Buy Stocks Tip

U.S. stocks plunged and the Standard & Poor’s 500 Index tumbled the most since the 1987 crash after the House of Representatives rejected a $700 billion plan to rescue the financial system.

The Dow Jones Industrial Average slid 778 points for its biggest point drop ever as $1.2 trillion in market value was erased from American equities. The MSCI World Index of 23 developed markets slid 6.9 percent, the most in 21 years.

The global market is having serious problem. Watch your investment carefully. There are many bad news in the US market and around the wordl:

• On March 14 2008, JPMorgan Chase, in conjunction with the Federal Reserve Bank of New York, provided a 28-day emergency loan to Bear Stearns in order to prevent the potential market crash that would result from Bear Stearns becoming insolvent. Two days later, Bear Stearns signed a merger agreement with JP Morgan Chase in a stock swap worth $2 a share or less than 10 percent of Bear Stearns’ market value.
• The federal takeover of Fannie Mae and Freddie Mac refers to the placing into conservatorship of government sponsored enterprises Fannie Mae and Freddie Mac by the US Treasury in September 2008.
• Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, filed a Chapter 11 petition with U.S. Bankruptcy Court in Manhattan today. Lehman was forced into bankruptcy after Barclays Plc and Bank of America Corp. abandoned takeover talks yesterday.
• Bank of America Corp., the biggest U.S. consumer bank, agreed to acquire Merrill Lynch & Co. for about $50 billion as the credit crisis claimed another of America’s oldest financial companies. This news is good for the market. But this also tells us that current subprime mortgage crisis is far from over.
• On the evening of September 16, 2008, the Federal Reserve Bank’s Board of Governors announced that the Federal Reserve Bank of New York had been authorized to create a 24-month credit-liquidity facility from which AIG may draw up to $85 billion. The loan is collateralized by the assets of AIG.
• Washington Mutual Inc. became the nation’s biggest bank to collapse after U.S. government regulators seized the Seattle- based bank on Sept. 25. JPMorgan Chase & Co. agreed to acquire WaMu’s deposits and branches for $1.9 billion.
• Fortis, the largest Belgian financial-services firm, received an 11.2 billion-euro ($16.3 billion) rescue from Belgium, the Netherlands and Luxembourg after investor confidence in the bank evaporated.
• Citigroup Inc., the biggest U.S. bank by assets, will acquire the banking operations of Wachovia Corp., rescuing the Charlotte, North Carolina-based lender beset by mortgage losses for more than $2 billion in stock.

Stocks tumbled worldwide, the dollar fell and U.S. Treasuries surged after the bankruptcy of Lehman Brothers Holdings Inc. drove investors to the safety of government debt.

Equities dropped in Europe and Asia, led by a 36 percent tumble in HBOS Plc and a 10 percent decline in Macquarie Group Ltd. Futures on the Standard & Poor’s 500 Index fell 4 percent as American International Group Inc. sank 46 percent. Russia’s Micex Index declined 5.3 percent, leading a retreat in emerging markets. Crude oil fell more than $7 to a seven-month low as speculation turmoil on Wall Street and the worsening credit crisis may slow the global economy, cutting energy demand.

This year crisis in one of the worst in history. So protect your money. Be prepare for big rally, because In the past two decades, after a big plunge in the aftermath of Sept. 11, the 1998 Russian debt default and Mexico’s 1994 peso devaluation, the index gained 20 percent or more in the next three months.

Ospraie Management, the investment firm run by Dwight Anderson, will close its biggest hedge fund after slumping 38.6 percent this year. The New York-based Ospraie Fund fell 26.7 percent in August after a sell off’ in energy, mining and resource equity investments.

U.S. stocks rallied after Hurricane Gustav spared drilling platforms in the Gulf of Mexico, sending oil to a fivemonth low. This oil drop is good for transportation companies, banks, and retailers.

Delta Air Lines Inc. and United Airlines’ parent UAL Corp. rose more than 15 percent each and Lowe’s Cos. Bank of America Corp. advanced 5 percent as Goldman Sachs Group Inc. said it won’t have to issue common shares to raise capital.

Crude oil fell after Hurricane Gustav weakened, easing concern of widespread damage to drilling rigs and refineries. Gustav has been downgraded to a Category 2 storm, the second-weakest of the five levels of hurricane strength. Preparations for the storm closed 96 percent of offshore oil production and about 10 percent of U.S. refining capacity.

Crude oil for October delivery fell as much as $3.01, or 2.6 percent, to $112.45 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $113.19 at 2:32 p.m. London time. It earlier rose as much as 2.2 percent to $118.

Crude oil fell to a 14-week low on signs that the U.S. economic slump will extend into 2009, crimping fuel demand.

Oil prices retreated as a Bloomberg News survey showed that the U.S. will grow at an average 0.7 percent annual pace from July through December, half the gain in the first half of the year. Prices rose in early trading as five days of clashes between Russia and Georgia threaten alternative export routes from Azerbaijan, needed because of a pipeline fire.

When reading bloomberg, you can find out which “Stocks On The Move”. The stocks has unusual price changes, and are usually signs of future price movement. On 9 August, the list was:

• BankUnited Financial Corp. (BKUNA:US): Florida’s largest bank posted a quarterly loss after setting aside more money to cover defaulting loans as borrowers fall behind on payments.
• Berkshire Hathaway Inc. (BRK/A US): Billionaire investor Warren Buffett’s Berkshire Hathaway Inc. posted its third consecutive profit decline on slowing returns from insurance.
• National City Corp. (NCC:US) dropped 2.7 percent to $4.98. The U.S. Securities and Exchange Commission started an informal probe at Ohio’s largest bank into the lending and the sale of its subprime home unit to Merrill Lynch & Co., according to a company filing.
• Lions Gate Entertainment Corp. (LGF:US): The independent film and television company reported first-quarter profit of $7.1 million as the comedy “Meet the Browns” lifted sales.
• Radian Group Inc. (RDN:US) rose 2.2 percent to $2.80. The third-largest U.S. mortgage insurer reduced its quarterly dividend 88 percent to boost liquidity amid the slumping housing market.

U.S. stocks climbed for the first time in four days as lower commodity prices eased concern that inflation will force the Federal Reserve to raise interest rates.

Bank of America Corp. and Citigroup Inc. led financial shares to the biggest advance in the Standard & Poor’s 500 Index. General Motors Corp., U.S. Airways Group Inc. and Carnival Corp. helped lead gains among companies that benefit from lower energy prices as oil dropped. American International Group Inc. rallied on UBS AG’s recommendation to buy the shares.

U.S. stocks tumbled, sending the Dow Jones Industrial Average to its worst June since the Great Depression, as record oil prices rose by $5 a barrel, credit-market writedowns and a slowing economy threatened.

The U.S. economy expanded at an annual rate of 1 percent in the first quarter, the weakest six months of growth in five years. Initial jobless claims totaled 384,000 in the week ended June 21, unchanged from the previous week’s tally that was higher than previously estimated.

Source: bloomberg.com