Wednesday, September 23, 2009

The FOOLs are in RUINS

Ah, well, perhaps not yet, but the frequent nay-saying of Motley Fool and the cries that there is little profit to be made with seemingly "risky" investments in companies like AIG, C, BAC, WFC, JPM, and _ is ridiculous.

Now I understand where the FOOLS are coming from on this. They see these companies that all required bailouts as being loose cannons with the potential to backfire and completely destroy a non-vigilant investor of his well-earned money.

Where they miss the opportunity is in the fact that all the companies I just mentioned were all rescued by the Federal government with a virtually blank check to ensure the well-being of these seemingly too-big-to-fail companies.

Despite what I saw as an obvious opportunity to make money, I have yet to understand why it is that they haven't admitted that they're wrong and redressed the issue to encourage people to make a few more profitable investment decisions.

Ah, wait! I completely understand now why it is they don't want to do this... because it's far TOO risky. And while they did miss the initial boat, it is a bit late to start recommending these companies at their present values.

Maybe the FOOLS at Motley should take a page from Jim Crammer and admit it when they're wrong, have missed the boat and made genuine FOOLS of themselves.

Sure, Motley may have played it same, but the fact that they sacrificed what I believe will prove to be one of the greatest money-making opportunities of this past century truly makes me question what they really know about finance and government intervention in private v publicly traded companies.

Maybe, instead of going with the masses who thought the sky was falling, they should have realized that, while there was a lot of potential for increased government stakes in these companies, the government had absolutely no intension of taking these companies completely off the market.

I think it was terribly obvious that the US & the Obama Administration have no interest in nationalizing AIG, C, BAC, GM or any of the other companies they took stakes in. Instead, they want to build market confidence in the stock market and protect the rest of the financial institution from going into an even deeper recession.

And for God's sake, Ben Bernakie even went on 60 Minutes and told us he wanted to shore up investor's confidence and..........

Case and point.
"It depends a lot on the financial system," he replied. "The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis. We've seen some progress in the financial markets, absolutely. But until we get that stabilized and working normally, we're not gonna see recovery. But we do have a plan. We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time."


"No," Bernanke replied. "I think the key issue is the banking system and the financial system."


and I think this line alone made it even more obvious that the FOOLS were wrong:
"There were many people who said, 'Let 'em fail.' You know, 'It's not a problem. The markets will take care of it.' And I think I knew better than that. And Lehman proved that you cannot let a large internationally active firm fail in the middle of a financial crisis. Now was it a mistake? It wasn't a mistake for the following reason: we didn't have the option, we didn't have the tools. All the Federal Reserve can do is make loans against collateral," Bernanke replied.


http://www.cbsnews.com/stories/2009/03/06/60minutes/main4862191.shtml

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