6-26-02 Wall street watch

[newsperson999]

It's going to be a long day folks, Worldcom has the market on edge. Overseas markets were down 2-4% and the Dow futures are off by 225 right now.
New Worldcomm Fraud forum here click

[Always Right]

I really don't see the excitement over what is currently an 85 point drop in the Dow.

[Night Hides Not]

My concerns are two-fold: that the dishonesty is pervasive, and that investors will throw their hands up and walk away.

Remember, the 90s boom in the markets were due to little guys like you and me socking away our money in a 401k, i.e. stock mutual funds. When that money leaves the stock funds, for money market and bond funds, there will be little or no money for new issues. That will definitely have a chilling effect on our economy.

[steve50]

I'm learning impaired myself when it comes to the market, too complicated for me to figure out. Just some views I've came across trying to figure a way to cover my backside in this mess.

[Night Hides Not]

Great post! Trust it to a great Freeper to get to the source of the problem!!! :^D

[p. henry]

Be very careful with bond funds, especially those which emphasize longer maturities. Sooner or later interest rates will rise, and when they do, bonds will decline in value.

[kinghorse]

Again, we find the perpetraitors (no sp)are not frightened of the Justice Dept.. We have to see people tugging at the rope from the end of the shower rod or being sentence to 30 years in the can before we can safely say the investing public's thirst for justice has been satisfied.

And if that doesn't do the trick, look for a major conflagration that will result in many fully depreciated structures blown to bits and the folks in the ME helping build churches from which to pray after they have repudiated the god that failed them.

BTW, I don't believe our fully depreciated structures are going to be exempt from the demolition. Why keep the golden gate bridge around if no one can get a depreciation write off on it? I wish I could say this is a joke but look at how we drug ourselves out of the great depression.

[Night Hides Not]

I really hope I'm wrong with my estimates. However, when there's that drip, drip, drip, of one more company being investigated, the overall effect on our markets will be felt.

I would also like to see the NYSE get active in investigating their members...but considering that MARTHA STEWART is one of their board members, I fear their oversight will be muted.

[kinghorse]

To the extent WCOM and ENRON are bankrupt, each and every one of us 9-5 joes are being bankrupted as our life savings in 401K are being taken apart, limb by limb.

[DJ88]

"To the extent they profited through options or bonuses, they must also be forced to disgorge those profits."

I believe that I read that he DOES have the money....he should be forced to pay it out to the employees who have stock in that company.

[DJ88]

I believe that happened because they put a halt on WCOM buying and selling. BTW, it's back down to -142. I don't know what would have happened if they didn't halt trading on WCOM.

[Night Hides Not]

Very good point!!! And not understood well by the average investor. In a previous career as a broker, I had a difficult time explaining that to clients, especially those chasing the highest yield.

[kinghorse]

My money managers (the great and brave thirtysomething perma-bulls) let the Enron investment go to pennies before bailing. They let Tyco go to 18 bucks. I think they dumped WCOM a while back. If J&J and the other bluest of the blue chips falter, it's depression time.

[ghostrider]

Come on. Companies and execs have done dumb things long before Clinton was in office and will do dumb things long after. Lots of execs made bad business decisions in the late 90's, and lived life on the fat of their companies. They made bad decision THEMSELVES - they did not need Clinton's stupidity to help them along...

This is definitely a correct statement. However, clinton as President, set the example for the immoral, corrupt, anti American "cookie cutter" that stamped out filthy souled people at a record pace. clinton helped the trash along and facilitated their acceptance within the American Society. He is as responsible as any person for this vile mess, and he can not escape his legacy of destruction, which began many years ago with the anti american generation of radical liberal protesters led by the likes of bill clinton and Jane Fonda.

[Fury]

I believe that happened because they put a halt on WCOM buying and selling. BTW, it's back down to -142. I don't know what would have happened if they didn't halt trading on WCOM.

I doubt much would have happened. WCOM was done to what - .18? There is not much downside left in a stock like that...

[Aggie Mama]

Yep, I agree.

[kinghorse]

You folks understand this EBITDA problem. What happens is the company elects to capitalize (put on the balance sheet) items that should have been expensed. Capital items get expensed over several years. The result is that it "looks like" you are generating more free cash flow than you really are. And the bankers keep loaning the money because the bankers believe you have hard assets to back up your loans. But if it was pencils and they have all been shaved down to the nub, the bankers get left holding the bag.

If the bankers try to survive by milking the little guy through inflated interest rates, the economy stays in the crapper because the little guy can't write off his debts like the big guy. When the little guy finally gives up, his house goes to the banker, we get a glut of houses and the last bastion of value gets taken down. Then it's game over for everyone. Have a great day.

[DJ88]

Yes, you're right..yesterday it closed at -18 cents. However, in overnight trading, it was down to .09 cents/share.

You may be right, as the DJI is still falling. But it's not falling as fast as it did at the beginning of the session.

[kinghorse]

Game over, except for the rich guys who leveraged their risk in dollars by sliding money to their offshore businesses. Then they get to take money that should have been profit and call it commissions or some shyatt which has the effect of reducing their tax liability while sheltering the currency out of the country.

[DJ88]

Yes, I know. My problem is this: if the CEO bailed (as he did) he must have known something big was coming. I say, freeze all of his assets immediately pending further investigation as to "what he knew and when he knew it." (I always wanted to say that). Then he can use that money he made paying back the 17,000 workers that are going to lose their jobs.

[Dukie]

As of 10:20 Dow -144, NAZ -33, S&P -19
The scandals are bad, casting doubt upon all financial statements, but even the suspect ones are showing dismal earnings.

The band aid is being pulling off so slowly.