008)

JPMs new name:

JP Morgan Chase Bear Stearns Chemical Manufacturers Hanover Trust.

(did I leave anybody out in recent history?)




BTW in case you don't think that the Fed injected anything into this deal and that $2/share was really a bargain price:



> The Fed also essentially made the takeover risk-free by saying it would guarantee up to $30 billion of the troubled mortgage and other assets that got the nation's fifth-largest investment bank into trouble.



http://news.yahoo.com/s/ap/20080317/ap_on_bi_ge/jpmorgan_bear_stearns

-David


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## dioxide45 (Mar 17, 2008)

TUG Improvements! said:


> cant be good news when the fed cuts the rate again on a sunday no less...



The rate that was cut was not their headlining fed funds rate (the rate they lend to institutions). I beleive it was the rate that banks lend to other banks that was cut. So the usuall cut to the Fed Funds rate will come this Tuesday as usuall.


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## Elan (Mar 17, 2008)

I've been hedging my long positions with some Ultra Short (Beta = 2) ETF's.  This allows me to stay in the stocks I believe in over the long term without getting totally taken to the cleaners should the entire market sell off.   S&P futures down 23 and Nasdaq futures down 35 (vs fair value) as I type this.


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## thinze3 (Mar 17, 2008)

Icarus said:


> JPMs new name:
> 
> JP Morgan Chase Bear Stearns Chemical Manufacturers Hanover Trust *Texas Commerce Bank*.
> (did I leave anybody out in recent history?)
> ...



During the original S&L crisis back in the mid/late eighties, there was one large Texas bank that survived with out being supplimented by the governement. It was Texas Commerce Bank. TCB was eventually merged with Chemical Bank, who then bought Chase Bank and then JP Morgan.

The last crisis was a huge meltdown of Texas real estate that spread throughout the nation just like the California meltdown is doing now. It is funny how things change. California has lost more jobs than all the other states combined, while Houston alone added over 100 thousand jobs last year.


I too own a very small amount of JPM stock and am starting to think that it just may be a bargain buy at this point.  


Notice that the stocks I mentioned above are taking a huge beating today? I will probably buy some Ishares financial (ticker: IYF) as soon as the chart levels out a bit.


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## Carol C (Mar 17, 2008)

We're near retirement age, so we went defensive about 6 months ago. We kept a small position in Fidelity Low Priced Stock since it's closed to new investors...and we have one individual stock, a company from my hometown that makes memorial plaques and caskets. I figure there could be a run on caskets if folks start flinging themselves out of windows on Wall Street.


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## Elan (Mar 17, 2008)

Carol C said:


> ...and we have one individual stock, a company from my hometown that makes memorial plaques and caskets. I figure there could be a run on caskets if folks start flinging themselves out of windows on Wall Street.



  Another good hedge would be to buy companies that make canoe paddles.


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## Icarus (Mar 17, 2008)

thinze3 said:


> The last crisis was a huge meltdown of Texas real estate that spread throughout the nation just like the California meltdown is doing now.



This is the first time I've heard anybody describe what's going on now as something that's limited to one state. The subprime mortgage problem is a nationwide problem, as is the liquidity and credit crisis.

Yes, there are a few areas that are still growing, and some areas have not had the real estate value declines as much as other areas. Doesn't Houston's economy generally track the oil industry? Or is that also an outdated concept?

-David


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## Courts (Mar 17, 2008)

Icarus said:


> BTW in case you don't think that the Fed injected anything into this deal and that $2/share was really a bargain price:
> 
> 
> > The Fed also essentially made the takeover risk-free by saying it would guarantee up to $30 billion of the troubled mortgage and other assets that got the nation's fifth-largest investment bank into trouble.
> ...


I look at this as the Fed being a cosigner to a solid company's transaction. I don't think JPM is in any danger of toppling, so the Fed is not (at this time) injecting any actual funds.

If the Feds need to bail-out JPM, then I'll find a place in the woods and hunt for rabbit and pick berries.  
.
.


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## jwq387 (Mar 17, 2008)

*market collapse*



dioxide45 said:


> Being out of the market may seem tempting, but being young I think we will hold in there. Our investments still earn dividends that in turn purchase more shares at cheaper prices. The market will rebound and continued growth will happen over time. You can become a very poor person if you attempt to time the market. Continued consistent investment will usually win out in the end.



I've been doing it this way for 10 years, without any unpleasant surprises.
Everybody "times" the market; it just depends upon your "time horizon." When the fundamentals and technical factors suggest a return, I will return. Until then, I will sit it out. I believe in "continued consistent investment", just not "continued, consistent investment" in the stock market, 100% of the time.


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## thinze3 (Mar 17, 2008)

Icarus said:


> This is the first time I've heard anybody describe what's going on now as something that's limited to one state. The subprime mortgage problem is a nationwide problem, as is the liquidity and credit crisis.
> 
> Yes, there are a few areas that are still growing, and some areas have not had the real estate value declines as much as other areas. Doesn't Houston's economy generally track the oil industry? Or is that also an outdated concept?
> 
> -David




I didn't say that the meltdown was limited to one state, but from what I have read, California is "ground zero". Bloated home prices are simply returning to realty, and California is leading the way. (I would guess that if you live in Florida, you might have something to say about that) *There are plenty of foreclosures here as well.*

Since the oil bust of the eighties, most Texas cities have diversified (or at least that's what the city leaders would say). They tought, 2nd largest port in the US , world's largest medical center, yada yada. Truth is, those large profits of the oil companies are definately helping the Texas economy - just like the financials did for New York and LA 2-5 years ago. Dallas, being a financial hub of the south, is feeling some of the heat as well - but hosting the headquarters of ExxonMobile does help a bit.  

With Texas having three of the top ten largest cities in America (Houston-4, San Antonio-7 & Dallas-8), the economics do vary around the state, but all three have good oil exposure. Houston just has much more of it with over 5000 energy related firms.   I guess $100/barrel oil is not bad for everyone.  

Terry


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## ArthurN (Mar 18, 2008)

*Let the Free Markets Reign*



Icarus said:


> Allowing them to fail would be far worse for the economy then injecting cash and finding a merger partner.
> -David



This is just not true.  The Fed is sending a bad signal to big business by not letting Bear Stearns fail.  Its telling big business....don't worry take on as much adverse risk as you would like and deliberately fleece your shareholders...because no matter what, we will not let you fail...."you are too big to fail."  At some point in time, we will the pay the price for this move.  All this move does is delay the inevitable.  The markets will account for this, it always does.  And besides Bear Stearns is not a bank, it's a brokerage house - so the Feds should not be involved at all in saving this business.




