Skip to main content

The Final Bits

What we are seeing are the remnants of the blowout by the subprime mess. While the US economy will continue to be weak over the next 2 quarters, the stock markets could be finding its feet now. Darkest before dawn, they say... then its true for E*Trade.

Everyone knows that E*Trade is primarily in online investing, and a successful one at that despite strong competition from TD Ameritrade and Charles Schwab. However, they found that their margin financing business is so good for stock trades that they went and bought a "phone-based bank" that makes and buys mortgage loans, and invests in securities backed by mortgages as well. Since beginning of this year till June the stock held firm just above US$20-US$22 level. The initial subprime surprise in July and August sent the shares down to US$13 and there were days it went close to US$10. Well, that's the good news, cause last night the shares fell another 59%!

There were reports flaming rumours that investors could withdraw funds and ask questions later which will put E*Trade at a real bankruptcy risk situation. The company said its US$3bn portfolio of asset-backed securities includes about US$450 million in so-called collateralized debt obligations. E*Trade is sitting on US$12.4 billion in home-equity lines of credit, in which people borrow against the value of their homes. Of that, US$404 million was delinquent at the end of September. While the lion's share of the home-equity loans was made to borrowers with strong credit, 60% didn't require "full documentation" and at least 25% of the loans were extended to people in California or Florida.

They had their run cause the bank purchase allowed the company to register record revenue from 2003 to 2006, so much so that trading commissions made up only 20% of revenue last year. Well, someone will need to step in and offer about US$500m-US$1bn as capital infusion and take control of the plane with engine failure.


Popular posts from this blog

My Master, A National Treasure

REPOST:  Its been more than two years since I posted on my sifu. This is probably the most significant posting I had done thus far that does not involve business or politics. My circle of close friends and business colleagues have benefited significantly from his treatment.

My Master, Dr. Law Chin Han (from my iPhone)

Where shall I start? OK, just based on real life experiences of those who are close to me. The entire Tong family (Bukit Kiara Properties) absolutely swear that he is the master of masters when it comes to acupuncture (and dentistry as well). To me, you can probably find many great dentists, but to find a real Master in acupuncture, thats a whole different ballgame.

I am not big aficionado of Chinese medicine or acupuncture initially. I guess you have to go through the whole shebang to appreciate the real life changing effects from a master.

My business partner and very close friend went to him after 15 years of persistent gout problem, he will get his heavy attacks at least…

PUC - An Assessment

PUC has tried to reinvent itself following the untimely passing of its founder last year. His younger brother, who was highly successful in his own right, was running Pictureworks in a number of countries in Asia.

The Shares Price Rise & Possible Catalysts

Share price has broken its all time high comfortably. The rise has been steady and not at all volatile, accompanied by steady volume, which would indicate longer term investors and some funds already accumulating nd not selling back to the market.

Potential Catalyst #1

The just launched Presto app. Tried it and went to the briefing. Its a game changer for PUC for sure. They have already indicated that the e-wallet will be launched only in 1Q2018. Now what is Presto, why Presto. Its very much like Lazada or eBay or Alibaba. Lazada is a platform for retailers to sell, full stop. eBay is more for the personal one man operations. Alibaba is more for wholesalers and distributors.

Presto links retailers/f&b/services originators with en…

How Long Will The Bull Lasts For Malaysia

Are we in a bull run? Of course we are. Not to labour the point but I highlighted the start of the bull run back in January this year... and got a lot of naysayers but never mind:

p/s: needless to say, this is Jing Tian ... beautiful face and a certain kind of freshness in her looks and acting career thus far

I would like to extend my prediction that the bull run for Bursa stocks should continue to run well till the end of the year. What we are seeing for the past 3 weeks was a general lull where volume suddenly shrunk but the general trend is still intact. My reasons for saying so:

a) the overall equity markets globally will be supported by a benign recovery complemented by a timid approach to raising rates by most central banks

b) thanks to a drastic bear run for most commodities, and to a lesser extent some oil & gas players, the undertone for "cost of materials" have been weak and has pr…