Why Did My Stock Just Tumble?
The markets fell big, but your stock took an even bigger a nosedive. Don't panic, though. First, let's see whether it had good reason to fall. Sometimes, panic-fueled drops can make excellent buying opportunities. Here's the latest crop of cratered stocks that could provide a possibility for profit.
CAPS Rating(out of 5)
|Deer Consumer Products (NAS: DEER)|
|Credit Suisse (NYS: CS)|
|ING (NYS: ING)|
With the Dow Jones Industrial Average (INDEX: ^DJI) plummeting 101 points yesterday as the employment picture remains exceptionally weak, stocks that went down harder are pretty big deals.
It was a short seller saying he had incontrovertible proof that Harbin Electric (NAS: HRBN) was a fraud -- and, by association, Deer Consumer Products was, too -- and the evidence was turned over to the SEC and the stock exchanges asking that its shares be halted. The linkage to Harbin was what sunk Deer yesterday, though Harbin itself hardly moved.
But as it has in the past, Deer isn't taking the mudslinging lightly and is pursuing legal action against the trader known as Alfred Little. After the market's close, Deer issued a press release announcing its legal pursuits and revealing that on Aug. 29, New York's Supreme Court granted Deer's motion to serve him with the summons and complaint in the New York Litigation by email, which it did. That may explain why Deer bounced back 8%.
CAPS All-Stars remain highly suspect of the Chinese kitchen-gadget maker, with almost two-thirds of those weighing in thinking it will underperform the broad market averages. But add Deer Consumer Products to the Fools' My Watchlist feature if you'd rather not have a stock caught in the crosshairs in your real-life portfolio.
The devil's in the details
George Soros says it would be like the Lehmann Brothers failure, but with "the potential to be a lot worse." He's talking about the failure of any of Europe's major banking institutions, as the continent tries to stave off panic runs of the type that ended up dooming Lehman.
The EU needs to bail out Greece -- again -- as well as prop up a bunch of failing banks. And if there's not solidarity shown in the face of the crisis, it's feared that the whole system will come tumbling down. No doubt that's weighing on the shares of Switzerland's Credit Suisse and Dutch financial-services giant ING, but they also have their own issues to contend with.
Credit Suisse is facing a Friday deadline for the Swiss government to hand over to the United States information on Americans suspected of tax cheating by using Swiss banks. The Swiss gave in on UBS (NYS: UBS) , which was similarly situated in the wake of the financial crisis, but now a year on and a new tax treaty undermining Swiss secrecy laws is not guaranteed. Yet it's likely that some accommodations will be made.
For its part, ING is racing to pay off the last installment of 3 billion euros for the bailout it received in 2008 as it attempts to shore up its capital position as required under new, stricter guidelines. However, that means it won't be giving its pension fund additional money to keep up with cost-of-living increases.
Some 17,000 retirees count on ING to pay for the increases so as to keep up with inflation and higher prices, but the banking and insurance giant hasn't made a payment to the fund since 2009.
ING is also selling off its online banking unit to Capital One Financial (NYS: COF) for $9 billion in cash and stock as part of the agreement it reached with the Dutch government when it was bailed out. Some critics of the deal fear Capital One will become "too big to fail" if it gets hold of ING Online.
CAPS members are worried about the financial capabilities of Credit Suisse, though they have a much more positive outlook for ING. Barely half of the All-Stars rating the Swiss bank think it can offer up market-beating returns, while 95% find the Dutch financial-services company much better positioned to exceed the broad indexes.
CAPS member bitterpete views ING as a turnaround story that has its best years in front of it.
Sure the whole financial sector is beat down right now, but that provides opportunity, right? And, although they have had their troubles, it looks like the folks at ING are doing the right things for long term growth. It is going to take a while, but this stock will rebound.
Let us know on ING's CAPS page whether you agree there's still opportunity on its head, and add Credit Suisse to the Fool's new portfolio tracker if you think it's an open secret that it is headed lower still.
Ready for a resurrection
Just because your stock has taken a beating, that doesn't mean it's going to roll over and die. Markets are known for overreacting. A closer look on Motley Fool CAPS at what's happened to your stock can give you an edge over other investors who just react to the market's lead. You can decide for yourself whether it's ready to come back from the dead.
At the time this article was published Fool contributor Rich Duprey holds no position in any company mentioned. Check out his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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