Icarus said:


> BTW in case you don't think that the Fed injected anything into this deal and that $2/share was really a bargain price
> -David



It would be naive to think that the Fed did not provide JP Morgan with guarantees that the government (that means tax payers) would absorb the majority of Bear Stearns defaulted debt instruments and those that will eventually default.  This was probably guaranteed via favored tax status or direct transfer.  Again, we pay either way.  I would rather let the free market sort this out.


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## Lawlar (Mar 18, 2008)

*Few Are Successful At Timing Market*



jwq387 said:


> Everybody "times" the market; it just depends upon your "time horizon." QUOTE]
> 
> A major study was done by an independent Boston firm (Dalbar Inc.) to determine the performance record of average investors in mutual funds.  During the past 20 years the S&P 500 is up an annualized 11.9%.  However, the study found that mutual fund investors earned only 3.9% annualized for the same period.  Reason:  most investors buy after the market is at high levels and the average investor buys the hot funds after they have had a big run – also, the average investor panics and sells during bear market lows.
> 
> ...


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## Icarus (Mar 18, 2008)

fullnelson3 said:


> This is just not true.  The Fed is sending a bad signal to big business by not letting Bear Stearns fail.  Its telling big business....don't worry take on as much adverse risk as you would like and deliberately fleece your shareholders...because no matter what, we will not let you fail...."you are too big to fail."  At some point in time, we will the pay the price for this move.  All this move does is delay the inevitable.  The markets will account for this, it always does.  And besides Bear Stearns is not a bank, it's a brokerage house - so the Feds should not be involved at all in saving this business.



I think if it's true or not is an opinion and not fact. I recognize that many people share your opinion. I'm just not one of them. BS did fail. It's shareholders basically lost all their equity except for $2. Allowing them to go into bankruptcy would have created far more long and short term pain as the effects rippled through the economy and made the credit crisis much worse than it already is.

BTW, BS was an investment bank. Yes, they had a brokerage business as well.

-David


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## ArthurN (Mar 18, 2008)

Icarus said:


> I think if it's true or not is an opinion and not fact. I recognize that many people share your opinion. I'm just not one of them. BS did fail. It's shareholders basically lost all their equity except for $2. Allowing them to go into bankruptcy would have created far more long and short term pain as the effects rippled through the economy and made the credit crisis much worse than it already is.
> 
> BTW, BS was an investment bank. Yes, they had a brokerage business as well.
> 
> -David



I simply believe that the markets will not let you escape the "pain".  The Fed may have delayed the "pain" by making this move. However, the markets will exact its correction one way or another.  I just prefer to get it over with quickly (i.e. let the market complete a healthy correction of 20-30%, and then get on with the bull market) as opposed to what we will be faced with now - a market that moves sideways trading in the 11K-12.5K range for the next 3-4 years - virtually making it impossible to realize any significant gains.
Point taken regarding BS as an investment bank.....still not the type of bank that the Fed was put in place to protect from a "run on banks", and thus the reason they did not directly assist BS.  Regardless, I think we all can agree that this is not a fun rough patch.


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## Icarus (Mar 18, 2008)

I think the problem is that nobody really knows if allowing a large institution to fail would simply cause a correction or a collapse. It's all theoretical, except for history.

We'll find out more in 6 months or a year what really motivated the Fed to move as it did.

On a lighter note, did you watch The Daily Show on Monday? Very funny edition w.r.t. the economy. Catch it if you still can.

-David


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## ArthurN (Mar 18, 2008)

Very funny stuff at the daily show.  Thanks for sharing.  If anyone else is interested in a good laugh, check out the "Broken Arrow" clip here:  http://www.comedycentral.com/


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## tlwmkw (Mar 18, 2008)

Thanks for posting the link to that clip.  Very funny- glad we can still laugh about this situation even as it gets more and more grim.


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## jwq387 (Mar 21, 2008)

*where is your money*



Lawlar said:


> jwq387 said:
> 
> 
> > Everybody "times" the market; it just depends upon your "time horizon." QUOTE]
> ...


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## jwq387 (Mar 21, 2008)

*what are you doing with your $$*



fullnelson3 said:


> I simply believe that the markets will not let you escape the "pain".  The Fed may have delayed the "pain" by making this move. However, the markets will exact its correction one way or another.  I just prefer to get it over with quickly (i.e. let the market complete a healthy correction of 20-30%, and then get on with the bull market) as opposed to what we will be faced with now - a market that moves sideways trading in the 11K-12.5K range for the next 3-4 years - virtually making it impossible to realize any significant gains.
> Point taken regarding BS as an investment bank.....still not the type of bank that the Fed was put in place to protect from a "run on banks", and thus the reason they did not directly assist BS.  Regardless, I think we all can agree that this is not a fun rough patch.



So there is someone out there who recognizes the effect "trading ranges" have on a retirement portfolio? I thought I was the lone wolf. LOL


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## Icarus (Mar 21, 2008)

Pension plans take chance on mortgages

http://news.yahoo.com/s/ap/20080321...s_mortgages;_ylt=AoD4ipAAT.IBlYge3PeYOVxv24cA



> Now, some see bargains as investors realize the underlying assets the securities represent are far from worthless.
> 
> "Some of the securities that have dropped in value were really very solid securities," said Robert Gentzel, a spokesman for the Pennsylvania State Employees' Retirement System.


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## otis8756 (Mar 21, 2008)

*nah*

no market colapse.  I personally reviewed the books of an outfit that obtained a Bear Stearns loan where they loaned $3mm on what I deemed to be less than $300k of assets (understand that I think like a po'boy, so it might be as high as $1mm in assets).  There is no WAY BS sent anyone out to personally observe the assets before they underwrote the loan.  Hmmmmm, Bear Stearns=BS, any thoughts on THAT??? Come on, JBL!!!  If I learned anything from my MBA classes, it was - don't worry so much about a company or mutual fund, watch the MANAGEMENT team...


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## Mydogs2big (Mar 22, 2008)

Perhaps I am naive, or just hopeful, but I have great confidence in our government to create the right policies for our economy to continue to prosper.  

We are a capitalist country, and we don't save, we spend.  If we don't have money we become creative, and in many cases we'll gamble everything we have to get ahead.

People can keep talking about the sky falling, but the reality is our nation as a whole just wants more, more, more.

Just a few years ago, the prospect of owning a home was far out of reach for most. Even many people with no savings and meager wages were able to become homeowners and second homes became common. Today's desire for everything is bigger, better, and more luxurious.

I still see us living better than any other country in the world, even when our money is worth less.


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## caribbeansun (Mar 22, 2008)

I've never seen capitalism equated with spending before.

The fact that credit was made available to people that couldn't really afford it doesn't exactly bode well for the future.  Particularly when you couple that with the fact that the asset the debt is secured by, which the bank will be taking back via foreclosure, is over-leveraged.

