Tuesday, March 18, 2008

The Fed cuts interest rates, Goldman Sachs & Lehman aren't bleeding so bad, everyone's happy!


On news that Goldman Sachs and Lehman Brothers aren't eating it quite as hard as everyone (themselves included) expected, and the Fed cutting yet another chunk out of the intra-rate, there was much rejoicing today as the Dow climbed 420 points.

Lehman Brothers (LEH) climbed 13.76 to close at 45.51 for a 43.34% gain on the day. Damn. Bear Stearns had some help with more short covers and rumors of a higher deal. More talk about how "orderly bankruptcy" would net shareholders more than the paltry steal-at-twice-the-price $2/share ($250M *total*) JPM offer kept hopes for another offer up and optimistic. (The shareholders have to approve the JPM deal and 30%+ of BSC shares are owned by VERY FUCKING PISSED OFF BSC employees. Others aren't so sure.

(Fun side story: My brother Steve is playing a stock market simulator for his stock market class in high school. I told him last night that BSC was going to rally today while holding on for a deal. His simulator doesn't let him place orders under $5/share to prevent massive swings on highly volatile penny stocks, etc. So, since BSC closed at $4.81, he places a limit order at $5, thinking as soon as it passed by $5, his $25k play money order would be executed and he could ride the wave. Except that after-hours pushed the open to $5.50, the limit never triggered and he didn't get in til $6-or-so, losing on the day. BSC peaked at $8.50 and would've made a hefty sum for the wise. The question is if you're going in, do you hold your position long for hope of a better deal, or exit at the quick 45% profit? BSC closed $5.91, up $1.10/22.87%; not bad for a day's work either way.)

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