When the whole subprime mess blew up and financial stocks went down, I saw it as an opportunity.
“The big banks are too big to go out of business” is what I said to myself. I recently recalled the last time I said that. It was just before I bought Enron after the stock had cratered. Those who forget history are doomed to repeat it.
Anyway, I jumped in and loaded up on financial stocks and started making plans to buy my M6. One of the stocks I bought was Washington Mutual, also known as WAMU. The stock has gone steadily down and last week it was finally put out of it’s misery. The FDIC went over to Seattle in the middle of the night and shot the poor bastard. JP Morgan gets the pelt, i.e. all the assets and the FDIC, i.e. the taxpayers (including me) gets to dispose of the rest of the worthless carcass. As for the shareholders and bondholders, they get bubkus. They are wiped out. So, I’m actually getting screwed twice – once as a shareholder and second as a taxpayer. But I’m not whining or looking for a bailout. Went into it with eyes wide open.
There is a private equity firm, TPG, that invested $1.35 billion in April. They, too, are wiped out. Of course, in their case most of the money, if not all of it, belongs to their investors. What TPG loses is their fees, which are bound to be substantial and a hit to their pride.
So what does this all mean. Even the big boys get stung once in a while. As for me, I took my car into the shop for some work. Have a feeling I’ll be hanging on to it for a few more years.