As to the government and policy making - lets just say that governments all over the world create policies, make spending decisions and taxation decisions based on the objective of getting re-elected and nothing else - the US is not alone on that point but lets not kid ourselves that governments are in any business other than their own self-perpetuation.  It is my hope that my present attitude is more cynical than necessary.


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## Lawlar (Mar 22, 2008)

*Good Time To Buy?  Maybe!*

Barron's has three articles in this week's issue that argue that the stock market has made a bottom and we are heading for a good rally.  Bottom line: there is so much fear out there that the sentiment numbers (which measure fear) are at the same panic levels that were reached in prior times of crises when the market made a bottom.  Morningstar and Value Line both say the market is at bargain levels.

Its nice to finally see some positive news.  Let's hope things start turning up.

I've been buying some stocks and funds during the last couple of weeks.  But only very conservative stuff.  [I hold for the very long term - I'm not a trader.]

By the way, I sold 1/2 of my gold coins on the day gold hit 1020.  The store was so full of people selling whatever they had that had any gold in it that people had to stand outside the store waiting for their turn to sell.


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## Icc5 (Mar 22, 2008)

*Coming back*

We have seen much of what we own coming back the last couple of weeks and feel very comfortable with our positions.  Nobody likes a downrun on things you own and we are old fashioned long term holders.  We can do this because most of what we own pay substancial dividends and is some of the stocks the dividend payout is more than what we originally paid for the stocks.  
We are still in the buying mood if we find the right fit.
Bart


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## thinze3 (Mar 22, 2008)

The only thing that scares me is how easy the "run on the bank" brought Bear Stearns down. There are likely to be a few more Bear Stearns out there.

What if there were rumors about Citigroup next week and the same thing happened to them? The outcome could be catastrophic! Don't think that in this environment it couldn't happen. 

*IMO*


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## Lawlar (Mar 22, 2008)

*Banks Are Strong And Backed By Fdic*



thinze3 said:


> The only thing that scares me is how easy the "run on the bank" brought Bear Stearns down. There are likely to be a few more Bear Stearns out there.
> 
> What if there were rumors about Citigroup next week and the same thing happened to them? The outcome could be catastrophic! Don't think that in this environment it couldn't happen.
> 
> *IMO*



Our banks are subject to stricter capital requirements than brokerages.  The banks have FDIC to back them up.  The FED is not going to let our big banks go down.  No way.  

Note that only the shareholders of Baer were hurt - not those with monies deposited with Bear.  Note also that Bear Stearns was leveraged 30 to 1 on its risky mortgage bets.  Banks are not leveraged like that.  

Barron's front page article this week is on how the financials have probably seen the worse.  Barron's believes many banks are good investments at this time.  I recommend that you read this week's issue.


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## thinze3 (Mar 22, 2008)

Read here about Washington Mutual's condition. It has been trading like a company on the brink - stock down 75%. According to this article, WaMu too, like Bear did, has been shopping around for cash infusions. (these are the rumors I mentioned above) After last week's actions, these cash infusions from outsiders may been hard to get.

I personally would not be investing in banks at this time. As a matter of fact, I'd probably short a few of them. Still too many teaser rates to expire for me to feel comfortable.

IMO


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## Brett (Mar 23, 2008)

thinze3 said:


> I personally would not be investing in banks at this time. As a matter of fact, I'd probably short a few of them. Still too many teaser rates to expire for me to feel comfortable.IMO



an article in the NYTimes business section shows some mutual fund managers are taking the opposite view - bullish on bank stocks!


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## thinze3 (Mar 23, 2008)

Fund managers have the luxury of buying 25 bank stocks at a time. I don't.  Buying a mutual fund heavy on financial stocks is one way to minimize the risk as is buying Ishares IYF. 

I do agree that many financials are under valued as may be reflected in the dividend yields, but owning WaMu, Lehman,  Citigroup, etc... can still be risky.

Again, this is just my take on the situation.


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## johnmfaeth (Mar 23, 2008)

When deciding if more Bear Stearns-type events will happen, one has to think of what caused the initial trouble. BS was one of the largest investors in Subprime Mortgages. Bear had not adequately diversified and got burned. 

The instigator was the $16.6 Billion dollar default on Wednesday by Carlyle Capital which had invested big in mortgages, especially subprime.

CC's parent is the famous Carlyle Group headed by Lee Iacocca with a partrner list that reads like the who's who of Washington, including an ex-president, ex-secretary of state, etc. Even the Saudi's own a big piece. Luckily, they had not invested a dime in their subsidiaries investment pools.

The question is who is left standing out there with that kind of exposure today? This may have been the biggest, Goldman Sachs already took their lumps and liquidated a month back. They were another biggie subprime pool issuer.

Time tells all....


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## bogey21 (Mar 23, 2008)

I think we are heading in the right direction.* I have been buying Financials(BofA, Wachovia, Regions, BBT and US Bank) and selling "in the money calls" against them.  I am in the process of going naked against all but Wachovia where I continue to sell deep in the money calls against my stock.

GEORGE


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## BocaBum99 (Mar 24, 2008)

The Stock Market has bottomed.  It is now time to load up on Stocks.

The bottom is achieved when everyone gives up.  That has happened.

The housing market will be back within a year.


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## PigsDad (Mar 24, 2008)

BocaBum99 said:


> The Stock Market has bottomed.  It is now time to load up on Stocks.
> 
> The bottom is achieved when everyone gives up.  That has happened.
> 
> The housing market will be back within a year.


I tend to agree.  In the last week, I have been pumping some extra $$ into our child's college fund (100% in stock funds now, since she is only 6).  I hope to get some good bargains here.

Kurt


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## Icarus (Mar 26, 2008)

*Home sales rose in February*

Home sales rose in February

http://news.yahoo.com/s/ap/20080324/ap_on_bi_ge/economy



> Sales of existing homes increased unexpectedly in February after six months of decline, but private economists said it was too soon to say the prolonged slide in housing is coming to an end.
> 
> ...



-David


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## Emily (Mar 26, 2008)

I would expect the housing market to get a boost if you reduce the prices by 25%.  I don't believe the economy is at the bottom yet.  The Fed pumps in money and cuts rates every few weeks.  Those bandaids give the market a 7-10 day bump (or less) and then its back to a free fall.  Unfortunately many  companies may not recover but the companies that are able to repositon and that are not over indebted and have a good market base should survive.  


http://latimesblogs.latimes.com/laland/2008/03/california-free.html

California freefall: Home prices down 26% in February

JyatpencSigns of distress are piling up in the California housing market, where prices are falling at three times the national rate of decline.

