Unprecendented

One the biggest pieces of business news today was the continuing fall of Citigroup shares, and at their current levels below $5, you’d have to trace the charts back to 1993 to find a similar low. Despite continued reassurances of liquidity, shareholders aren’t listening and are dumping the stock en masse. Volume was well over 700 million today. Failure isn’t much of a danger – the American government/central bank would never allow such a crippling event to occur; however the face of banking will be seriously changed even if a full government bailout were to occur.

Furthermore, I found the advertisement below the Citigroup chart at Yahoo! Finance to be quite shocking.

Citigroup Stock - November 20, 2008

Yes. That’s General Motors advertising its bailout plan.

What has the world come to?

Another Black Monday

Although I’d rather see the market go the other way, the crash of the North American stock markets today was a sight to behold. Following (eerily) in the footsteps of several previous Black Mondays (1929, 1987), perhaps Monday, September 29, 2008 will go down in history as the beginning of a serious global financial crisis, after the United States House voted down the proposed $700 billion bail out package. With the 777.68 point fall, the Dow Jones had broke its single day point loss record. Here are a few other market finishes at a glance.

  • Dow Jones -777.68 to 10365.45
  • NASDAQ -199.61 to 1983.73
  • S&P 500 -106.62 to 1106.39
  • TSX -840.93 to 11285.07
  • FTSE 100 -269.70 to 4818.77
  • CAC-40 -209.90 to 3953.48
  • DAX -256.42 to 5807.08

Take a Look At The Banks

There’s a lot of worry about the state of the credit market in the United States and everyone’s along for the ride down. Despite a few attempts at clawing back up, the bears have a stranglehold of Wall Street and markets around the world – the TSX has been beaten down as well. The volatility index has spiked up to its highest levels in over 3 years, indicating that fear is driving the markets.

I believe the reaction has been exaggerated and many solid companies are getting oversold. Even the industries directly related to the credit and investment concerns – the brokerages and the banks – there are many companies that have little exposure. For example, Bank of America doesn’t even play in the subprime mortgage market, but its stock has been battered, just following along in the sell-off. This is a stock that deserves a good, hard look. Its fundamentals are solid and the recent pull back presents a nice buying opportunity.

Additionally, Goldman Sachs looks like it could benefit from the whole mess. It doesn’t have much exposure to the space either, not to the extent of some of the other investment houses. Additionally, it is financially strong and could look at picking up one of the other brokerages while they’re weak or at least pick Bear Stearns’ assets apart should they go under.

Take a look at the space. It’s risky, but there’s also a lot of opportunity. Let’s see if the Dow can form a nice ‘W’ bottom and start bouncing back next week.

K790 Resuscitation and RIM Earnings

I finally got around to flashing my K790a today (I actually had to boot into Windows XP because Sony Ericsson doesn’t support Vista with their update service) and it seems to have solved most of the software issues I’ve been experiencing lately. Obviously the navigation stick problems are still there. I’ll probably end up having to send this phone in to Sony Ericsson anyways. Nevertheless, it’s nice to not have a brick…

The company right next door, Research in Motion reported absolutely spectacular earnings and forecast another blowout quarter coming up. First quarter earnings were up 73% over the prior year while revenues were up 77% year over year. Going forward, Research in Motion forecasts earnings of $1.37 – 1.49 per share for the upcoming quarter on $1.30 – 1.37 billion in revenues. That’s substantially higher than the analyst consensus of $1.12 per share and $1.11 billion respectively. They also announced a 3-for-1 stock split, effective August 20, 2007.

Research in Motion stock is up over 17% after hours at a penny less than $194USD. Wow.

iPhone Battery Improved; Apple Stock Up

There were announcements this morning that Apple had addressed two issues with the iPhone – the non-user-replaceable battery had its battery life runtimes increased and the covering for the touchscreen has been changed from a plastic material to glass. Apple’s stock was up almost 4% on the day due to that news.

AAPL June 18 close

I don’t know about you, but I’m not sure an increase in battery life and a screen more resistant to scratching would make someone who wasn’t going to buy it now go out and spend $500 on an iPhone. I think pricing, usability and compatibility with existing email infrastructure will be much larger challenges for the iPhone to overcome. But the mere fact that Apple’s stock is reacting so violently to iPhone news indicates that this may be a make or break product, at least for Apple’s stock price in the short term. With the run-up in price over the past three months or so, iPhone better be good.