A whole lot of Irrational Exuberance Part II

General Motors lost $39 billions?
Most of the $39 billions posted by GM today is accounting NON-CASH charges which is related to the write down of deferred tax assets on GM's book. The loss in GMAC is what concerned me. But even then, GM sold 51% stake of GMAC to Cerberus Group before the subrpime mess got messier. Smart move?
The automotive segment of GM actually made $122 mil during the quarter, driven by strong solid performance results from GM Latin America and GM Asia-Pacific segment. Surprise?

Toyota Motors trades at $200 bil market cap vs. GM $19.5 bil market cap. GM is on my list of stocks to buy if it get cheaper. Too many reasons to list in a blog post. You will definitely see a report on TM vs. GM from me soon.

Time Warner (AOL) mess
AOL division profit decline continued to drag down TWX's results. Disappointing to say the least, TWX replaced Dick Parson with Jeff Bewekes. Shareholders are probably looking at some sort of asset(s) sales in the near future (hopefully, someone would take AOL off TWX's hands). I must say, Steve Case (former CEO of AOL) sold the top. The man is a genius in destroying shareholders' value and enriching his own. I was tricked by Yahoo thinking that TWX is trading at P/E of 11. The company affirmed that guidance of $1.07 for 2007, which make the company trades at P/E of 17. No value here even if they sell AOL out (who will buy that crap?). Good luck to Jeff Bewekes. TWX is off my list.

The Big Red Umbrella?
I did not know that Citigroup sold it's big red umbrella logo to the St.Paul Travelers Group. Looks like Citigroup really need a big red umbrella now. They saved for rainy days, but it has been pouring every day since. On top of that, Citigroup's CDS is trading at the lowest of investment grade level, coupled with a downgrade from Fitch recently, the cost of capital at Citi must be rising. Citigroup is also stuck with $55 bil of CDOs and $135 bil of Level 3 assets (assets that don't have readily market value). I smelled more write downs to come. I'm staying away. If Citi trades at book value, another $10-15 bil write down will bring down another $10-15 bil market cap. That's roughly 10% of Citi $171 bil market cap. Citigroup, I will be waiting for you on the sideline.

I can't believe the automaker is the most attractive out of my list. Talk about Irrationality!

A whole lot of Irrational Exuberance

Google at $700?
Google has gained 40% market cap over the last month or so. That is a gain of $90 billion. It is safe for me to say that the G phone factor has been priced into the stock. And Google has yet to bid on the spectrum.

http://techland.blogs.fortune.cnn.com/2007/11/06/verizon-and-att-no-shows-at-the-google-party/?source=yahoo_quote

Verizon, on the other hand, is trading at $120 bil market cap. This $120 billion market cap includes Verizon landline, DSL, Fiber Optics and Verizon Wireless. It boggled me as to how Google can find $90 billion off an already competitive wireless market.

$1 Trillion Company? Really?
Petro-China is now worth $1 trillion dollar. That's more than 2x what Exxon-Mobile is trading at. If the Chinese aren't selling gas at 2x the price what Exxon get in the U.S., how can you explain the 2x market cap? And if we (U.S.) is complaining about $3.0 a gallon gasoline, how can the Chinese afford $6.0 a gallon when their GDP/Capita is one of the lowest in the world. I'm perplexedly confused.

More Financials Carnage
So Chuck Prince finally quitted, and Citigroup's shareholders might finally get a relief. Not so fast. In the same day as they announced Chuck's resignation, Citi mentioned that it will write down another $8 billion +. Citigroup has lost about $100 bil market cap since the beginning of the year. I'm more than glad to announce that Citigroup will be in my "soon-to-be-too-cheap-and-attractive-value" list. (put that down with TWX)


It's Tuesday morning, I'm jobless and all I care about is $100 a barrel crude oil. Perplexed and Confused? I'm too.