Closing Observations

  • The market would be up this week if they closed the market at 3:30. The entire loss for the week has happened between 3:30 and the close.
  • Every day there is a smaller short base in financial stocks as shorts cover but shorts are not added. How much has this aided the market? What happens when this wears off?
  • Yesterday, I asked why Take Two (TTWO), the video game maker, was trading at 8 times next year's earnings estimate, net of cash? The answer I received was that many don't believe that they will earn that much. It seems like there is a reasonable margin for error already baked into the price as competitor, Electronic Arts (ERTS) trades at 15 times next year's earnings estimate, net of cash. Seems like Take Two trades at an attractive price, but I am still looking into it. My biggest issue is that earnings are very inconsistent for video game makers and can swing wildly depending on how hot their games are.
  • What's the most bullish thing about this market? It seems you have to be crazy to buy it.
  • I don't understand politics, so I don't know if all the tough talk from Congress about the bailout package is just a show?
  • I do understand who butters their bread, as the financial industry is the largest lobbyist and campaign donor.
  • Have a good night.


Matt said...

Charles Schumer is getting hs head ripped off by his constituents but still plans to back his financial industry sponsors. But many politicians on both sides of the aisle are genuinely angry, because they know we are all being ripped off, and Paulson made the huge mistake of approaching them in an arrogant manner. So there is a chance this won't pass. I myself simply cannot understand why they keep insisting on this idiotic idea of buying mortgage-backed securities instead of taking equity stakes.

Tsachy Mishal said...

I sincerely hope that you are right with your faith in our politicians. I am skeptical.