In a market where General Motors (GM), Ford (F) and Chrysler collectively known as the Big Three were once part of the booming American auto industry, we could be standing witness to one or more of their final days. On Thursday, CEO’s from the Big Three requested $34 billion in government loans in an effort to avoid filing for bankruptcy. Although declaring Chapter 11 would devastate these brands, as the companies argue, it could spell the takeover of foreign automakers in the United States, and an opportunity for new investments.
Investing in Financials: Who Will be Left Standing?
Bankruptcies, bailouts and bad loans have rocked the financial industry. For investors, this bad news may provide good opportunities to buy low. Let’s take a look at some companies that look to be in the best shape to survive the current crisis and profit once it’s passed. CITIGROUP INC. (C) A discussion of the current financial crisis must include Citigroup. With over 200 million customer accounts in more than 100 countries, Citigroup provides consumers, corporations, governments, and institutions with a broad range of financial services.
Mark Cuban & Insider Trading – Maverick or Martha Stewart
By his own admission, Mark Cuban sold his shares in Mamma.com Inc., now Copernic Inc.(CNIC), after receiving non-public information from a senior officer of the company. However, insider trading is notoriously hard to prove, for a variety of reasons. One can only imagine that the SEC is very confident in their case; surely aware of the press this charge would generate and Mr. Cuban’s financial means for a legal battle. Even if convicted, because this is a civil suit, Mr. Cuban will not face jail time. Instead, he would be required to hand over a few million dollars, which is pocket change for him. This is not to say that the SEC should not aggressively pursue this case. This whole incident merely illustrates Mr. Cuban’s solipsism and disregard for the principles of the marketplace the same marketplace that allowed him to amass his staggering wealth in the first place.
The Poor are to Blame for the Housing/Financial Crisis – Not
Much of the focus of the country’s economic problems has been on the burst of the housing market’s bubble and the related credit crisis. While this focus is appropriate, the foreclosure rate has hit a record level and these problems are frequently blamed on “the poor.” However, much of the data shows that this is not the case. It is often assumed that those with lower income levels are a bad credit risk in the first place. In fact, foreclosure rates are comparable across all income levels. High foreclosure rates are found in many communities across the country. There are, however, significant and surprising exceptions. The current national foreclosure rate is approximately 1 in 450. However, states that are frequently regarded as more affluent, California, Nevada, Arizona and Florida, are all facing foreclosure rates of more than 1 in 200. Conversely, Mississippi, the poorest state in the US, has a…
Recession Recovery Track: U or V?
With the recent financial bailout of major banks and their owners, there is no doubt the US is headed into a recession, or already in a recession. The only questions that remain is how the economy will be able to recover and turn itself around and how long it will take to do so. In 2001, after the tech bubble burst and recession loomed, the salvation came from homeowners who tapped into their home equity, thusly easing the financial burden and keeping the economy afloat and credit lines healthy. This put the country on a V-shaped, fast road to recovery by re-energizing the market and keeping values of the dollar high. After 8-months it was all over, and the economy was well on it’s way to a healthy state. However, with the recent downfall in the housing market and no light at the end of the financial tunnel, it appears…
Companies Benefiting from Lower Commodity Prices
With the recent strength of the U.S. dollar and the fear of a global recession, commodity prices have plunged over 50% in some cases, over the last few months. While this is hurting the majority of industrial and commodity based companies, there are some consumer staples and consumer goods companies whose raw costs are declining because of the decrease in commodity prices, which should lead to increased profit margins. Companies which may benefit the most from these lower commodity prices are: Kimberly-Clark Corp. (KMB), General Mills (GIS), Tyson Foods (TSN), and Goodyear Tire & Rubber Co. (GT).
Aren’t Long Calls and Married Puts the Same Thing?
Chris Smith actually bought The Blueprint. I’m okay with his review, except he should be informed that: 1) The Blueprint’s chapters HAVE been revised to name the Income Methods with the traditionally accepted terms, so that part should be eliminated if he wants a current, accurate review and be reminded… 2) The benefit of the married put at the outset is that it defines risk more readily, in a more understandable way for many.
Housing Bubble & Financial Crisis – Who’s to Blame? Part 3 of 3
Almost everyone is searching for someone to blame for the current economic crisis. The problem is, most of the people looking to point the finger, are actually the ones who should be looking in the mirror when it comes to who is really at fault. Unfortunately, the American consumers put themselves in this situation through a combination of greed and lack of personal financial knowledge. Sure, greedy corporations and lending institutions played a role as well, especially if they deceived unwitting borrowers, but there again, the key word is “unwitting”. Buyer beware is still the mantra, even when it comes to purchasing a home.
Housing Bubble & Financial Crisis – Who’s to Blame? Part 2 of 3
Because the financial meltdown has happened so close to a presidential election, the partisan spin-masters are working overtime to capture the public’s perception of who is to blame. The Democrats are blaming the Republicans for de-regulation. The Republicans are blaming the Democrats for propping up failing government-sponsored programs. The mortgage industry is blaming consumers for making poor financial decisions. The consumers are blaming the mortgage companies for issuing loans that could not be maintained.
Housing Bubble & Financial Crisis – Who’s to Blame? Part 1 of 3
The headlines scream it loud and clear: “Greatest Financial Crisis Since the Great Depression,” “Severe Recession Looming,” “Retirement Savings Wiped Out.” Government bailouts and partial nationalizing of our banking system have resulted, thus impinging on the great American laissez-faire capitalistic experiment. Clearly, something in our financial system went very wrong or we wouldn’t be in this precarious predicament. That something is the result of two historic economic bubbles within one decade; unprecedented in American history.