Citadel purchased the mortgage backed securities for 26.5 cents on the dollar. Shares of Etrade were down 5% at $4.97 in intraday trading.
Consumer law in France requires Orange to sell “unlocked” mobile devices able to work on any carrier. Unlocked handsets will cost about $965.32 in France. It costs about $149 to have a handset unlocked independently.
Customers using SIM cards from Orange’s rivals in unlocked iPhones run the risk of not being able to use all of its features or seeing their phones malfunction after software updates.
Orange will offer locked iPhones for about $593 - the same price as T-Mobile in Germany - with two-year service subscriptions, which offer unlimited access to email and the Web.
The market is pretty much in chaos. The Dow is down, Nasdaq is down, big names like Apple and Google are barely moving. So what do you do in a market like this? You wait. You either sell what you can and stay in cash, or if you are fully invested like I am, you simply wait.
My trades are usually over a 6-18 month timeline but there are a couple stocks I own that are longer term than that simply because I like the companies and I think their potential hasn’t peaked yet. If you trade shorter term then you want to be in cash. The great thing about being in a cash position is you can take your time and decide when to pull the trigger on that stock you really like.
One other thing I typically do in these kinds of markets is look for dividend paying stocks. Dividends can boost your overall portfolio growth and reinvesting those dividends can grow those good stocks faster than they otherwise might.
Now is a good time to be in defensive stocks like Lockheed Martin and Coca Cola or Proctor & Gamble. You want stable large cap stocks or cash. Cash as they say, is King.
One such company announced today they will be giving out $300 million in dividends to shareholders in January.
The board of directors of Infospace (INSP) have decided to issue a $9 per share dividend to shareholders on or around January 8th, 2008 for shareholders on record as of December 10th, 2007. Free Money!
Not so fast, there slugger. Though it looks like free money it isn’t exactly. It’s more like a rebate on your purchase. I’ll explain.
When a dividend like this is given out, the money has to come from somewhere. In this case, the money is coming directly out of the stock price itself. On the ex-div date the stock price will adjust down $9 to accommodate the dividend. So if the price of the stock is $20 for example before the dividend, afterward it will be $11.
Wait, I’m losing money then?
Not really. You get some of your money back, see? The idea is that you would be holding this stock long term, after all we don’t just buy stock in companies based on dividends…earnings play a part as does growth. That being said, I think this is a fantastic opportunity to buy some stock, get some cash back and have some shares in a growing company that you can sell when the price moves back to a profitable value. Sweet!
Don’t be fooled, it’s not easy to do. I spotted the bottom on Etrade partly because of luck, but really I was counting on the volume to keep the stock on the uptick. Monday, Tuesday and Wednesday saw over 100-200 million shares trading but today that volume winded down to under 40 million. That signals much of the end of the run for me. The 10 day moving average for Etrade had been 20 million, so as we near that number again I decided to exit my position and book the small gain.
Most of my portfolio has been in the red over the past year, mainly because of a few bad picks but also because I held on too long to some positions that I felt should be doing much better. For those stocks, I actually bought more shares on the way down as a way of buying the weak stock of good companies. Ameritrade is one of those stocks. Two years later the stock is finally recovering. So be it.
With Etrade, I knew I was only going to be holding onto the stock for a couple days at best. Some analysts put the stock at 9-12 but I don’t care. Who knows what’s going on with the banking arm and until Q4 earnings come out, I am done with that trade. Momentum plays can pay off big when you spot them…that’s the tricky part.
I should also mention I booked gains on Netflix. I still believe in Netflix long term and I am looking to get back in at a lower cost. The PE is too high considering their earnings and I want to wait until Q4 earnings are stated before I take another solid position. If you must own it here, buy a quarter of your position and wait for it to come in.
What’s Next?
Right now is a great time to be looking at retail in both tech and apparel. Names like Gamestop (GME) and Best Buy (BBY) come to mind as does American Eagle Outfitters (AEO) which I wrote about in October.
I also still think Apple and Google are good buys because their growth and fundamentals haven’t changed. Apple is rumored to have a new notebook computer to unveil at MacWorld in January and sales of the iPod and iPhone should pan out nicely this holiday season.
