- what the market impact will be from a failure to avert the fiscal cliff; and
- three stocks you shouldn't even consider buying.
This Isn't Like TARP Posted at 7:46 a.m. EDT on Friday, Dec. 21 We're stuck with bad templates: TARP votes one and two and the Grand Bargain No Bargain moments of 2011. These two Washington-orchestrated calamities caused the stock market to plummet each time, which then helped get a deal done. Anyone who remembers the chaos after the failure of TARP to be passed knows that a 7% drop can occur when Congress chooses not to save the republic's banks. The failure to raise the debt ceiling or come up with anything responsible led to a 19% fall until we got something that worked then, but isn't working now. We were paralyzed by the possible ratings agency downgrades and when we got one we thought, somehow, it was the end of the Earth. It wasn't. Bonds did the opposite of what we thought and staged a remarkable rally. In that sense the selloff was about nothing. I think that these two analogies, which are being trotted out quickly this morning after the failure of Plan B, simply don't work. First, the hated TARP came at a time when there was a run on the banks. You could argue that your ATM might not even have worked if that didn't pass. That one was huge. Second, the debt ceiling deal turned out not to matter, at least when it came to the ratings agencies. It was, alas, almost much ado about nothing. This time around it would not shock me if the president just raised it himself and accepted a court challenge. Bills need to be paid, that's the law. One law -- that the Congress has to approve a debt ceiling raise -- conflicts with another. The payments that the federal government must pay on time.
Some Stocks Are Just Too Dangerous Posted at 6:37 p.m. EDT on Thursday, Dec. 20 I've got not one, not two but three cautionary tales about what happens when you wander into battlegrounds, obvious battlegrounds that can be avoided. In fact, today's action provides a battlefield manual of where not to go, where the interstitial machine gunfire is so overwhelming that you know you are going to eat lead. We've got three companies, Mellanox Technologies ( MLNX), Allscripts Healthcare Solutions ( MDRX) and Herbalife ( HLF), all vying for worst battlefields out there. Let's start with Mellanox Technologies. Here's one I put in the "sell block" a few months back, after it caught a gigantic gain. The Israeli semiconductor company had had a monster run. Next thing I know, the chief financial officer retired, and I thought it had just moved up too much, so I just said "enough already." Sure enough, Mellanox reported soon after, and it didn't have the best guidance, so I told people here to dump it. I said that while you can never get out at the top, I thought that once the stock was broken, it would stay broken. And that's just what happened. There are some obvious lessons here. When a CFO departs, even if the move is orderly, it is worth it to ring the register particularly, after a colossal run. Then once a red-hot stock reports a weak quarter, it doesn't pay to hang around, as the momentum people will sell relentlessly. That's what is happening in today's action. Then there's Allscripts Healthcare solutions, another hammered stock today. Allscripts, another "sell block" name, had faltered badly and lost out to Cerner ( CERN) for a lot of business. I had urged people to bolt from it, but the CEO of Allscripts, Glen Tullman, tried to sell the company. I say over and over again that you can't speculate on a takeover if the fundamentals are in decline as they were with Allscripts, because who wants to buy a faltering business? Apparently no one; Tullman was fired last night.