--Statewide, median sales prices fell by a stunning 26% from year-ago levels in February, with home prices dropping at a rate of nearly $3,000 a week,


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## Pat H (Mar 26, 2008)

bogey21 said:


> I think we are heading in the right direction.* I have been buying Financials(BofA, Wachovia, Regions, BBT and US Bank) and selling "in the money calls" against them.  I am in the process of going naked against all but Wachovia where I continue to sell deep in the money calls against my stock.
> 
> GEORGE



Could you put that in English?


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## Pit (Mar 26, 2008)

I don't believe the bottom is in yet. The market has only been in decline for 6 months. It will take much longer to purge the effects of the housing surplus and credit crisis from the economy. I look for the market to retreat and retest the recent lows around 1260 on the S&P. I don't believe support will hold, and the market will sell off further.


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## thinze3 (Jul 7, 2008)

BocaBum99 said:


> The Stock Market has bottomed.  It is now time to load up on Stocks.
> The bottom is achieved when everyone gives up.  That has happened.
> The housing market will be back within a year.  03/24/08




*OUCH!*  

After GM, American Airlines and WaMu file bankruptcy, then it may be time to load up. 

Terry


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## pedro47 (Jul 7, 2008)

The market is still heading south today.


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## Lawlar (Jul 7, 2008)

*I Was Wrong!!!!*

I forgot about this thread until it popped up on new posts today.  When I read the thread I discovered that I had written in March that Barron's said the market bottom was in and that the financials were through going down.

Boy was I wrong!  Just look at BAC (Bank of America).  It is unbelievable how the financials have dropped.

Morningstar's StockInvestor put BAC in its model portfolio when it was over $50 - and highly recommended the stock.  Its now below $22.  Many talented fund managers bought the financials and they have lost billions in those investments.

Marriott stock is down about 50% too [that doesn't make me feel bad at all - if you've read my prior posts you know why.]

Making predictions is a good way to become humble (if you look back at what you said).


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## thinze3 (Jul 7, 2008)

It is funny that you mention Marriott, as I too posted about it a while back. I made comments about its ever declining balance sheet.  I also stated that if it kept falling I might soon become a buyer. 

I'll be watching it closely as it sure appears to be a value play - if the economy doesn't get much worse.

Terry


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## Brett (Jul 7, 2008)

Lawlar said:


> Making predictions is a good way to become humble (if you look back at what you said).




how true
it's hard to forecast the direction of the stock market or any other future event
( I generally stick with index funds, not individual stocks)


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## rschallig (Jul 8, 2008)

Brett said:


> how true
> it's hard to forecast the direction of the stock market or any other future event
> ( I generally stick with index funds, not individual stocks)



I think it was Will Rogers that said: "making predictions is difficult, especially when it involves the future".
Bob


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## ricoba (Jul 8, 2008)

rschallig said:


> I think it was Will Rogers that said: "making predictions is difficult, especially when it involves the future".



:hysterical: :hysterical:


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## thinze3 (Jul 14, 2008)

The bloodbath in financials continues!

http://finance.yahoo.com/q/bc?t=5d&s=WM&l=off&z=l&q=l&c=fnm,+zion


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## ricoba (Jul 14, 2008)

thinze3 said:


> The bloodbath in financials continues!
> 
> http://finance.yahoo.com/q/bc?t=5d&s=WM&l=off&z=l&q=l&c=fnm,+zion



It looks like WAMU, is skating on some pretty thin ice.  Down almost 35% today!  

I am not sure how some of these regional banks will be able to raise the needed cash to survive.


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## Carol C (Jul 14, 2008)

So many pension funds have big investments in financial companies. There go folks' retirements down the toilet, if this downward trend continues. Time for a change!


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## dmharris (Jul 14, 2008)

thinze3 said:


> The bloodbath in financials continues!
> 
> http://finance.yahoo.com/q/bc?t=5d&s=WM&l=off&z=l&q=l&c=fnm,+zion


 

Okay so if my home loan is with Washington Mutual and they go under. . . what happens to my mortgage?  Seriously.

If I go under, they take my home; if the bank goes under, do I get the bank??  :rofl:


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## thinze3 (Jul 14, 2008)

dmharris said:


> Okay so if my home loan is with Washington Mutual and they go under. . . what happens to my mortgage?  Seriously.
> 
> If I go under, they take my home; if the bank goes under, do I get the bank??  :rofl:



Shucks! Wells Fargo is financial sound. No bank for me.  

Seriously, you will continue to pay until the notice comes to tell the name of the your mortgage holder.


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## SDKath (Jul 14, 2008)

Indie Mac just went bankrupt (bank system in Los Angeles).  My parents stood in line for 4 hours today to get their FDIC checks.   

Katherine


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## Twinkstarr (Jul 14, 2008)

Goldman Sachs just put Starwood on their Sell list today.

National City Bank(out of Cleveland, branches here in NW OH) might be the next one to go. Trading was halted earlier today and they put out a notice that they were liquid. I think WAMU also put out a statement that they have enough cash. 

But if there are runs on these institutions?


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## davenlib (Jul 14, 2008)

*what about ING online accounts*

anyone have an opinion about accounts with ING direct.. they are an on line bank and I have savings accounts with them.. should I be scared???


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## UWSurfer (Jul 14, 2008)

davenlib said:


> anyone have an opinion about accounts with ING direct.. they are an on line bank and I have savings accounts with them.. should I be scared???



ING Bank, fsb  
1 South Orange Street
Wilmington, DE 19801 
FDIC Certificate #: 35489

That FDIC cert keeps me from being scared.


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## Brett (Jul 14, 2008)

SDKath said:


> Indie Mac just went bankrupt (bank system in Los Angeles).  My parents stood in line for 4 hours today to get their FDIC checks.
> 
> Katherine



the nightly news showed the lines but said it was actually foolish to be in the line (unless you had over $100,000 per account, then it didn't matter what line you were in!


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## Brett (Jul 14, 2008)

davenlib said:


> anyone have an opinion about accounts with ING direct.. they are an on line bank and I have savings accounts with them.. should I be scared???



no, it's the banks that specialized in risky mortgages that are in trouble


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## ricoba (Jul 14, 2008)

ING, is a large multi-national bank out of the Netherlands.

For quite sometime, they have taken a specific policy not to do high risk mortgages 

Whereas on the other hand IndyMac was an offshoot of Countrywide, which was one of the biggest contributors to this mortgage meltdown.

Since I live in LA, I too saw the news with the long lines, and agree, that unless a person had over $100,000 (or more with joint and ira accts) on deposit with IndyMac, they didn't need to be in those lines.


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## ricoba (Jul 14, 2008)

Twinkstarr said:


> But if there are runs on these institutions?




Who could have imagined that there would still be a run on a bank, this is 2008 and not 1928/29 and later.....


