March 17, 2008

S&P 500 Racing Away

The S&P 500 Index follows 500 well-capitalized stocks around the world, and the chart above shows its performance over the last three years. I added the white lines and the blue line.

We are in a recession. This isn't a correction anymore, and I decided so around the time represented by the blue line. If it were a correction, the S&P would have bounced off that lower white line and continued along its merry way, between the white lines. It tried, but it failed.

The white lines represent the borders of a "channel" the S&P index has been following for several years, and just as the index was above the channel for a while, I believe it will now be below the channel for a while.

I've been suggesting to friends and family over the past six months that they should sell their broader-based investments (like S&P 500 mutual funds, blue chip portfolios, and so forth), and I hope they've listened.

Some economic pundits were caught saying just last week that the sub-prime crisis is over. However, just this past weekend, J. P. Morgan bailed Bear Stearns out of an almost-inevitable bankruptcy, following the collapse of even more of its sub-prime investments. Ah, Bear Stearns, that well-respected Wall Street powerhouse, profitable every year since its inception in 1923 and with a stock price of $160 a year ago, finally bought by a rival at a scant $2 per share.

It's not over! I wonder who's next?

November 27, 2007

Subprime Mortgages

Are you confused about the subprime mortgage crisis? This comedic skit from The South Bank Show, via YouTube, with John Fortune and John Bird explains it all. It's quite excellent.

October 13, 2007

Virgin Mobile IPO

Virgin Mobile's banner outside the New York Stock Exchange last Thursday. Click to enlarge
Two days ago, Virgin Mobile (NYSE: VM) had an IPO on the New York Stock Exchange. Sir Richard Branson and crew rang the opening bell, and there were attractive women dressed as angels walking around the Exchange floor. It was quite a big deal and fun to watch, especially since Branson is just as eccentric as he is wealthy. CNBC even aired footage of him base-jumping following the opening bell.

Walking past the front of the Exchange on Broad Street later in the day, I saw the giant red banner pictured to the right; along with a big, red carpet; a stage presumably to be used for a concert in the afternoon (though, it rained, so I don't know what happened with that); and those lovely angels milling about. There was also a sound system playing the song "Maniac", which I thought was particularly appropriate for something associated with Sir Richard.

While I thought the fanfare surrounding the Virgin Mobile IPO was rather extreme for Wall Street but nonetheless entertaining, it seems Soleil Securities didn't feel the same way. In the afternoon, they initiated coverage on the Virgin stock with a "sell" rating. Ouch.