The ETFC Debacle

[yoyomama]

Well, you know the rest of the story. I got hit with a little of it unfortunately.

Do you think they'll survive...would you ride it out - or are they done?

It's at $1.89 right now, what do you think it opens at?

[yoyomama]

Okay so I'm a newbie & learning a few tough lessons unfortunately but this is such a crock.

He burns the share holders & then posts this.

[yoyomama]

The ETFC Debacle

Could somebody explain to me in laymen's terms what exactly happened a few nights ago...as in why and how it happened specifically? Obviously it's legal to burn the shares like that... and I apologize for my naivete

[Karel]

(I merged two threads, no need to start so many)

Well, the company is losing quite a lot of money and this will not change in the foreseeable future. 2010 is still expected to be a red year. This is enough for most investors to leave the stock.

Secondly, the company has lost so much money that its reserves are compromised. Banks need reserves and are obliged to keep them above a certain level. Etrade needs to attract investors, who will strike a hard deal, seeing that Etrade is in trouble and not a nice investment at all. Which means that Etrade will be forced to give a premium on a new stock issue, and therefore needs to issue more stocks, to get its reserves back up. This will mean a significant loss of participation for current stock holders, who are now leaving the stock in droves.

Thirdly, its credit ratings will likely be lowered, so that inter-bank loans and bonds will be priced with higher interest rates, cutting further into the Etrade bottom line.

Frankly, the projected earnings for Etrade this quarter were a loss of .40/share. This has been a long time coming. Why would anyone be interested? Unless you are a chartist with an eye for a day or swing trade, or an investor betting on the short side.

Regards,

Karel

[yoyomama]

Why would anyone be interested? Unless you are a chartist with an eye for a day or swing trade, or an investor betting on the short side.

Hey Karel...thanks for the thread merger, sorry about that.

Also appreciate the explanation...I wasn't looking long term, just to survive the night! (forced smile)

[Karel]

Hey Karel...thanks for the thread merger, sorry about that.

Also appreciate the explanation...I wan'ts looking long term, just to survive the night! (forced smile)

Hi yoyomama,

I know it is easy to be right after the fact. But it is also risky to go against the trend. Only a day trader or swing trader who feels/knows/sees/has calculated that the trend is temporarily overextended would have been justified going long ETFC in the recent past (and would be in the near future). And only with a tight stop. IIC might be able to give better advice here.

Regards,

Karel

[yoyomama]

Thanks...I got lucky with C, hanging on to it & very unlucky with E#$@!

A tight stop wouldn't have helped me because they stuck it to everybody After Market so that wouldn't have held up.

Of course everybody that knew something was up... was dumping the stock the last few minutes & the stop would have helped there. Newbie just wanted to make it to the morning.

To be continued.

[Karel]

OK, better luck (and a better plan) next time!

And I see you posted a picture wider than 700 pixels, which officially is not appreciated, as we would like the right column (yes, the one with the ads) to remain visible on screens 1024 pixels wide.

Regards,

Karel

[yoyomama]

Sorry...I thought I resized to 640 before I posted?
I've been doing that for years on messageboards. Maybe it didn't take.

[Stuck]

(I merged two threads, no need to start so many)

Well, the company is losing quite a lot of money and this will not change in the foreseeable future. 2010 is still expected to be a red year. This is enough for most investors to leave the stock.

Secondly, the company has lost so much money that its reserves are compromised. Banks need reserves and are obliged to keep them above a certain level. Etrade needs to attract investors, who will strike a hard deal, seeing that Etrade is in trouble and not a nice investment at all. Which means that Etrade will be forced to give a premium on a new stock issue, and therefore needs to issue more stocks, to get its reserves back up. This will mean a significant loss of participation for current stock holders, who are now leaving the stock in droves.

Thirdly, its credit ratings will likely be lowered, so that inter-bank loans and bonds will be priced with higher interest rates, cutting further into the Etrade bottom line.

Frankly, the projected earnings for Etrade this quarter were a loss of .40/share. This has been a long time coming. Why would anyone be interested? Unless you are a chartist with an eye for a day or swing trade, or an investor betting on the short side.

Regards,

Karel

I trade with soctia iTrade (it was called e-trade when I signed up, so I assume they are still related). is there a risk in putting your money there for investing if they go bankrupt? or is the funds guaranteed like FDIC deposits?
This is bad news

[Stuck]

Thanks...I got lucky with C, hanging on to it & very unlucky with E#$@!

A tight stop wouldn't have helped me because they stuck it to everybody After Market so that wouldn't have held up.

Of course everybody that knew something was up... was dumping the stock the last few minutes & the stop would have helped there. Newbie just wanted to make it to the morning.

To be continued.

C?? VERY risky my friend. Take your money to other banks aspa imo.

Avoid Bank of America too. best ones are JPM and GS.

[yoyomama]

Yeah I'm stupid enough that I might trade C for a few minutes here & there but I'm not holding it close to overnight anymore...especially this week!

ETFC...I've been snake bitten by them, I'm scared to hold any position overnight these days

[yoyomama]

I trade with soctia iTrade (it was called e-trade when I signed up, so I assume they are still related). is there a risk in putting your money there for investing if they go bankrupt? or is the funds guaranteed like FDIC deposits?
This is bad news

I think they have this coverage:

http://www.sipc.org/