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## bookworm (Jul 14, 2008)

I find this quite shocking as well. While bankers today have extensive education and knowledge of historical financial trends, we are still in this position today. I suppose we, personally, are fortunate since the bank around the corner from us (Hudson City Savings Bank) has been named by Forbes as number 1 during this crisis. We didn't pick it for that reason - it just happened to be nearby. 

I don't know why anyone would put more than 100K in an account and risk not being insured. I suppose they couldn't have imagined this happening.

I realize that there is no reason to be concerned about this now, but I'm curious about how many big banks (or accounts totalling multi-billions) would need to fold before the FDIC would be in trouble.


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## dioxide45 (Jul 14, 2008)

IndyMac is operating today just as it did in the past. You can still use ATMs and online banking just as one did last week. It is operating under the Fed. I think you can still walk in and open an account.

The problem with IndyMac was comments of one senator. This caused worries that people wouldn't be able to get their money and a run on deposits. If the comments weren't made, then this wouldn't be happening.


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## Rose Pink (Jul 14, 2008)

bookworm said:


> .... but I'm curious about how many big banks (or accounts totally multi-billions) would need to fold before the FDIC would be in trouble.


 
I was just having this conversation an hour ago with a 91 year old neighbor who was telling me about living through the Great Depression.  I'm starting to get a great depression of my own.


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## SDKath (Jul 14, 2008)

ricoba said:


> ING, is a large multi-national bank out of the Netherlands.
> 
> For quite sometime, they have taken a specific policy not to do high risk mortgages
> 
> ...



Not true.  My parents had 4 accounts totalling $200,000 there.  They got $50,00 today and said the rest will come some other time.  They got no specifics, guarantees, written papers or anything.  All of it was insured by FDIC due to the separate accounts.  Yet they have only 1/4 of the money!

They don't know if the rest will ever be seen again.  The bank was no help as everyone in line was in their position.

This is a very scary time.  Even with FDIC insurance, people are out of substantial amounts of money.  What if my parents needed this money?  It's a large sum and they have no idea what will happen.  The bank and the government simply refused to give them any more of the money.  They said they didn't have it.  Period.  Nothing anyone can do.

By the way, it is laughable but they were told that the rest of the money will continue to accrue interest until they get it.  My dad laughed and said thanks, buy 10% of 0 is still 0!

Katherine


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## dioxide45 (Jul 14, 2008)

SDKath said:


> Not true.  My parents had 4 accounts totalling $200,000 there.  They got $50,00 today and said the rest will come some other time.  They got no specifics, guarantees, written papers or anything.  All of it was insured by FDIC due to the separate accounts.  Yet they have only 1/4 of the money!



See the link in post #93 for accurate information regarding FDIC insurance.


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## ricoba (Jul 14, 2008)

This is from the FDIC website regarding this issue.

All non-brokered insured deposit accounts have been transferred to IndyMac Federal Bank, F.S.B. (IndyMac Federal Bank), Pasadena, CA ("assuming institution") a newly chartered full-service FDIC-insured institution.  The OTS appointed the FDIC conservator of IndyMac Federal Bank.  All insured deposit accounts will be available as usual during regular business hours starting July 14, 2008.

Principal and interest on insured accounts, through July 11, 2008, are fully insured by the FDIC, up to the insurance limit of $100,000.  You will receive full payment for your insured account.  Certain entitlements and different types of accounts can be insured for more than the $100,000 limit.  IRA funds are insured separately from other types of accounts, up to a $250,000 limit.

All accounts that exceed the $100,000 insurance limit, and/or all accounts that appear to be related and exceed this limit, are reviewed by the FDIC to determine their ownership and insurance coverage.  If you think you might have uninsured deposits you should call the FDIC Call Center to arrange for a telephone interview with  a Claims Agent at 866-806-5919.
I am sure your parents are upset, (as I would be) but the rules are clear as they have always been about FDIC insurance.


All non-brokered insured deposit accounts have been transferred to IndyMac Federal Bank, F.S.B. (IndyMac Federal Bank), Pasadena, CA ("assuming institution") a newly chartered full-service FDIC-insured institution.  The OTS appointed the FDIC conservator of IndyMac Federal Bank.  All insured deposit accounts will be available as usual during regular business hours starting July 14, 2008.

Principal and interest on insured accounts, through July 11, 2008, are fully insured by the FDIC, up to the insurance limit of $100,000.  You will receive full payment for your insured account.  Certain entitlements and different types of accounts can be insured for more than the $100,000 limit.  IRA funds are insured separately from other types of accounts, up to a $250,000 limit.

All accounts that exceed the $100,000 insurance limit, and/or all accounts that appear to be related and exceed this limit, are reviewed by the FDIC to determine their ownership and insurance coverage.  If you think you might have uninsured deposits you should call the FDIC Call Center to arrange for a telephone interview with  a Claims Agent at 866-806-5919.


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## ricoba (Jul 14, 2008)

dioxide45 said:


> I beleive if the four accounts are in both of their names (each account is in both names), then they are only insured up to $100,000 even though they have the money spread accross four accounts.



That would be my understanding, though I can appreciate how upset her parents must be.


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## Pit (Jul 14, 2008)

More banks likely to fail in the next 12 to 18 months. If you haven't already done so, now would be a good time to assess your exposure.

http://finance.yahoo.com/banking-budgeting/article/105391/Analysts-Say-More-Banks-Will-Fail


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## myip (Jul 15, 2008)

Twinkstarr said:


> National City Bank(out of Cleveland, branches here in NW OH) might be the next one to go. Trading was halted earlier today and they put out a notice that they were liquid. I think WAMU also put out a statement that they have enough cash.
> 
> But if there are runs on these institutions?



What is the likelyhood that National City Bank go under?  Is there any article about this bank that it may be going under?  My aunt has money with the bank... SHe is over 85 years old and lives outside of US.   We try to tell her to withdraw money from her account.   She doesn't understand and can't have a conversation with her on the phone.  We may need to fly a relative to Hong Kong and help her transfer the money out of National City Bank.    I am wondering how serious is the problem with National City Bank.


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## ricoba (Jul 15, 2008)

National City and WaMu, seemed to the two that were in the headlights today.

WaMu stock dropped a whoping 35% and National City 15%

This does not mean these banks will close or be taken over by the FDIC, but the market is not seeing happy times ahead for them and other regional banks. 

Here is the Yahoo link


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## SDKath (Jul 15, 2008)

ricoba said:


> That would be my understanding, though I can appreciate how upset her parents must be.



They spoke to the FDIC loan folks by phone.  I guess it also depends on who is to inherit the money.  If different people are put on it by inheritence, each is individually insured.  I dunno.   

It seems like the rules can change from moment to moment.

On another note, my economist father in law said anyone who has more than $100,000 in cash should put it into treasury bills, which are guaranteed to give you the full price yield.  Short term ones for even just a week are available, with autorollover weekly.

