WorldCom Files Bankruptcy! Please say this is the end of the market crash of 2002!

Discussion in 'The Late Night Cafe (off-topic)' started by shawtycat, Jul 22, 2002.

  1. shawtycat

    shawtycat

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    WorldCom files largest bankruptcy ever

    Nation's No. 2 long-distance company in Chapter 11 -- largest with $107 billion in assets.
    July 21, 2002: 11:19 PM EDT
    By Luisa Beltran, CNN/Money staff writer




    NEW YORK (CNN/Money) - WorldCom, the nation's No. 2 long distance phone company, filed for Chapter 11 bankruptcy protection late Sunday, nearly one month after it revealed that it had improperly booked $3.9 billion in expenses.

    WorldCom, crushed by its $41 billion debt load, made its filing in the Southern District of New York. With $107 billion in assets, WorldCom's bankruptcy is the largest in United States history, dwarfing that of Enron Corp. The Houston-based energy trader listed $63.4 billion in assets when it filed Chapter 11 late last year. WorldCom's non-U.S. units were not included in the filing.

    For the full story: WorldCom Files Largest Bankruptcy In US History

    What are your thoughts? Should we pull our money out? Will the market continue to crash? :( How is this affecting your part of the country/world?

    Jodi
     
  2. katbalou

    katbalou

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    dear shawty kat,
    sometimes you just have to hang on for the ride. my money is in mutual funds that are very diversified, i've seen them go up and down in the past few years, but they still pay better interest(dividends) than a savings account. i think the best thing to do is have a good broker and call him/her for advice.
    kat
     
  3. shawtycat

    shawtycat

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    Lets just say that Im worried, anxious, on the edge of my seat biting my nails, since I have 3 kids to put through college. :( My best friend (who is also my kids god father) is a stock broker and he's lost 80k so far. Unfortunately, I haven't spoken to him since this started. Im sure hes trying to fix his portfolio.

    Do you think this is a good opportunity to buy a few stocks or should we wait until this thing has leveled off? Hopefully this is the end of the bear and the market will start to recover.
     
  4. katbalou

    katbalou

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    if i had extra cash, i think i'd be looking at blue chip stocks to see what they are doing, such as att, certain utilities companies that have been around a long time and have good track records and good management practices.
    as for the kids and college, i have two that i'm saving for also. one wants to save me money by going to annapolis and becoming a marine and the older one, who will be going in 2003, has decided that (by getting lousy marks all through high school) he will have to find money for college the same way his mom did. by busting his hump! if the kids really want to further their education they'll find a way to do it.
    kat
     
  5. chiffonade

    chiffonade

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    Would love to tell you it's the end...but it's probably not. If you take all the large companies in the world and have someone with a magnifying glass examine all their books, there will be additional sacrifices made to the gods of ethics. Yes, some will come out squeaky clean and those will be the ones to make the money. Ironically, those are the ones who should have been making it all along.

    This crisis is similar to the Nixon Government - everyone does it but he was unfortunate enough to get caught.
     
  6. phatch

    phatch Moderator Staff Member

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    I think we're going to see lots more bankruptcies and accounting failures. I think the market will continue to trend down some more. But it's a great time to buy. You'll see some short term losses probably, but playing the market for the short term is a great way to lose your shirt.

    I'm in it for the long haul and not too worried. The majority of the gains of the last 20 years have occurred on just 60 days of trading, at least according to my broker. There's no way to predict when those happen so you just get on for the ride and play the averages.

    Phil
     
  7. alexia

    alexia

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    Anyone remember the childhood tale, "The Emperor has No Clothes"?

    Shawtycat, My sense is that the market over the long haul will be stagnant, though it may have a few feints of recovery. And even if it does regain its previous peak, it will not advance too much from it. Markets are depressed in other parts of the world as well. Foreign investors are moving their money out. Our national debt has resurfaced with a vengence. The trade deficit is humongous. The dollar has lost value.