Bottom line, if you are looking for quick profits on something like Etrade make sure you have an exit strategy in mind before you buy the stock and make sure the volume is there to support it otherwise you might be left “holding the bag”.
Of course, had you subscribed to my Newsletter, The Proficient Investor Alerts! you would have known these trades even before I made them and you would have made the same mad cash I have. Subscribe today and get the first month free.
This sent the stock plummeting 58% in value to close at $3.55.
Today we are seeing a rebound in the general market led by Apple(AAPL), gaining $15.71 late in intraday trading. Google (GOOG) gained $24.75 in intraday trading along with some of the financials like GS which was up $16.94. Etrade is up over 53% today, not quite erasing the loss yesterday but for investors who grabbed it at the bottom, we are seeing good solid gains here.
Takeover talk has resumed on Wall Street, but it was a comment by Matt Snowling, a Friedman, Billings Ramsey & Co. analyst that stated E*Trade is “exploring the sale of some of its troubled assets” and downgraded from outperform to market perform putting the target at $12. With volume of 200 million shares, the stock is liquid right now and won’t be easily shorted in the short term.
Long term, I still don’t think its as troubling as panicky investors would have us think. Even after today’s gain there’s still some upside here because although their banking arm is in trouble, it is backed by FDIC up to $100,000 in your account and their brokerage business is still in good condition and growing. In July, when the stock was at $25, management laid out plans to focus more on the brokerage side of the business, so a lot of this downside is now priced in and we should be seeing the end of the decline here.
You know, this sounds awful speculative to me. Even on Fast Money they are backing Ameritrade(AMTD) over E*Trade(ETFC) as if AMTD is doing better because of the problems at ETFC. They also think investors are going to be leaving E*Trade in droves over fear they might not get their money back.
All this maybe, might not, could be, possibly…blah blah blah. It’s all noise. What I see here is a huge sale on a stock that I have had an account with since 1997. As a multi billion dollar company, you don’t survive 10 years in such a competitive environment without having diversified your business model. The facts are, yes they had some mortgage backed securities that melted down just like everyone else. Just like Bear-Stearns, Goldman Sachs, Schwabb, you name it…every single one of the financial companies trading made bad decisions into the low rate mortgage market.
But E*Trade isn’t just a bank. They are a brokerage like Ameritrade. E*Trade’s brokerage business is fine and the fundamentals are intact. Now I have been holding Ameritrade shares since December 2005 and the performance of that stock has been less than stellar. A special dividend caused investors to bolt from the stock after they received the dividend and it has had trouble ever since. At the time, Ameritrade was at $26 so it’s still $6 below that high. I still hold shares of AMTD but I also pulled the trigger (50 shares) on E*Trade because the upside looks too good.
E*Trade will recover from their mortgage woes and their growth is going to continue. I’ll ride out this storm and after I think will book a solid gain in a very short time. E*Trade as everyone has been saying is now even more of a takeover target than it had been. According to news posted by the brokerage, they still have over a billion in capitalization and aren’t worried about the issues mentioned in the press today. They also stated the remarks by Citibank were irresponsible and inaccurate.
My take? Take a small position you can live with because I think you get an easy double on E*Trade. 200 million shares traded hands today so even if there are shorts they are going to have to cover quickly on that kind of volume.
Google finally unveiled the much rumored GPhone…sort of. They confirmed they are creating an open source mobile phone software that will be available to all major manufacturers such as Motorolla, LG and Samsumg, among others. While they won’t confirm their own hardware, it is still rumored they are making a move into the space which will compete with the likes of the Apple iPhone. Although, in a recent inverview with Steve Jobs at the D5 conference it was stated that Apple was working closely with Google to develop software for the iPhone.
Google ended the day up $14.40 at $725.65 shattering the recent 52 week high of $713.25 and is showing no signs of slowing down.
Apple closed at $186.18, down $1.69 or .90%.
In other news, Netflix announced they are considering plans to offer the popular watch instantly feature on the Playstation 3 and XBox360 Consoles. No date has been set. Netflix (NFLX) closed up $.25 at $26.51.
A slow start to the trading week but it’s to be expected as the holiday shopping season gets underway and earnings season continues to bolster the market.
At the time of publication, I had no shares in Google, but did have shares in Apple, Inc. and Netflix Inc.
