Single Largest Drop in DOW History!
-777 points, many said it would never happen, some said it was impossible, so many believed that the economy was fine, that this was a cycle that
economies go through.
This is uncharted water..
But before we announce the end of days is among us, stalk off to our bunkers and defend our plots of dirt like cave men ravaging over the last can of
Let's view where we REALLY stand.
This first link will bring you to a site that list the biggest loosers of the day .. essentially with a Composite, such as the DOW, NYSE, S&P 500 etc,
you have winners and loosers. If the looser's over take winners, you see the composite drop..
So who among the losses got slaughtered and what does it mean..?
National City lost 63% of it's stocks value today .. meaning it is at a very high risk right now. They have said they are not trying to sell
themselves, but when a banks stock drops... like so:
You can bet, like Wachovia and WaMu, the FEDS are at National City..
Lost a further 11% of their value today in volatile trading.. while they purchased Wachovia.. via the Federal Regulators.. they are actually expected
to take a massive $48 billion dollar HIT from the deal, a huge loss for a bank that was just recently looking for possible buyers..
Look at their stock for the past 5 years.. a constant profit, little volatility, and then they tank .. a picture of how badly these companies are
coming down. Some wonder why Wachovia was not sold off to a more sound bank, such as BoA or Chase.. it seems that the amount of losses from huge
purchases by BoA and Chase is making it impossible for these huge banks to purchase other huge banks.. Wachovia was the FOURTH LARGEST bank in
America.. making it the largest bank failure in history (if you consider it a failure)
The bill being voted on (thankfully failed) will buy hundreds of billions in bad assets these banks acquired somewhat not by choice ..
Proof bailouts don't work?
AIG (American International Group) post another loss today, even after a bailout of $85 billion, stock has still been plummeting.
So technically.. even after their huge cash infusion, they very well could fail.. how the Fed plans to avoid this, I am not sure..
AIG .. half solvent, half not?
This article essentially details how one area of the AIG family is causing most of the problems.. the portion that invested in the bad debts. The
Insurance side of the company is fine, turns a profit and the policy holders are safe. But because it's a singular entity, the group could fail.. in
the event that it does, I believe AIG would probably be split up, it's insurance policies and so on being spared to protect that billions people have
entrusted to AIG..
We certainly live in interesting times.
I am also seeing on the composites some smaller regional banks like 5/3 bank and Key Bank are suffering from the same woes the bigger banks are..
however I cannot find wide spread concern over Credit Unions. Perhaps it's their small compact and isolated size and market that keeps their books
relatively "sane".. regional banks fail much more often then large banks, as large banks are protected much more by the Fed.
Some news on retirement investments:
You can SUE over 401(k) losses!
An interesting article, and a Supreme Court decision I never heard about, making 50 million Americans able to SUE 401(k) investors over major losses..
to the sum of 2.7 TRILLION dollars invested in 401(k), I always stress to people to watch your investments, watch what your 401k is linked to, watch
your mutual funds.. you could be taking losses in areas that are avoidable by moving funds out of say, banks. It's best to consult your Financial
Adviser or Agent about what you are currently investing in, and ways to protect your self.
Mutual Fund Losses
An article that links quite a few stories about major losses in the Mutual Fund Market.. concerning because money can be tied into mutual funds with
heavy withdraw penalties, and investors telling clients "it's soon to get better" .. quite a few funds are posting massive 30-50% losses..
WaMu Failure Hurts Mutual
I may be repeating my self, but when an investor suggest funds, or any other security, they establish "risk guidelines" .. Banks are Low Risk and
Mid Risk investments, depending on the bank .. I mean, look at Citicorp, it WAS a steady corp, thus a safe investment, then they loose 90% of their
worth in a year and low risk investment funds take massive hits..
WaMu was such a low risk investment, relatively sound and expanding, the credit crisis snuck up on them. You can bet Wachovia is also going to hurt
funds, as did Indy Mac and Bear Sterns. For instance:
* Oakmark Select (OAKLX): 4.85% * Touchstone JSAM Institutional Lg Cp Val (CIJLX): 3.76% * Touchstone JSAM Institutional Value
(CIJVX): 3.46% * Touchstone Large Cap Value (TLCAX): 3.37% * Transamerica Partners Instl Val (DIVLX): 3.32% * Transamerica Partners Value
(DVVLX): 3.32% * Oakmark Global Select (OAKWX): 2.78% * Dreman Contrarian Large Cap Value (DRLVX): 2.69% * DWS Dreman Concentrated Value
(LOPEX): 2.65% * Fidelity Select Home Finance (FSVLX): 2.55% * DWS Dreman High Return Eq (KDHAX): 2.37% * ING Large Cap Value (IVLAX):
2.24% * Oppenheimer Quest Balanced (QVGIX): 2.19% * AIM Financial Services (FSXSX): 2.00% * Dreman Quantitative Large Cap Value (DRQLX):
1.92% * Diamond Hill Financial Long-Short (BANCX): 1.78% * Columbia Global Value (NGLBX): 1.65% * Schwab Financial Services (SWFFX): 1.62%
* Monetta Mid-Cap Equity (MMCEX): 1.31% * Rydex Banking (RYKIX): 1.29%
These are the names of Mutual Funds, and the percentage of their total investment in WaMu ..
WaMu, FDIC total cost? $0
WaMu cost the FDIC nothing, all assets where handed over to their new suitor. But why?
Some banks, like Indy Mac, failed outright, they sold off what assets they could to recoup some money, but the FDIC had to insure the accounts..
Now, the Federal Regulators are pushing assets onto new banks, such as Citi acquiring Wachovia and taking a 48 Billion dollar hit .. if the FDIC had
to insure both WaMu and Wachovia is would have failed, no question about it.. the FDIC currently has only $48 billion in assets right now.
Essentially we are lucky Citi and Chase covered our butts on this one, they will take the hit so the FDIC and Federal Reserve do not have to ..
naturally, a large part of the 700 billion will be paying them, and others back.
Currently on all three major economic sectors the Futures are down.. but I would bet we will see most of these stocks recouping their losses over the
next few days, especially if the bail out passes.. (only failed by under 20 votes I believe, so force a few congressmen to vote your way, and the bill
passes.. I encourage people to write their congress person and remind them who they work for!)