The market just injected Ambac with more liquidity so they can possibly raised capital (trading at $5.25 while beginning of July was at $1.20). How nice would this be if you have a house that is declining in value and you know one year from now it will fall even further so you go to the bank today to go refinance. Most likely outcome is that the bank knows your house will fall further so they won’t give you the money you have which is the “unrealized” portion of your net worth.
It is amazing how Wall Street can fiddle with the number and fool a lot of people.
I may be wrong on this analysis, but I sure won’t go anywhere near this company.
P.S. Ambac have diluted share outstanding by 185%!!! Yr-over-Yr.
“Net income rose to $823.1 million, or $2.80 a share, from $173 million, or $1.67, a year earlier, New York-based Ambac said in a statement today. Excluding gains and other changes in the value of securities it holds and insures, Ambac had a loss of $1.53 a share, compared with an average estimate for a loss of 61 cents from five analysts surveyed by Bloomberg.” From Bloomberg
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Great insight into the "generally accepted" accounting methods used in the stock market.
ReplyDeleteI'm going to be a contrarian here. Some stocks that make new low continue to make new low and stay low for quite sometime. How do you stay calm in the market as many "investor" now appear to be looking for 10% in a fraction of the time. Also, I think it would also be a good thing to list stocks that are down. Great post!
ReplyDeleteGreetings Arti,
Thanks for you considered thoughts on my blog. I wish to address your concern about staying calm in the market when the stock you've recently purchased at a new low continues to go lower. On top of going lower, the stock trades in a range well below the entry price.
First, I don't ever recommend that someone who is interested in stocks automatically buy a stock simply because it is at a 52-week low. In fact, I stand by my position that the one year low is the starting point for your research and nothing else. A perfect example is my Stock Focus Report of Mine Safety Appliance of on April 4, 2008. Even though the recommendation was in place I added specific comments about what I thought the price should trade down to.
As to your question about the how to stay calm during a decline in the stock price after making a purchase, this explains why I invest in income paying stocks that have increased their dividend at least 10 years in a row. While nothing is guaranteed at least I can hold the stock and receive some income until the stock price comes back. After all, you're always going to be in the same position not matter which stock you buy. It might as well be with one that compensates you for your wait.
Finally, the list of stocks at a new 52-week low was in the works...I just didn't have to time to complete it.
Thanks for your thoughts.