    Our economy remains, fortunately, relatively strong. We have insurance on our bank accounts even were some banks to fail (unlike in the 20's) , unemployment is still relatively low historically, and consumers are still buying houses and spending money.

    If I had young children, I would be putting my money into residential investment real estate. Middle level housing in dependable locations (1-4 family properties). But study up on it first, learn how to evaluate whether the property is worth its money in terms of rental income. Forget the issue of appreciation if it does not generate income now. Consider appreciation as icing on the cake- delightful but not essential. Restrain yourself in your use of that income and use it ONLY to buy more good properties. You will generate real wealth that way, not paper profits. (That's why it's called "real" estate.) The problem in the stock market came because people thought a rising tide will raise all boats no matter how ignorant, inept, or larcenous the captain and pilot might be. People all over this country listened to their "betters" and got conned. They gambled. Educate yourself about something you can understand and make and keep your money with real things.

    We've let the "monied" class invite us to a banquet and serve us packaged foods filled with artificial substances, chemicals, little nutrition, and a bad after taste.

    edit: I just checked the D-J after writing the above at 11:44 EST and found it at 7811.58 - in other words down after a morning up up and down. For those who are interested, the NYTimes keeps a running graph on the day's trading at:
    http://www.nytimes.com/
     
  8. shawtycat

    shawtycat

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    After watching CNN and a few other channels for the past month, Ive heard a few things.

    1. The dot coms were valued on the stock market at many times what their actual profits were. I think he said we were paying more than the stock was worth.

    2. Alot of companies on the stock market are giving employee stock options (microsoft does the most of this). They say that the companies are actually losing money this way. And I cant remember what was said about where/what the companies were reporting this as.

    I think it was Ben Stein that said a few days ago that the Stock Market was really a bubble that was going to burst sometime. And he believes that it still has a way to drop before it levels off. My hubby agrees with him on that.

    I also know, from many of the seniors around my neighborhood, that many have lost or seen a significant drop in their retirement savings. I see more and more seniors taking jobs now. :(
     
  9. phatch

    phatch Moderator Staff Member

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    The most important aspect of any money choice is your risk tolerance.

    Real estate is good but very time intensive. Another property choice is a RIT (Real Estate Investment Trust). Consult a broker for those. They are basically a property based mutual fund. With a RIT, you can buy in to property in small monthly amounts without assuming the financing and debt risk. Cash it out if you want when you have enough to buy the property you want.

    Property too, can tank. And you can get stuck with liability on old clean up such as asbestos and lead. Diversification is key.

    And if you want some post tax shelter, Variable, Universal Life with a Guaranteed Wash Loan Provision is really cool. But have a good broker and accountant to use their fine tooth combs to find the good ones.

    It's good to have some bonds too as you have a guaranteed growth and payout. Their risk is they may not outearn inflation. Corporate Bond owners are paid before other debts and stock owners in a bankruptcy. Both government and corporate bonds have their value.

    A word on bank insurance. The government association as the insurer doesn't just look at your statement and pay you that amount. They have 17 years or so to make the payment(s) at any rate they choose. And only up to the limited amount ($100K?). Money Markets are not insured. You never want more in all your accounts with a single bank to be over that limit. Spread your money around if you have that much.

    Diversification does not mean just in the stock market.

    Phil
     
  10. panini

    panini

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    ShawtyCat
    If you're thinking along the lines of children then start the 529's as soon as you can. We're fortunate in Tx. We have the Texas Tomorrow Fund. You lock your child in at let say 10,000. when they are five. You pay that 10,000 over the next 12 years and the state will pay the average tuition at any state school or transfer the funds out of state. Some states have these programs although the 529 is more flexible in the distribution of funds such as housing, food, etc.
    Kat,
    I'd like to know what mutuals your in. I'm in semi conservitive and have taken a hit since the begining of the year. The trend here is to buy in now when things are on sale but I think the overall picture is not looking at more then 7% over the next five years.
    MY Formula, start your own business and build your net worth. You can't just depend on anyone else. BUT!!, I just bought a bunch of K Mart stock last week. I like companies that restructures, gets rid of all their lease properties, unload most of the fat cats sitting on top and start fresh with a couple of billion liquid $$. So what the **** do I know?LOL
     
  11. marmalady

    marmalady

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    In the past 4 years, since my son's accident, I've learned more about the stock market than I ever care to know (I'm a firm believer of keeping your money under your mattress - at least you know where it is!).

