- dangerous financial media,
- the right read on housing data, and
- life after the bad jobs number.
Warning: The Financial Media Can Be Hazardous to Your Portfolio
Posted at 2:12 p.m. EDT, June 29, 2009 You want a rebuke to the "never-ending woes of commercial and residential real estate mortgage bonds"? You get one every day in this market, and today is no different. Look at what is up big today: Genworth ( GNW), Lincoln National ( LNC), Wyndham ( WYN), Regions Financial ( RF) and Zions ( ZION). Each in its own way needs the residential or commercial real estate markets to be robust to thrive, and if the myriad articles I read about the horrible state of the mortgage bond market and the dim commercial real estate prospects were true, why would you be making money in Wyndham, a gigantic timeshare company? How could Regions and Zions be rallying? They are among the worst of the worst; unless you consider Genworth and Lincoln National, which are supposed to be roadkill because of all of their mortgage bonds. Something doesn't make sense. I think it is the articles, which are too easily written and written as if any of these institutions now needs to sell them. The simple truth is that by not listening to these lost-cause articles, the managements of these institutions have been able to hold on for better prices and preserve capital. (And I am not even including MBIA ( MBI) or XL Capital ( XL) both of which are rallying today pretty strongly.) I believe these articles are vestiges of pre-March, when the moment of nationalization should have happened but Ben Bernanke and Tim Geithner simply refused to let it happen. I am waiting for an article that says, "Because so much capital has been raised and because the earnings are so great, these bonds can be kept until they dwindle to nothingness and it won't matter." Although it will, because hundreds of billions of them will come back to life if things get better. I am not a Pollyanna -- a trillion will be worthless, maybe even more. But much, much more than a trillion has been written off. So it won't even matter in the end. Random musings: Memo to the bears and lovers of ultra ETFs -- the bulls are being shameless and are 100% to blame for the rally here, which is obscene and wrong. How's that? ... As absurd as this sounds, I do not think that Sallie Mae ( SLM), my speculative stock of the year, is done going up. Its book of old loans alone is worth $15, valuing the actual company (with real earnings power) at nothing! At the time of publication, Cramer had no positions in the stocks mentioned.