June 30th, 2008 by Potato

I know that my very limited readership is probably bored to tears by the continued stock market updates, but I just can’t help but vent.

So here we are on a Monday before the market closes for Canada Day on Tuesday, and things aren’t going so well. CIBC is having the shit kicked out of it, down 4% or so on the day. It’s at a new low — yes, lower than on the panicked day when Bear Sterns was going under. When there was blood in the streets and people were running around afraid that banks might be going out of business and people might go back to the days of closing leveraged buyouts with sparkly beads and seashells… CIBC today is below the price set on that day. I appreciate that the banks, CIBC in particular, have had a rough run of it, and the earnings for the next year or two are expected to be dismal due to the whole credit mess. Added to that is the growing realization that Canadian real estate is not a special unique snowflake, and that there may be some additional pain to factor in for the Canadian banks as we finally find out how many zero-down condo speculators really are in the market. However, there’s no news, no commentary, nothing that should be driving this kind of sell-off today, which is a bit worrisome. But despite all that, I still can’t help but feel that banks might be, you know, a bit of a value at these prices. Of course, that’s tough to say since it’s kind of hard to tell what part of a bank’s balance sheet is actually junk, as well as what the economy might have in store. As my dad says, a stock is not a value just because it’s less than it was. You’ve got to see if the value of the underlying company is there.

Yellow Pages has also had a rough day, and I nearly bought some more, using the last of my “dry powder”. It went down below $8.80 today, and I thought that was just getting a bit ridiculous (and also a new low). The yield at that point is something like 12.7%, and I figured that that was higher than the long-term expected return of the stock market, so if I could lock in for that then I’d be sitting pretty. I put my bid in at $8.80, but by the time I finished entering all the info, the price had moved back up. I wasn’t too interested in chasing the price up, even though it’s only a difference of a few cents, since the brief chance to second guess myself made me value holding on to that cash and waiting to see how much worse things get. I’m leaving the bid in until the end of the day — I think it’s a good value if there is a reversal towards the close — and then I’ll see what tomorrow and the next day and the rest of the year brings in terms of value.

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