    We established a special needs trust for Matt, with the insurance settlement and donations from family/friends. We have an accountant whom we trust, and on his advice, put 2/3 of the money in a split value/growth stock portfolio with Sanford Bernstein, and 1/3 into tax-free bonds and munis with Charles Schwab.

    The bond funds are all doing well, but we've lost about 15% value in the stock portfolio, and I get more and more freaked every day. My thoughts are to pull some of the money from the stock portfolio and put it into short term bonds and munis, then when (if?) the market recovers more, turn it back into stocks.

    Talked with both the accountant and our rep from Bernstein; accountant is in the process of looking over our 'asset allocation' to see if that's a good idea. And of course, the Bernstein rep says, just hold on, it'll get better.

    I just want to do the right thing; this is my son's money for life that I'm responsible for, and it's weighing pretty heavily on me right now.

    Any thoughts from those of you more experienced folks out there? Thanks!
     
  12. peachcreek

    peachcreek

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    About 3 weeks ago, I accidently threw my BANK DEPOSIT in the mailbox with a big sheaf of letters. Then I left town for a few days and it wasn't till we got back that I realized the mistake. The post office had called and left messages, etc. So a week and a half goes by and I finally track down my deposit. And go pick it up. Apoligized for the delay and the mistake, I made the comment that keeping my money accidently at the post office, not only was it was safer, but had also outperformed the stock market.....
     
  13. panini

    panini

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    Marm,
    If anyone knew I'm sure they would tell ya. It's a crap shoot at this point. I know this is not what you want to hear since it's your sons money. I'm kinda in the same boat with my employee funds. We have taken quite a hit since the beginning of the year. They are now not only losing the monies I put in but theirs also. At least you can talk with your guys. My guy is so busy with people getting out but more so with people getting in with "sale" prices.I opted to ladder some cd's which I grabbed through my guy at some pretty decent interest. Course one is in the Bank of PuertoRicoLOL but they are insured.
    I think if your portfolio is geared towards conservative you will see some sort of recovery, but I think it will be slow.
    I hope things turn soon so you don't have this hanging over you. If I had a dollar for every time my guy told me to hold on since Jan. .....I understand long term, but how far away will be my break even.
    Like I said previously, I just bought kmart, So what the h--- do I know. In fact they just reported yesterday that they lost ,I don't know how many more millions.Yes! CRAZY! bought some more!
    I'm banking that the 2 billion they are sitting on will help them through a good holiday and I will make a few bucks.How does that happen, they go bankrupt and have 2 billion liquid?!!!!!
    ****! health inspector!gtg
     
  14. blueyedgourmet

    blueyedgourmet

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    hmmmmmmm just thought I would throw my 2 cents worth in (yes I still have that to rub together hehehe) got this great investment strategy sent to me in my email......go figure!!

    For those who invest!!!!





    * If you had bought $1000.00 worth of Nortel stock one year ago, it would
    now be worth $49.00.
    * With Enron, you would have $16.50 of the original $1,000.00.
    * With WorldCom, you would have less than $5.00 left.
    * If you had bought $1,000.00 worth of Budweiser (the beer, not the stock)
    one year ago, drank all the beer, then turned in the cans for the 10 cent
    deposit, you would have $214.00.


    And besides, you can end up with a great beer gut like mine.



    hehehe just thought I'd lighten up the mood......I work in the telecommunications industry in Canada.......and my company just announced 6,000 layoffs , so far I have been able to escape it but could be a matter of time......
     
  15. shawtycat

    shawtycat

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    This is depressing....the dow lost 489 points yesterday. If I didnt need to watch the market Id switch the channel to cartoon network just to get away.

