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Tuesday, November 25, 2008
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Tuesday, March 11, 2008
Stocks Boom on Fed's Bank Booster
Tuesday March 11, 7:54 pm ET
By Joe Bel Bruno
Fed Announces $200 Billion in Help for Banks, Leading Dow to Biggest Day in 5 Years
NEW YORK (AP) -- The Fed promised a $200 billion booster shot for ailing markets -- and Wall Street answered with its biggest bounce in more than five years.
The Dow Jones industrials shot up more than 416 points, the biggest single-day point gain since July 2002, after the Federal Reserve announced the move as part of a worldwide effort to help struggling banks and mortgage providers.
Hoping to ease the credit crisis, the Fed -- acting with the European Central Bank, the Bank of Canada and the Swiss National Bank -- agreed to loan investment banks money in exchange for debt, including slumping mortgage-backed securities.
The idea is to create a market for assets that investors have recently been too scared to buy. That freeze in demand had sent asset values plunging and caused huge losses for some of the world's biggest banks.
After a series of hefty losses in stocks, the market hopes the central banks' decision Tuesday might be more effective than previous moves -- like rate cuts, which had led to initial stock pops that later fizzled.
"It's not just a rate cut. I think it's a very creative way to do financing," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. "It shows the Fed is willing to do things that are a little out-of-the-box to shore up credit issues. I really think they went to the heart of the issue."
Investors certainly seemed to like it: The Dow rose 416.66, or 3.6 percent, to 12,156.81. It was the biggest point jump in the Dow since a 447-point rise on July 29, 2002, and its widest one-day percentage gain since March 2003.
The Dow had lost more than 500 points in the past three sessions and is still down about 2,000 points from its October 2007 record high.
Broader stock indicators also soared. The Standard & Poor's 500 index rose 47.28, or 3.7 percent, to 1,320.65, while the Nasdaq composite index surged 86.42, or about 4 percent, to 2,255.76.
It was the S&P's biggest point gain since April 5, 2001, and the Nasdaq's biggest since May 8, 2002.
The latest step by the central banks was seen as a direct lifeline to investment banks, which previously couldn't borrow beyond already established Fed liquidity plans.
The plan basically allows Wall Street's biggest institutions to put up troubled assets as collateral for loans, use the new capital to make money in the market, and then pay back the loan up to 28 days later.
Though eventually banks would be forced to take the troubled mortgage-backed debt back on their books, the plan still takes short-term pressure off them. Many of these banks will release first-quarter earnings reports next week.
"The big problem has been the financials, and this helps supply money directly to the banks and may take some of the need for aggressive rate cutting off the table," said Peter Dunay, chief investment strategist at Meridian Equity Partners. "The Fed is basically going to take the bad loans off the banks' books, and the market seems to be loving that idea."
The Fed may have avoided dramatically slashing interest rates again when it meets next week. Economists remain concerned about the unrelenting rise in oil prices and the dollar's weakness, which contribute to inflation -- and cutting rates only adds to those pressures.
Government bond prices fell as stocks rallied. The yield on the 10-year Treasury note, which moves opposite its price, spiked to 3.60 percent from 3.46 percent late Monday.
Financial sector stocks, many of which have dipped to multiyear lows in recent days on liquidity concerns, led the market higher Tuesday.
Citigroup Inc. rose $1.42, or 7.2 percent, to $21.11, Washington Mutual Inc. rose $1.72, or 17 percent, to $11.76, and Bank of America Corp. rose $1.33, or 3.8 percent, to $36.64.
Morgan Stanley rose $4.19, or 10.9 percent, to $42.49, Lehman Brothers rose $3.33, or 7.8 percent, to $46.31, and Merrill Lynch rose $2.76, or 6.4 percent, to $45.60.
Bear Stearns Cos. rebounded from losses to rise 67 cents to $62.97, even after an analyst said the No. 5 U.S. investment bank might need to sell itself, or layoff more staff, to stay afloat. The cost to insure Bear Stearns bonds has been spiking to all-time highs. A spokesman for Bear Stearns didn't immediately return telephone calls.
The Fed's announcement overshadowed a report from the Commerce Department that showed the United States' trade deficit grew larger in January. The latest snapshot of the economy showed that the trade gap increased to $58.2 billion -- the highest since November.
The primary reason behind the widening trade deficit is high oil prices. Crude rose as high as $109.72 in premarket trading on the New York Mercantile Exchange before ending at a new settlement record of $108.75. The weak dollar has contributed to oil's rally from $87 a barrel in January.
Gold prices rose, while the dollar edged up against most other major currencies.
The only sector posting major losses Tuesday was health care, which has been strong in recent months. WellPoint Inc. fell after Goldman Sachs trimmed its ratings in the managed care sector to neutral from attractive. The investment bank singled out WellPoint's performance amid pricing pressures. The stock plunged $18.66, or 28 percent, to $47.26.