Katherine


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## dioxide45 (Jul 15, 2008)

myip said:


> What is the likelyhood that National City Bank go under?  Is there any article about this bank that it may be going under?  My aunt has money with the bank... SHe is over 85 years old and lives outside of US.   We try to tell her to withdraw money from her account.   She doesn't understand and can't have a conversation with her on the phone.  We may need to fly a relative to Hong Kong and help her transfer the money out of National City Bank.    I am wondering how serious is the problem with National City Bank.



I think the chances of National City going under are very slim. They completed a very large capital raise in April (you can likely find a press release on their website). They raised $7 billion in capital for it to weather these times. The raise has made it one of the best-capitalized banks among its piers. The money wouldn’t necessarily be any more safe in an account at any other bank.


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## Brett (Jul 15, 2008)

SDKath said:


> They spoke to the FDIC loan folks by phone.  I guess it also depends on who is to inherit the money.  If different people are put on it by inheritence, each is individually insured.  I dunno.
> 
> It seems like the rules can change from moment to moment.
> 
> ...



the rules don't change from moment to moment, the same rules still apply to bank accounts as it did 25 years ago during the S&L "crisis".   It's unfortunate your parents did not understand FDIC insurance but I blame the banks and regulatory complexity for that.  I believe they will get all their money back even if they did not follow the rules.   in past financial institution failures very few depositors of your type (multiple accounts but within the limits)  did not get back 100%


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## ricoba (Jul 15, 2008)

I just heard Mark Kriski our local KTLA weatherman, tell of his personal IndyMac experience this morning on the KTLA Morning news.

He and his wife are customers.  On Saturday they could only withdraw $200 from the ATM, and they could not see their balance or transactions.

On Sunday they tried to withdraw again, and they were unable to make a withdrawl.

He said all weekend and even up till today they have also been not able to access their account online on the phone or through atm's.

It must be extremely frustrating and stressful for many customers.... 

The old mattress may be looking better all the time!


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## thinze3 (Jul 15, 2008)

*Couldn't resist.*

When I started this thread back in March, I was pondering buying into certain industries - financials, airlines, etc.  I am not a big stock buyer, but I will fiddle with the market a little bit every six months or so. Boy am I glad that I didn't buy back then.

Well I couldn't hold out any longer. This morning I bought $2500 of Ishares financials (IYG), $1250 of Delta and $1250 of Continental. I hope to buy those same stcks again next month (up or down).

Now we will wait and see.   

Terry


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## rschallig (Jul 15, 2008)

SDKath said:


> Indie Mac just went bankrupt (bank system in Los Angeles).  My parents stood in line for 4 hours today to get their FDIC checks.
> 
> Katherine



FDIC issued a Question and Answer Sheet for IndyMac Bank representing the most commonly asked questions by customers of this failed bank. 
Bob

http://www.fdic.gov/bank/individual/failed/indymac_q_and_a.html#Over%20$100,000


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## Carol C (Jul 15, 2008)

ricoba said:


> Who could have imagined that there would still be a run on a bank, this is 2008 and not 1928/29 and later.....



Yeah, and I can just imagine Osama bin Laden sitting in  swank digs somewhere, popping a bottle of champagne with his cronies as they watch CNN and see Californians on long bank lines waiting to withdraw their money. :annoyed:


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## Liz Wolf-Spada (Jul 15, 2008)

My dad has CD's with IndieMac worth about 150,000, but the person we hire to do his money management said that they had told her previously that because there are 4 of us listed as trustees each of us had coverage of 100,000. I hope this is correct. One CD matured on the 11th and she was going to get it closed. Another matures on the 25th and I'm not sure when the last one matures.
Liz


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## SDKath (Jul 15, 2008)

Liz Wolf-Spada said:


> My dad has CD's with IndieMac worth about 150,000, but the person we hire to do his money management said that they had told her previously that because there are 4 of us listed as trustees each of us had coverage of 100,000. I hope this is correct. One CD matured on the 11th and she was going to get it closed. Another matures on the 25th and I'm not sure when the last one matures.
> Liz



That's exactly what my parents were told.  They have $50,000 of the $200,000 in their posession so far and they said the remaining moneys will come some other time.  Excellent.

Katherine


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## Pat H (Jul 16, 2008)

Liz Wolf-Spada said:


> My dad has CD's with IndieMac worth about 150,000, but the person we hire to do his money management said that they had told her previously that because there are 4 of us listed as trustees each of us had coverage of 100,000. I hope this is correct. One CD matured on the 11th and she was going to get it closed. Another matures on the 25th and I'm not sure when the last one matures.
> Liz



That's not correct. The title on the accounts has to be different, e.g. 
Mary, Mary & Joe, Mary & Liz, etc. Each one of those would be insured up to $100,000. If they all say Mary, Joe, Liz and Tom then the total is $100,000.


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## SDKath (Jul 16, 2008)

Pat H said:


> That's not correct. The title on the accounts has to be different, e.g.
> Mary, Mary & Joe, Mary & Liz, etc. Each one of those would be insured up to $100,000. If they all say Mary, Joe, Liz and Tom then the total is $100,000.



Well, my mom talked with the FDIC counselor today and received all of her money in one lump sum.  As long as the beneficieries are separate, you are ensured for EACH one at $100,000.  She had all the accounts under her name but with different beneficiaries.

So yes, make sure that each account has a different beneficiary.  Katherine


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## somerville (Jul 16, 2008)

You guys are spreading some misinformation.  The deposit rules have changed since the last banking crisis.  There can be greater coverage, depending on how accounts are structured.  However, some of these rules can also be traps for the unwary.  There is a great deal of deposit insurance information available on the FDIC website. http://www.fdic.gov/deposit/deposits/index.html If you don't understand the rules after reading them, I suggest that you then call the FDIC on the toll free information line.  There are experts available to answer questions.  However, also keep in mind that deposit insurance is determined at time of failure, not at the time the deposit is made.  If there are changes in circumstances, you may need to revisit the rules.  Also, there are reasons why insured deposits over $100,000 are not released immediately.  Sometimes the FDIC needs to verify information.


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## Pat H (Jul 16, 2008)

SDKath said:


> Well, my mom talked with the FDIC counselor today and received all of her money in one lump sum.  As long as the beneficieries are separate, you are ensured for EACH one at $100,000.  She had all the accounts under her name but with different beneficiaries.
> 
> So yes, make sure that each account has a different beneficiary.  Katherine



That would make each account titled differently so that's why they were covered.


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## ricoba (Jul 16, 2008)

thinze3 said:


> When I started this thread back in March, I was pondering buying into certain industries - financials, airlines, etc.  I am not a big stock buyer, but I will fiddle with the market a little bit every six months or so. Boy am I glad that I didn't buy back then.
> 
> Well I couldn't hold out any longer. This morning I bought $2500 of Ishares financials (IYG), $1250 of Delta and $1250 of Continental. I hope to buy those same stcks again next month (up or down).
> 
> ...



