Thursday, January 10, 2008

Capital(less) One

Wow, for six days now I've been warning of the insidious spread from subprime debacle to credit card delinquency. When you don't have money to pay your mortgage, do you think people are going to pay their other bills? Capital One was down about 8% in pre-market trading on yet another warning of huge impending delinquencies and a 20% earnings slash for 07'. Delinquency rates are approaching 7%, but who knows what the actual figures are; these guys tend to lie. Be thinking about the next fallout. Will it be the largest investment banks such as Goldman and Lehman, will it be retail as consumers literally go broke, or will it be emerging markets as the U.S. economy puts the kibosh on foreign goods?

These are new investing times. Historical data won't do you much good here. Having your money out of the market on several key days over the last 5 years could've saved 25-50% of your portfolio's value. Value managers got killed last year with traditional measures leading them to ride banks all the way into the ground...and they're still buying. Don't be fooled by BAC's possible bailout of Countrywide. Tell me, where are the profits going to come from in these crumbling industries? It's always a good time to short these losers on up days, take your pick....Capital One is actually up at the moment based on absolutely nothing. Not many companies stay buoyed by news of a 20% earnings loss.

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