Google Inc. shares spiked after European Union regulators cleared the Internet company's $3.1 billion bid for online ad tracker DoubleClick. Shares of Google rose $26.22, or 6.3 percent, to $439.84.
The Russell 2000 index of smaller companies rose 29.84, or 4.63 percent, to 673.81.
Advancing issues surpassed decliners by more than 5-to-1 on the New York Stock Exchange. Consolidated volume came to 5.17 billion shares, up sharply from 4.15 billion shares Monday.
Stocks overseas rebounded. Japan's Nikkei 225 stock average rose 1.01 percent, while Hong Kong's market closed up 1.28 percent higher. Britain's FTSE-100 rose 1.7 percent, Germany was up 2.01 percent, and France added 1.61 percent.
Tuesday, March 4, 2008
Passcode dari Interactive Brokers.
Interactivebrokers (IB) memperketat sekuritinya dengan menambahkan
passcode. Biasanya kita cukup masukkan User Name dan Password untuk login
ke Trader Work Station (TWS), dengan ditambahkan sekuriti, maka IB akan
meminta untuk memasukkan "Passcode".
IB akan mengirimkan Passcode Card / Value Card (kartu passcode) atau
Passcode Key ke rumah Bapak/Ibu, jadi bagi Bapak/Ibu yang Live Account
sudah ada dananya, pastikan alamat rumah yang didaftarkan ke IB sama
dengan alamat rumah tempat tinggal sekarang. Jika berbeda, segera masuk ke
account management untuk merubah alamat tersebut.
Langkah-langkah untuk merubah alamat rumah sebagai berikut :
1. Masuk ke website IB dengan mengetik : http://www.blogger.com/
2. Klik Individual.
3. Di pojok kanan atas Select Trade or Account Login, pilih Account
Management.
4. Isi User Name dan Password, klik Login.
5. Klik Account Administration
6. Klik Account Information
7. Klik Modify
8. Ubah informasi alamat
9. Klik Continue
10. Buka email dari IB untuk mendapatkan Confirmation Number, catat nomor
tersebut
11. Isikan nomor tersebut dan klik Continue
Passcode card / value card berbentuk seukuran kartu kredit yang berisi
kombinasi huruf dan angka. Saat login ke TWS akan muncul angka di sebelah
kiri dan kanan, cara pakainya : cocokkan angka di sebelah kiri ke kartu
dan kemudian baca angka/huruf penggantinya, masukkan angka/huruf
penggantian tersebut di TWS, lakukan juga dengan angka di sebelah kanan,
kemudian tekan enter.
Passcode Key berbentuk gantungan kunci kecil, cara kerjanya seperti key
BCA. Saat login ke TWS akan muncul kotak untuk memasukkan passcode, tekan
tombol di passcode key, maka akan muncul angka, ketik angka tersebut ke
kotak di TWS dan tekan enter.
IB akan mengirimkan email ke Bapak/Ibu jika IB mengimplementasikan
passcode ke account Bapak/Ibu agar Bapak/Ibu mengaktifkan passcode
tersebut. Jika Bapak/Ibu belum menerima passcode card / value card atau
passcode key tetapi pada saat login ke TWS sudah dimintakan untuk mengisi
passcode, maka Bapak/Ibu harus menghubungi IB via telepon baik ke Hongkong
+852-2156-7907 (jam kerja Asia) atau ke USA +1 (312) 542-6901 (jam kerja
US) untuk mendapatkan "Temporary Passcode" (passcode sementara) agar bisa
login ke TWS. Passcode sementara tersebut akan berlaku 1 minggu. Jika
temporary passcode sudah berakhir dan Bapak/Ibu masih belum menerima
passcode card / value card atau passcode key, maka Bapak/Ibu harus
menghubungi kembali IB via telepon untuk mendapatkan temporary passcode
yang baru yang juga berlaku 1 minggu. Pada saat menghubungi IB, sekalian
tanyakan status pengiriman passcode card dan di kirim ke alamat mana? Jika
IB mengirimkan passcode card / value card atau passcode key via DHL, minta
"Trace Number" sehingga kita bisa masuk ke website DHL dan memeriksa
status pengiriman tersebut.
Setelah menerima Passcode Card / Value Card atau Passcode Key, maka
Bapak/Ibu harus mengaktifkannya, langkah-langkah mengaktifkannya akan
diberitahukan via surat yang dikirim bersamaan dengan passcode card /
value card atau passcode key tersebut.
Salam Mega Profit,
Janto E
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Should you join the Visa IPO craze?
What to consider before investingThe credit-card behemoth -- which processes twice as many transactions as its closest rival, MasterCard Inc. -- is thriving, increasing its fourth-quarter earnings by 70 percent even as other financial-sector institutions watched profits plummet.