    Do you think that if the corporate con men got sent to prison that the stock market would rebound?? :confused: That's what everyone is saying and I dont see how that will help.

    I keep waiting to see who else is gonna say "Oops forgot to mention but we lost 20 billion dollars and its the accountant's fault" :( Im sure everyone is waiting too. I sure as heck didn't trust corporate america but I REALLY don't trust them now. How do we know if they are telling the truth THIS TIME about their earnings??

    Jodi
     
  16. panini

    panini

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    Jodi,
    This can't be blamed on corp exec's. This is all on the hands of the investors. This counrty pumped billions of dollars into companies they new nothing about. ****, at one point years ago by BIL (stock broker, retired at 42) said lets throw your business out there and see what happens. I asked if people would invest, he said sure you'll get a couple of million. I asked, what would I do with the moneies? He just shrugged his shoulders and said spend it.
    I've made a few dollars in the market but the whole time I knew that the companies I was putting money into were not worth a fraction of there holdings.
    My BIL always told me to invest for my old age in whats around you which back then was beer, cigarettes , diet coke,etc.
    So basically it's going to even out a lot of the exaggerations in some of the money belts of companies, but the reality will be healthy for the economics of the country. You should not loose sleep or get sick from this, things will start to rise but at a much slower pace. There won't be to many get rich quick investments anymore, but that's a good thing, no?
    I know it's great for small business, now is the time if anyone wanted to start their own business to do it. I myself have had numerous people approach me wanting to invest in our business to grow. People seem to be wanting to invest in small and mom an pop places where they can keep closer contact with their investment.
    keep watching cartoon network,tv land also good:D
    Jeff
     
  17. ziggy

    ziggy

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    Jodi, the market GAINED 489 yesterday. I wouldn't be convinced or dream to claim that it's turned any corners but what the heck a gain is a gain.
     
  18. shawtycat

    shawtycat

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    Ah geez Zig! I lost a dang day again. :( Shoot...now Im not sure WHICH day that was. :confused: I think that was tuesday that it lost 400 and something points. It went up to 8 thou and then slipped back to 7 thou and something. I wont know what its at today until I turn on my TV.

    BTW Panini: You are right. I guess you can say everyone contributed. Especially with the dot gones. This will probably teach some of us to investigate carefully but even THAT may not be enough if they are cooking the books.

    Ah to heck with it...Ill leave it alone but Im stuffin my mattress with what ive got now.
     
  19. kylew

    kylew

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    Jodi - Take a deeeeeep cleansing breath :) Here's my two cents and where it's coming from. I work for the largest diversified finacial services company in the world and while I am no longer working as a financial consultant, I am trained and licensed as one :)

    I would avoid watching the news and checking the level of the Dow Jones Industrial Average. It's just 30 stocks and the news media makes its living selling panic. The stock market is a cyclical beast. As such, focusing on short term events, like these last few weeks is very dangerous. To cite an industry chestnut, time in the market is more important than timing the market. My numbers are rough but, if you had invested $1 in the S&P 500 in 1927 and let it sit there, by 1997 it would have been worth around $210. If you had tried to time the market, taking your money out when you though it was going down and vice versa, over that same 70 years, and missed the top 10 days, your $1 would have grown into $11! I'm not smart enough to know when those 10 days are going to occur over 70 years :)

    I am biased because I work in the industry. I would caution against trying to invest and plan for your childrens education by yourself. Think of it like someone coming into your restaurant and wanting to cook their own meal :) Find a financial services professional that you like and trust and then trust them!

    PS..
    "1. The dot coms were valued on the stock market at many times what their actual profits were. I think he said we were paying more than the stock was worth. "

    This is very true. This refers to a stocks P/E (Price/Earnings) Ratio. How much a stock costs relative to how much it will earn per share. If a company earned $1 per share and the stock was selling for $10 it would have a P/E ratio of 10. People would be paying "10 times earnings" for the stock. In the hay day of Internet Investing madness people were paying 3000 times what a company was earning, if they were earning anything!