The Stock Market Today: What’s Hot and What’s Not
Thursday, October 25th, 2007
By Michael Lombardi, MBA for Profit Confidential
Financial stocks are not the place to be these days. With Merrill Lynch reporting yesterday a bigger-than-expected $7.9-billion write-off in its third quarter, the message was clear. The subprime problem extended to all types of financial institutions. In Merrill’s case, the loss came from write-offs mostly from its collateralized debt instruments.
Bank stocks may also be risky. Yesterday, Aastra Technologies sued HSBC Securities, a division of HSBC Bank, because it can’t redeem its short-term paper. Aastra has millions of dollars in notes that have come due but for which it cannot get its money back because of the turmoil in the commercial paper market. Banks could be on the hook for billions if clients start to sue for bad advice on the stability of commercial paper.
Construction, home improvement and home building stocks… forget it. They’ve fallen but not far enough. See NEWSFLASH below.
Retail stocks… need to be careful here, too. If it’s one of those specialty stores with a strong up-and-coming brand (like the recent Lululemon offering), that’s one thing. But if we are talking the old, big retailers that sell to the masses, this could be risky, as the housing bust is definitely affecting the wallets of consumers. High oil prices are not helping the drive to the stores either.
What do we have here?
Franco-Nevada, a gold mining company, is set to raise $1.0 billion in its initial public offering. And rumor has it that investors are lining up to buy shares in Franco-Nevada. With royalty interests in 190 precious and base metal properties, investors see the company as a great play if you believe in rising commodity prices. (A 28- year high in gold prices doesn’t hurt demand for these types of stocks.)
Precious metal stocks are what’s hot right now and where I believe the smart money is moving to.
NEWSFLASH: Sales of existing homes fell eight percent in September, according to the National Association of Realtors, twice the fall housing analysts had expected. The median price of homes in the U.S. is down 4.2% over a one-year period. The carnage in the housing market continues, with no end in sight.
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Tags: gold, gold mining, gold prices, mining companies, precious metal stocks
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