If all goes as expected, Visa will be by far the biggest initial public offering in U.S. history, raising $16 billion -- and that's the conservative estimate.
"Yeah," says John Fitzgibbon Jr., founder of IPOscoop.com, "that's going to draw some attention."
But don't let Visa's big name, big earnings and ubiquitous presence lure you into buying its stock without weighing the disadvantages as well. There are good reasons to buy into Visa and other IPOs, and good reasons not to. Here are factors to consider.
Why buy?
Visa has a strong brand name, an established track record and a product that is in demand. Consumers are increasingly willing to put everyday purchases on credit and debit cards: Card payments accounted for 42 percent of all consumer purchases in the U.S. last year, up from 29 percent five years ago, according to the Nilson Report.Visa's business model, it says, protects it from the credit crunch that's hurting the banks that issue its cards, like Charlotte-based Bank of America Corp. and Wachovia Corp. Visa makes its money by charging those banks for transmitting authorization messages every time a consumer uses a credit or debit card. "Whether the person repays the balance is irrelevant to Visa," said Gwenn Bezard, research director at Aite Group in Boston. "That's the problem of the card issuer."
MasterCard, which has a similar business model, has had a wildly successful ride on the stock market. It went public in 2006 at around $40 per share. Now it's trading at almost $200.
Both Visa and MasterCard had strong fourth quarters. Visa increased earnings 70 percent, to $424 million. MasterCard increased earnings more than sevenfold, to $304 million. (In the same period, Bank of America wrote off $2 billion because of bad credit card loans. American Express Co. and Discover Financial Services, which are responsible for bad loans, saw their earnings decline.)
In addition, the sheer size of Visa's offering might be an advantage to investors. The company wants to sell 406 million shares; Google offered about 19 million when it went public in 2004. To sell that many shares, Visa will be compelled to price them fairly, Fitzgibbon theorizes. "It's like a one-day sale," he said.
But ... buyer, beware
• MasterCard's stock-market success doesn't guarantee the same for Visa. MasterCard went public in a year when the Dow was hitting record highs. Also, when MasterCard went public, investors had no reference for pricing it, since Visa is the only other major company that operates under the same business model. Many analysts now believe that MasterCard's initial offering was underpriced, which is partly why the stock has risen so much.
The banks won't let that happen with Visa, says Eric Grover of Intrepid Ventures in California. He believes that, for Visa stock to quintuple like MasterCard's has, its initial offering would have to be underpriced by 80 percent -- an unlikely scenario. "There will be no windfall here like there was with MasterCard," Grover said. "The banks left a lot of money on the table with the MasterCard IPO."
• MasterCard's success is the exception, not the rule. Of the IPOs created last year, about half were trading below their offer price by the end of the year, said Richard Peterson, director of capital markets for Thomson Proprietary Research. "Technology did well," Peterson said. "Health care did not do well, financial services and real estate did not do well."
Renaissance Capital's IPO Index is down 16 percent this year, while the S&P 500 is down 7 percent.
"Most IPO stocks underperform the market," said Eric Tyson, author of "Investing for Dummies." "People should realize that in their quest to buy the next Microsoft or Google."
• Visa's current success doesn't guarantee that it will always rake in money. "You can't just look at a company's history," said Tyson. "I would want to know how Visa is going to grow their business in the next three to five years."
Despite its strong fourth quarter, Visa lost $861 million over 2007, when it set aside $2.7 billion to settle an antitrust lawsuit with American Express and in anticipation of costs associated with another lawsuit with Discover. Also, Visa said it expects the softening economy and housing market to "moderate our rate of growth" in 2008.
And while Visa is correct that its business model largely shields it from the credit crunch, it's not entirely protected. Visa makes money on a per-transaction basis, so it's relying on consumers to continue spending, and often. Consumers are less inclined to do so when food and fuel are eating up larger portions of their paychecks, and when lenders are getting stricter about handing out money.
• Also, investing in a single company is always riskier than investing in a portfolio. If you're going to invest in an individual company, you should plan to hold that stock for five to seven years, Tyson said. Don't count on flipping your IPO investment for a quick dollar. "That's not investing," Tyson said. "That's gambling."
Investing in an IPO is also inherently risky, which is why Bill Baynard, managing director of Charlotte's Novare Capital Management, usually avoids them. IPOs represent either companies that are new -- which means they haven't proven themselves to investors -- or companies that are private -- which means they haven't had to release too much information about how they do business.
The Blackstone Group, the asset manager and operator of private equity funds that went public last summer, is proof that even established companies can fare poorly in an IPO. It's trading at about $17, less than half its initial price. "They've got a great history and a great track record, but the pricing of that IPO was wrong," said Baynard. "And the people who got in early have paid the price."