Looks like you timed it A-OK...Freddie Mac & Fannie Mae both up 30+ points today......now will it hold????


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## dioxide45 (Jul 16, 2008)

ricoba said:


> Looks like you timed it A-OK...Freddie Mac & Fannie Mae both up 30+ points today......now will it hold????



In fact many bank stocks were also up double digits today.


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## somerville (Jul 17, 2008)

Pat H said:


> That would make each account titled differently so that's why they were covered.


Not necessarily.  It sounds like they were payable on death accounts, which fall under a separate rule for revocable trusts.  Not all joint accounts are entitled to additional insurance.  Please read the information on the link in my previous post.


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## caribbeansun (Jul 17, 2008)

Well you know what they say - if you want to have a small fortune start with a large fortune and buy airline stocks...



thinze3 said:


> Well I couldn't hold out any longer. This morning I bought $2500 of Ishares financials (IYG), $1250 of Delta and $1250 of Continental. I hope to buy those same stcks again next month (up or down).


----------



## pwrshift (Jul 17, 2008)

If I read that right, if you have $300,000 in one account you can't split that amount into 3 separate accounts at the same bank and still be insured.  Is that correct?


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## thinze3 (Jul 17, 2008)

caribbeansun said:


> Well you know what they say - if you want to have a small fortune start with a large fortune and buy airline stocks...






This is evident in the historical numbers, but I have a sneaky suspicion that they aren't ALL going out of business.  

FYI, later Tuesday afternoon, I also bought AMR and UAUA. Now I have 4 of the top five legacy airlines in that account. Hopefully (meaning if I have the free cash), in the next month or two, I will cost average in again with the same stocks.

I didn't have the heart to call my stockbroker and make any real purchases. (<< Probably a smart move, eh?)


Terry


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## Mel (Jul 17, 2008)

pwrshift said:


> If I read that right, if you have $300,000 in one account you can't split that amount into 3 separate accounts at the same bank and still be insured.  Is that correct?



That's correct.  Unless you have different joint account holders on each of the accounts, they are all treated as owned by one entity - you.  You are only insured to $100,000.

In most of these cases it is all about panic.  The bank doesn't keep all that money liquid, they use it to fund loans.  The loans are paid, and the interest earned on the loans is used to pay interests on the deposits.

A run on the bank as we saw is caused by people in a panic assuming they won't get their money if they don't get there before everyone else.  The only solution is to give a portion of the deposit to each of the people in line, and make everyone wait for the balance.   Very few of those people needed access to all that cash that day!  If they had left the money where is was, business could have continued as usual.

I worry more about the devaluation of the dollar than about whether my bank has the cash to pay me today.


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## somerville (Jul 17, 2008)

pwrshift said:


> If I read that right, if you have $300,000 in one account you can't split that amount into 3 separate accounts at the same bank and still be insured.  Is that correct?


There are ways that you can increase coverage, but it depends upon how the accounts are structured and other factors.  Anyone depositing more than $100,000 in a financial institution needs to be aware of the deposit insurance rules.


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## SDKath (Jul 17, 2008)

somerville said:


> There are ways that you can increase coverage, but it depends upon how the accounts are structured and other factors.  Anyone depositing more than $100,000 in a financial institution needs to be aware of the deposit insurance rules.



I just had a long talk with the manager at my Wells Fargo.  He said our accounts are theoretically insured for $400,000 because DH and I are on the account and we have 2 beneficiaries (our 2 DDs).  It doesn't matter how many accounts they are split into, we are covered for up to $400k.  He logged on to the FDIC website and put the scenario in there and it confirmed it.  I feel better now, especially since WF reported positive earnings yesterday.  Katherine


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## ricoba (Jul 18, 2008)

SDKath said:


> I just had a long talk with the manager at my Wells Fargo.  He said our accounts are theoretically insured for $400,000 because DH and I are on the account and we have 2 beneficiaries (our 2 DDs).  It doesn't matter how many accounts they are split into, we are covered for up to $400k.  He logged on to the FDIC website and put the scenario in there and it confirmed it.  I feel better now, especially since WF reported positive earnings yesterday.  Katherine



If you are really worried, why not simply put money into different banks?  It's easy enough to open a Bank of America, or Union Bank or Bank of the West account here in CA.  

I think perhaps you are getting worried unnecessarily.


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## Liz Wolf-Spada (Jul 18, 2008)

Well Dad's financial assistant went to get the CD's closed (the ones that were due) and was told the money would be available, but she now needs a notorized letter from us as they are no longer Indie Mac CD's and we can close the one that isn't yet due for no penalty also.
Liz


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## caribbeansun (Jul 18, 2008)

Well, it's certainly a contrarian approach I will give you that.  Buying airlines with record high oil prices, the US economy in the tank and people traveling less.  You should have a pretty low average price by the time you're done and then when the economy picks up in a couple years you'll be laughing all the way to the bank.

Of course based on the last line of your post I'm not sure if you actually did this or you're just being facetious.



thinze3 said:


> This is evident in the historical numbers, but I have a sneaky suspicion that they aren't ALL going out of business.
> 
> FYI, later Tuesday afternoon, I also bought AMR and UAUA. Now I have 4 of the top five legacy airlines in that account. Hopefully (meaning if I have the free cash), in the next month or two, I will cost average in again with the same stocks.
> 
> ...


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## thinze3 (Jul 18, 2008)

caribbeansun said:


> Well, it's certainly a contrarian approach I will give you that.  Buying airlines with record high oil prices, the US economy in the tank and people traveling less.  You should have a pretty low average price by the time you're done and then when the economy picks up in a couple years you'll be laughing all the way to the bank.
> 
> Of course based on the last line of your post I'm not sure if you actually did this or you're just being facetious.




That last line was a bit confusing. Yes, I actually did buy the stocks, and for the moment my timing looks incredibly good.

What I meant is that I have not made any real (large) purchases. These larger purchases are controlled because we keep those accounts at a brokerage firm which requires a phone call and a discussion before buying and/or selling. This keeps our retirement security away from my little black keyboard.  

Terry


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## rschallig (Jul 18, 2008)

*Warren Buffett's opinion on airlines*



thinze3 said:


> This is evident in the historical numbers, but I have a sneaky suspicion that they aren't ALL going out of business.
> 
> FYI, later Tuesday afternoon, I also bought AMR and UAUA. Now I have 4 of the top five legacy airlines in that account. Hopefully (meaning if I have the free cash), in the next month or two, I will cost average in again with the same stocks.
> 
> ...



