Two months ago, I bet on Freddie Mac (FRE) when the stock was traded below $7. For a company like Freddie, I thought that was an attractive price. That trade was proven to be as bad as it could be: The $100 I spent on the stock is only worth $9.5 now, even though I recovered part of the money later on from another trading of the stock at a much lower price.
Today, when Lehman Brothers (LEH), an investment bank that’s fighting its life, dominated financial news, WaMu also made some noises, in the bad way: the stock early traded as low as $1.75 a share, a 18-year low. The stock has been under pressure for quite some time after losses related to bad loans mounted. Like Lehman, investors question the survival of the thrift, which may need to raise as much as $10 billion fresh capital, according to some analysts (Reuters).
I didn’t get the stock at the lowest level, but the best I could. At $2.00 apiece, I bought 125 shares of WM through my TradeKing account (so I paid $4.95 commission). I’d love to save that commission and buy the stock through Zecco, but didn’t have enough cash in it. But that’s not the only reason. I found that I can’t use proceeds from stocks I just sold to make a purchase immediately with Zecco. The Buy Power didn’t increase right away. It only increase when the fund settles, usually the next day. Of course, in this case I can’t wait till tomorrow to make the purchase.
At the close of today’s trading, WM actually gained 51 cents to $2.83. The stock rises in after-hour trading after the company said
Despite the losses, Washington Mutual said it maintains $50 billion of liquidity from “reliable funding sources,” and expects to remain “well-capitalized,” with capital “significantly above” regulatory minimums.
Let’s see how this one plays out.
BTW, WaMu has recently introduced a couple of big promotions, including the 3.75% APY for WaMu online savings account and 5.00% APY 12-month CD. I am wondering what roles these promotions play in WaMu’s capital basis. And remember before Lehman’s stock lost some 90% of its value, it also repeated said it has plenty of capital, but only came out to ask more and more. That wasn’t long ago.
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