Want to buy?
If you're interested in the Visa IPO, talk to your broker before March 19, which is the stock's expected pricing date. Your brokerage firm may have access to the Visa IPO. Be warned, however, that IPOs are usually the domain of institutional investors, and your brokerage firm may reserve IPOs for customers with a certain amount of assets."Generally speaking," said Eric Tyson, author of "Investing for Dummies," "if it's an in-demand IPO, the shares are going to go to people who are connected to the underwriters and not John Q. Public."
You can also purchase Visa shares after the stock starts trading.
Selected IPO winners
COMPANY IPO YEAR IPO PRICE (ROUNDED) CURRENT PRICE(ROUNDED)
Google Inc. 2004 $100 $470
MasterCard Inc. 2006 $40 $190
SOURCE: Yahoo Finance
Christina Rexrode: 704-358-5170
The Appeal of Visa's IPO
by:Anne Kates Smith, Senior Associate Editor,
Kiplinger.com Sunday, March 2, 2008
If it goes as planned, such a mega-deal could kick start the stalled IPO market, which is running at the slowest pace since 2003, according to Thomson Financial.
More than a dozen Wall Street firms involved in the underwriting could share about $500 million in fees. Plus, the deal calls for Visa to buy back some $10.2 billion worth of stock now in the hands of its bank customers. That would boost the banks' beleaguered balance sheets and give them an opportunity to share in the appreciation of their remaining stakes. Of Visa's stakeholders, J.P. Morgan could see more than $1 billion from the deal, while Bank of America stands to gain more than $500 million.
But what's the attraction for Main Street investors, given the present turmoil in the financial sector? The chief attraction is that Visa isn't part of the turmoil.
Unlike American Express and Discover Card, Visa isn't the one lending money to cash-strapped consumers whose homes are worth a fraction of what they once were. Visa simply collects the fees every time someone swipes a Visa credit or debit card. And that happens way more often than it does with MasterCard, Visa's only true competitor.
Visa handled 44 billion transactions in 2006, compared with 23 billion handled by MasterCard (and just 4.5 billion by American Express), according to The Nilson Report. In dollar terms, that amounted to $3.2 trillion for Visa, dwarfing MasterCard's $1.9 trillion.
The shift from paper to plastic is still in the early stages, especially in developing countries, Visa says in its prospectus. It says that Nilson forecasts global transactions to grow at an annualized rate of 11% through 2012, with particular strength in Asia, Latin America, the Middle East and Africa.
For fiscal 2007, which ended September 30, Visa generated operating revenues of $5.2 billion. Stripping out some one-time litigation charges (more about that later) and adjusting for taxes, Visa's net income topped $1 billion. That would pan out to be about $1.31 a share, says Nick Einhorn, an analyst at Renaissance Capital, an IPO research outfit that also runs a mutual fund that invests in new issues.
Business may be great, but even Visa acknowledges substantial risks to investing in its shares. Chief among them is a pile of lawsuits. Since 2005, merchants have filed some 50 suits for alleged overcharges. Discover and American Express sued, charging Visa with anticompetitive practices. Visa will plunk $3 billion into an escrow account after the stock offering to cover the cost of settlements or judgments -- but only time will tell if that's enough.
Other risks include increasing regulatory scrutiny -- especially in matters of consumer privacy and identity theft. This could boost costs for the company. Another potential risk is further consolidation in the banking industry, which could shrink the market for Visa cards.
As it is, only a few financial powerhouses account for a significant share of Visa's revenues. Its five biggest customers represented 23% of revenues for fiscal 2007. J.P. Morgan Chase accounted for 9% alone.
But companies always belabor the risks in a prospectus. Investors will likely give as much credence to the performance of MasterCard shares since their debut in the spring of 2006. Since closing at $46 on the first day of trading, MasterCard ( MA) is up more than 300%. It closed at $191.19 on February 27, down 2.4%. Analysts expect MasterCard's earnings growth to approach 20% annualized over the next three to five years.
Assuming a comparable growth rate for Visa, the stock at $39.50 a share (the mid-point between the expected offering price of $37 and $42) would trade at 25 times estimated 2008 earnings of about $1.58 a share -- dead even with MasterCard's price-earnings ratio of 25. If you're bullish on MasterCard -- and many experts are -- there's no reason not to feel the same way about Visa.
The good news for IPO fans is that, with an offering this size, there's a good chance that your broker will have some shares for you, if you want them.
Before you make the call, though, remind yourself that MasterCard came out of the gate much more modestly priced -- with a P/E in the mid-teens instead of the mid-20s. Plus, some analysts who love the business think that MasterCard's shares are due for a breather. So expecting the same kind of meteoric gains for Visa may be just too much wishful thinking.
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