As I sit back and look at the market go through its bear rally, performing a myriad of what if scenarios on my various bearish positions and generating cash where feasible by selling off profits, I revisited the Doo Doo 32 and a few big name banks. I say to myself, "This year will not be as easy as last year, now that nearly everybody should be aware of the extent of the problem, and the violent bear market rally/option spreads that makes shorting and put buying very expensive." Then I listen to talking heads in the media and the "everbull", long only professionals. I ponder, "Hmm, maybe there is a little low hanging fruit to be had after all". To be sure, we will have to sit through this bear market rally which has to hurt anybody not in all cash or hedged, and there seems to be a willingness of traders to push this one relatively far. The FACTS still remain though, if the stocks of the BoomBustBlog bear targets move much farther, this could very well be another repeat of last

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• Countrywide was forced into a fire sale vs bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets.
• Merrill Lynch was forced into a fire sale vs bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets.
  • Bank of America bought both of these companies. Hmmmm. Look at its share price and balance sheet. Where do we think all of those reeking assets ended up?
• Bear Stearns was forced into a fire sale vs bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets.
• Washington Mutual was forced into a fire sale vs bankruptcy situation. It was totally insolvent and reeked of non-performing, illiquid and depreciating assets.
  • JP Morgan bought both of these companies. Hmmmm. Look at its share price and balance sheet. Where do we think all of those reeking assets ended up?

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GS came out with red numbers for the first time in about a decade with the net revenues and net income entering the negative territory, thanks to the unrelenting investment losses. The 4Q08 net revenues dropped to negative $1.5 bn against $6.0 bn in 3Q08 and $10.7 bn in 4Q07. GS reported a loss of $2.3 bn (or $5.0 per share) against a profit of $0.8 bn (or $1.8 per share) in 3Q08 and a profit of $3.2 bn (or $7.0 per share) in 4Q07. The book value per share came down to $98.7 at the end of 4Q08 from $99.3 at the end of 3Q08. The decrease in book value was largely moderated by the share premium collected through the issuance of additional shares at a considerable premium over the book value under the public offering in September and issue of shares to Berkshire Hathaway in October.

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For all new readers to the blog, you may have noticed that the media is all over the fact that the Street thinks Goldman and Morgan are to report significant losses this quarter and that the investment banking business is over. Click this Google search query for Goldmand and Morgan losses .

Imagine if you could have shorted these companies at the beggining of  the year when their share prices were three times higher.

Imagine if you read this blog last year, or even in January of this year!!! Just imagine.

Wednesday, 19 December 2007 | Reggie Middleton

A thorough forensic analysis of Goldman Sachs, Bear Stearns, Citigroup, Morgan Stanley, and Lehman Brothers has uncovered...  Last week, Morgan Stanley called Citibank the “short play of...

The Riskiest Bank on the Street
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)

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From Bloomberg: Former Bear Stearns CEO Greenberg Says Investment Banks ‘Gone’ .

“There’s no more Wall Street,” Greenberg, 81, said today in an interview to be aired on Bloomberg’s “Money & Politics” television program. “That model just doesn’t work because it’s at the mercy of rumors.” Really??!! Would these be the rumors that you bought a bunch of bad assets with a lot of leverage at the top of bursting bubble?

Greenberg elected to stay when JPMorgan Chase & Co. acquired Bear Stearns through a forced sale in March. The acquisition followed a run by clients and lenders that left Bear Stearns on the brink of bankruptcy. Market rumors helped cause customers to pull their money from Bear Stearns and Lehman Brothers Holdings Inc., and pushed down the stock prices, he said. I would think your balance sheet and opaque reporting helped to cause customers to pull their money from Bear Stearns and Lehman Brothers. See Is this the Breaking of the Bear? and Bear Fight - A most bearish view on Bear Stearns in a bear market.

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