OTCPicks Market Blog

Dear Mr. Pandit, Citigroup CEO

Last year kind of sucked for everyone with the financial industry meltdown, the housing industry slump, the steep nosedive the stock market took, the near bankruptcy of the auto industry, the worst unemployment seen in decades, and the trillions of dollars of debt that U.S. is piling up that will take probably a generation to repay. And who gets to foot the bill, "That's right, Me, Joe Taxpayer, is who!" As you might be able to possibly imagine, (sitting up in your ivory tower full of entitlements) it has been a pretty depressing time for us average citizen taxpayers.

With all the horrid news every day, it has started to wear on our family and I was hoping things would turn around a bit in 2009. Maybe if things get a little better we might be able to afford to get away for a few days and have a margarita somewhere warm and tropical.

December 8, 2008 -

Wallstreet charged ahead bullishly on Mnday as the Dow and S&P 500 surged ahead more than 3% as investors bet that the automakers will get a first installment of a bridge loan from congress, and on Barack Obama's weekend comments on a plan to implement a major infrastructure investment to help avert a deeper economic slump.

One of the infrastructure heavyweights that are Monday beneficiaries include heavy equipment maker Caterpillar (CAT) up 12%, Freeport-McMoRan (FCX) up 20%, and automakers including Ford (F) and General Motors (GM) were both up more than 16% in early trading on Monday.

December 1, 2008 -

The stock market today suffered one of its worst days since the financial meltdown began, slicing 680 points off the Dow Jones industrial average as Wall Street snapped out of its daydream of a rally and once again faced the harsh reality of a recession.

Not only did stocks end their five-day winning streak, they erased more than half the gains. The Standard & Poor's 500 stock index, one of the broadest market gauges, lost nearly 9 percent.

November 25, 2008 -

Nationwide sales of existing homes fell more than expected last month and the median sales price plunged to $183,000. Despite efforts to shore up the U.S. credit markets and financial industry the housing market continues to sink.

On Monday the government announced a plan to bail out Citigroup Inc. and the markets responded positively and soared to a 400 point gain, and has risen 891 points since Friday, its biggest two-day percentage gain since October 1987. The major indexes all jumped more than 4.5 percent Monday.

Investors hope the Citigroup assistance will help quiet some of the uncertainty hounding the financial sector and the overall economy. The Treasury Department announced that it will invest another $20 billion in Citigroup, and the government agreed to guarantee large losses the company might absorb on real estate-related assets.

November 18, 2008 -

On Tuesday, Treasury Secretary Henry Paulson and members of Congress clashed over the best use for the $700-billion financial bailout fund, with lawmakers demanding money to stem a national wave of mortgage foreclosures.

At a House of Representatives Financial Services Committee hearing where he was grilled over his handling of the program, Paulson said the bailout plan wasn't "a panacea for all our economic difficulties" and would be more effectively used by investing in financial companies to shore up the system.

November 12, 2008

"Hold on, we're in for a bumpy ride!" is the familiar saying that comes to mind right now in the markets. More bad news keeps coming despite all the government interventions and eye-popping money being thrown at the worst financial crisis our country has faced in the last 80 years.

Stocks fell to their lowest levels since late October today after bad news from Best Buy (BBY) and Macy's (M) and many negative reactions to changes in the government's financial rescue program.

November 10, 2008 -

ETF stands for exchange-traded funds. ETF's are a lot like mutual funds but trade throughout the day very much like normal stocks. ETF's are index-based, representing baskets of stocks, bonds or other assets and are often lower-cost than comparable index-based mutual funds.

Unlike open-ended funds, which buy back their own shares, ETF owners can sell their funds to anyone in the stock market who is willing to buy them. Also higher levels of transparency make an ETF investment trade much closer to its actual value than a regular mutual fund.

For a long time mutual funds have made it easy for ordinary investors to invest modest amounts of capital to achieve a diversified portfolio of stocks, but ETF are a new way to achieve that same goal with trading flexibility not found with mutual funds.

November 6, 2008 -

After the euphoria and history of the election of Barack Obama, the United State's first African American president, markets were quick to get back to the business at hand, ie. pricing in the negative effects of a prolonged recession into the market. There are probably lots of great things in store for the U.S. and world as we usher in a new president 2+ months from now, but the markets are looking at "now" and trying to see a glimmer of a light at the end of the long dark tunnel we are in at the moment.

After a pre-election multi-day "Rally-of-Hope" starting on October 27th culminating with the presidential election on Tuesday, the last two days have seen more blood in the water as the major indexes dropped precipitously for two consecutive days in a row resulting in the biggest two day slump since 1987. The market drop reflects the markets coming back to reality land in digesting mounting disappointment in corporate earnings and projections, and bleak sales data coming from major retailers fueling fear of a worsening economic downturn.