by Michael Shulman 07/28/08
Earlier this year, the anchors at the Fox Business Channel made fun of me and called me a grinch because I said the banks were in trouble and that crude oil prices would definitely drop before year-end, thanks to decreased demand.
I'm not the type to gloat, but U.S. gasoline usage has dropped for 13-straight weeks in the thick of summer vacation driving season, and the price per barrel of crude oil has slipped about 15% in three weeks.
And sure, we've still got five months left in the year, during which anything can (and will) happen. But I don't hear anyone (other than the oil conglomerates) complaining!
KLEIN LEAVING THE 'CITI'
This has reminded of the time when I was basically told to calm down and buy a doughnut because I said, in a very animated fashion, that Citigroup (C) at $28 was headed for a very serious fall.
Now that Citi shares have touched $14 and has spent the past few days in a steady decline, the fall looks to be even steeper after today's reports that the chairman of Citi's Institutional Clients Group, Michael Klein, is leaving after 23 years with the company.
Even he knows it's time to bail out before the sinking ship is completely submerged.
Klein's reported $42.6 million exit package comes with a stipulation that he can't work for/with the dozen major investment and commercial banks within the next 15 months. With that list containing other such beleaguered banks as Lehman Bros. (LEH), Merrill Lynch (MER) and Morgan Stanley (MS), you'd have to pay me that kind of money to want to go and work for any of them! (And it still wouldn't be enough.)
DROPPING THE 'BOTTOM' BALL
I am writing about this now because the "value guys" and the "brave contrarians" (sounds like a Roman legion, and you know how they all ended up) are beginning to say they "smell a bottom."
"Smell" is the key word here, although "stink" seems more appropriate.
What it all means to you as a trader and investor is that you need to stick to facts and fundamentals, not pundits, when looking to build a long or short positions. (The fundamentals are ...
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