When Uncle Sam wrote that $85 billion dollar check to save AIG last night, he probably didn’t expect this to happen on the Wall Street today: a nearly 450-point plunge of the Dow Jones Industrial Average.
The government’s effort failed miserably. Not only the $85 billion bailout didn’t prevent AIG’s share from plummeting another 46%, it also failed to soothe investors’ nerve on the health of other financial institutions. Shares of other two independent investment banks, Goldman Sachs (GS) and Morgan Stanly (MS), were hammered in today’s trading, losing 18% and 26%, respectively, even though both reported better-than-expected earnings yesterday. Morgan Stanly even took proactive move, seeking to merge with a bank. At the same time, Washington Mutual (WM), the embattled savings and loan thrift, is putting itself up for sale, but so far no taker has emerged. The drama on the Wall Street is far from over.
I didn’t just watch the Dow took a nosedive on the sideline today. I did some bottom fishing myself:
Bought 55 shares of AIG at $2.03/share at TradeKing
Bought 60 shares of MS at $19.77/share at Scottrade
Unlike trades on FRE, WM, and AIG, this time I put close to $1,200 on MS instead of just a couple of hundreds of dollars as before. The reason for me to buy this stock is that I feel Morgan isn’t in as a bad shape as Lehman was and today’s drop is more of psychological reasons. Well, time will tell whether this is a bad move or not. Besides, I didn’t add any new money to my account to make this trade. The money was from recent dividend distribution from China Life Insurance (LFC). Before placing my order on MS, I was thinking for a moment whether to buy PGJ, which I already own, or MS. Eventually, I went for MS. The nearly $10 drop was tempting.
BTW, I have updated the 10 Largest Drops of Dow Jones I posted just two days ago. Today’s 449.36-point drop ranked No. 7, right after Monday’s 504.48 points.
This article was originally written or modified on . If you enjoyed reading this post, please consider subscribing to my full RSS feed. Or you can also choose to have free daily updates delivered right to your inbox.
EverBank Money Market Account 1.25%: Open an EverBank Money Market Account with a minimum balance of $1,500 and earn 1.25% bonus rate for the first six months. The first year APY is 1.01% for account balance up to $50,000. Find out more about this offer.