Sifting Through the Bear Stearns Media Gala

From a bottom up perspective, Bear Stearns looks like a nightmare come true for bottom fishers. Some smart people like Joe Lewis bought the stock since it went down a while back only to see it plunge recently.

I've never owned Bear Stearns, but you know I know that feeling. ;-)

Whenever a big story like this is breaking, and I want to know more, the first places I check out are the Lex column in The Financial Times and the Breakingviews column in WSJ.com. The editors of both think Bear's days as an independent company are numbered. Lex thinks J.P. Morgan is most likely to buy, while Breakingviews favors either J.P. Morgan or Barclays.

Another good piece I've read is Ambrose Evans-Pritchard's take in the Daily Telegraph:

Big American finance houses have collapsed before. Continental Illinois required a $4.5bn (£2.25bn) bail-out in 1984 after coming to grief in Texas as the oil boom deflated.

The giant hedge fund Long Term Capital Management was saved by a club of banks in 1998 under the guidance New York Federal Reserve. The fund blew up after Russia's default, which ravaged its portfolio of Danish, Italian and Spanish bonds.

On both occasions the US economy was in rude good health. The damage was quickly contained.

The implosion of Bear Stearns is more dangerous.

Comments

[slick]

$2/share.
Bottom fishers wiped out.
Ouch.

[John]

slick: Ouch is right. My goodness.