Bear Stearns, part II

UPDATE: Sunday evening, 03/16/2008: Bear Stearns to be acquired by JPMorgan Chase for $2.00 in stock swap deal.
That is NOT a typo!
The stock closed at $30 on Friday. On Thursday, it was $57.00.
And yes, it was $150 last summer.

This, essentially became a giant margin call on Bear Stearns. Apparently, cash — and customers — were leaving in droves the last few days. And when the firm needed to raise more cash, they found no buyers for all of the sub-prime investments they held.

All the brokerage firms and banks dealing in these same illiquid investments may get painted with the same brush. If Bear Stearns is worth $2, what is Citibank worth? What about Goldman Sachs, Merrill Lynch, Morgan Stanley…what are they worth now?

Since these are all widely-held stocks (and Citibank and JPMorgan are stocks in the Dow Jones Industrial Average), it would not be a big surprise to see a massive sell-off tomorrow.

We remain interested in currency and commodities, and cash. Call the office if you have ANY questions or concerns, or just need a gut-check.