The following is an excerpt from Warren Buffett’s  2007 Berkshire Annual Report:

“Now let’s move to the gruesome. The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.

The airline industry’s demand for capital ever since that first flight has been insatiable. Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it. And I, to my shame, participated in this foolishness when I had Berkshire buy U.S. Air preferred stock in1989. As the ink was drying on our check, the company went into a tailspin, and before long our preferred dividend was no longer being paid. But we then got very lucky. In one of the recurrent, but always misguided, bursts of optimism for airlines, we were actually able to sell our shares in 1998 for a hefty gain.In the decade following our sale, the company went bankrupt. Twice.”
Bob


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## Courts (Aug 3, 2008)

I have one personal rule when buying stocks, NO AIRLINES.  Works for me.
.


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## pwrshift (Aug 5, 2008)

thinze3 said:


> I didn't have the heart to call my stockbroker and make any real purchases. (<< Probably a smart move, eh?)
> 
> 
> Terry


 
Cash is gold these days...as long as you don't have more than $100,000 in each bank.  That probably means 40 banks for you, Terry ... are there that many banks in the US?


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## Autoeng (Aug 5, 2008)

thinze3 said:


> Read here about Washington Mutual's condition. It has been trading like a company on the brink - stock down 75%. According to this article, WaMu too, like Bear did, has been shopping around for cash infusions. (these are the rumors I mentioned above) After last week's actions, these cash infusions from outsiders may been hard to get.
> 
> I personally would not be investing in banks at this time. As a matter of fact, I'd probably short a few of them. Still too many teaser rates to expire for me to feel comfortable.
> 
> IMO




I saw an ad for an 5 month *18%* WAMU bond this weekend. Won't be long now.


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## Brett (Aug 5, 2008)

> Originally Posted by thinze3
> I personally would not be investing in banks at this time. As a matter of fact, I'd probably short a few of them. Still too many teaser rates to expire for me to feel comfortable.
> IMO





Autoeng said:


> I saw an ad for an 5 month *18%* WAMU bond this weekend. Won't be long now.





then there are those investors who cannot get enough bank stocks, 
 - a stock offering that's oversubscribed in one week with people begging to buy more!


http://www.dailypress.com/business/dp-biz_townebank_0805aug05,0,7004453.story


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## gary01 (Aug 5, 2008)

Courts said:


> I have one personal rule when buying stocks, NO AIRLINES.  Works for me.
> .



Smart.... That's the same thing that Warren Buffett says about airlines.


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## thinze3 (Aug 5, 2008)

Brett said:


> then there are those investors who cannot get enough bank stocks,
> - a stock offering that's oversubscribed in one week with people begging to buy more!.....



That's a nice little bank. It'll probably be bought out by BOA in a couple more years. The banking industry has definately stabilized for many banks.




thinze3 said:


> 3-22-08
> I personally would not be investing in banks at this time. As a matter of fact, I'd probably short a few of them....



I wish I had shorted many of the referenced bank stocks back then. I would have made a killing by covering on July 15th, the day I bought into the Ishares financials (IYG) and four legacy airlines.


Terry


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## thinze3 (Aug 5, 2008)

pwrshift said:


> Cash is gold these days...as long as you don't have more than $100,000 in each bank.  That probably means 40 banks for you, Terry ... are there that many banks in the US?



No. That is reserved for those in their prime who spend 4 weeks a year in Fort Lauderdale. 

I just sent my second off to college.  


Terry


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## thinze3 (Sep 19, 2008)

Looks like a good day coming in the stock market, especially financials. The SEC has teamed with authorities in the UK to ban all short selling of financial stocks.

This should keep stocks propped for a while. IMO


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## Santina (Sep 19, 2008)

+Interesting  this was posted in March!


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## bogey21 (Sep 20, 2008)

thinze3 said:


> Bear Stearns Companies just got bought for pennies on the dollar by JP Morgan. This is a huge collapse that may be only the tip of the iceberg in the financial industry. Are Lehman Brothers, Merrill Lynch, WaMu and Citigroup next?



About a month ago I bought pretty heavy for me (5,000 shares each) in WAMU and National City figuring someone would eat their bad assets to get  their branch networks.  As of now it looks like Uncle Sam is going to make this a profitable investment.

GEORGE


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## pwrshift (Sep 20, 2008)

Wow...did you read that right back in March!  Do you want to be my broker?  

Brian



thinze3 said:


> Bear Stearns Companies just got bought for pennies on the dollar by JP Morgan. This is a huge collapse that may be only the tip of the iceberg in the financial industry. Are Lehman Brothers, Merrill Lynch, WaMu and Citigroup next?
> 
> The stock market may drop like a rock in the near future. If it does, will it be like the dot com bust that began in March 2000? Will the dollar crater to world currencies much worse than we have already seen ?
> 
> What are your thoughts?


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## Rose Pink (Sep 20, 2008)

pwrshift said:


> Wow...did you read that right back in March! Do you want to be my broker?
> 
> Brian


 
I believe Santina was referring to the OP post of March 16:

"Bear Stearns Companies just got bought for pennies on the dollar by JP Morgan. This is a huge collapse that may be only the tip of the iceberg in the financial industry. Are Lehman Brothers, Merrill Lynch, WaMu and Citigroup next?"


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## thinze3 (Sep 21, 2008)

pwrshift said:


> Wow...did you read that right back in March!  Do you want to be my broker?
> 
> Brian




We all could have made a little pocket change had we shorted the stocks I mentioned when this thread started.  


Terry


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## thinze3 (Sep 25, 2008)

*WaMu just folded - selling good assets to JP Morgan.*



thinze3 said:


> Bear Stearns (gone) Companies just got bought for pennies on the dollar by JP Morgan. This is a huge collapse that may be only the tip of the iceberg in the financial industry. Are Lehman Brothers (gone) , Merrill Lynch (gone) , WaMu (gone) and Citigroup next?
> 
> The stock market may drop like a rock in the near future. If it does, will it be like the dot com bust that began in March 2000? Will the dollar crater to world currencies much worse than we have already seen ?
> 
> What are your thoughts?  *Posted March 16, '08*




Well, I guess Citigroup is next.


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## pwrshift (Sep 25, 2008)

Then Bank of America? ... paying 7.75% yield today with a rating of 2.

http://moneycentral.msn.com/detail/stock_quote?Symbol=bac&getquote=Get+Quote


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## SDKath (Sep 25, 2008)

Rumor has it that WaMu has just gone under (or been bought out).  No formal announcement yet but due in a few minutes...

Katherine


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## thinze3 (Sep 25, 2008)

SDKath said:


> Rumor has it that WaMu has just gone under (or been bought out).  No formal announcement yet but due in a few minutes...
> 
> Katherine




Pssst. Look at the Title of my post above.


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