Getting Personal
Penny stocks
Question: Thank you for your insightful financial advice on Marketplace. I enjoy your commentaries.
I had WM in an individual stock portfolio. Embarrassed - yes...
I was wondering if it would be better to: A. Sell all that stock and take the tax savings this year?, or B. Hang on to the new WAMUQ penny shares and hope that they will eventually make it back to around $12.00 a share? I'm thinking answer A because I don't anticipate those shares reaching those levels again for a long, long, long time. What's your two cents? Eric
Answer: Look at it this way: you have plenty of company owning Washington Mutual. You can also tell people that you owned one of the worst investments of 2008.
But then again, I don't understand the lure of penny stocks. I can't figure out why anyone would playing the penny stock market, especially in the case of a company like WaMu since there isn't any real remaining stock market value to it. There are plenty of good blue chip stocks to invest in. The value of WaMu is now with its new owner--JPMorgan Chase--that took over the company in a deal engineered by the Fderal Despoit Insurance Corp.
So, as far as I am concerned, I see the real value of the these shares for you is taking it as a tax loss.
12/02/08 by Chris FarrellSearch
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Comments (3)
December 2, 2008 2:32 PM PT
Mr. Farrell seems to be espousing the typical company line in his answer here.
"The value of WaMu is now with its new owner--JPMorgan Chase--that took over the company in a deal engineered by the Fderal Despoit Insurance Corp..."
Mr. Farrell is correct when he asserts that Washington Mutual's banking operations were seized by the FDIC and sold to JP Morgan in late September (for the absurdly nominal price of $1.9 billion) and their stock currently has little value.
He is incorrect, however when he implies that there is no value left in WMI. Even cursory due diligence would reveal that WMI (Washington Mutual's holding company) currently has $4.4 billion in cash available to it in a JP Morgan bank account (accruing interest every day). It also has over $20 billion in net operating losses it can use to it's benefit as well as additional assets in the form of subsidiaries and real estate, the true value of which is currently unknown.
Added to this, Texas Pacific Group (TPG)-- one of Washington Mutual's largest investors-- lost catastrophic amounts of money when the FDIC seized the bank. It lost money on behalf of teacher's pensions. TPG will not sit quietly and will be looking for compensation on behalf of the common shareholders.
I'm tired of desultory remarks by "financial gurus" who use Washington Mutual and it's shareholders as a punchline. What I would like to see is real discourse in the popular press about the current state of this bankruptcy case. I, along with thousands of other investors, would like to hear educated opinions from tax lawyers and bankruptcy experts who are willing to do some research.
Perhaps there's even someone who's brave enough to look at their balance sheet and see for him or herself that what I am saying is absolutely true.
For people who have lost their life savings, Mr. Farrell, I don't believe that is too much to ask.
Very best,
Justin
December 2, 2008 5:55 PM PT
Please let Justin's words resonate through your minds and take a closer look. There are more of us shyly optimistic, waiting, then "espousing" the evilness born to this.
Do yourself a favor and dig deeper, and realize what is truly unfolding.
Dominic: responding to Justin Hammond | RespondDecember 3, 2008 9:07 AM PT
I have researched this stock quote a bit as well. I think it is up for debate whether this company has value or not. I would also like to see a better researched answer.