Time to throw in the towel on WaMu?

The beleaguered bank just can't catch a break. Today Standard & Poor's Rating Services downgraded WaMu's counterparty credit rating to "CCC" from "BB-" further miring it in junk status. The reasoning being a split of the bank on any sale, as vultures are keen on snatching the strong deposit base while staying as far away as possible from the toxic mortgage assets.

As seen in the chart, WaMu's stock price (NYSE: WM) has fallen along with the confidence in the bank, dropping another $0.94 to a 52-week low of $2.26. Uncoincentally, this battering has led them to increase interest rates on online savings to 4.00% and on 12 month CDs to 5.00% in attempts to shore up capital.



While these are GREAT rates given current market conditions (who wouldn't want guaranteed returns in this financial crisis!) how safe is your money? Sure its FDIC insured on deposits up to $100,000 but with all these bailouts and government takeovers, but how long will the FDIC's printing press be available until it breaks down? Here's a great article on reasons to stay with WaMu from MyMoneyBlog, but seeing that nearly 60% of my cash is sitting with WaMu, I still am pretty uneasy with leaving my money in there.

I have an online savings account and an 8-Month CD (which I opened for 4.25% APY) and the trigger is itchin for me to withdraw the money. IndyMac is the closest example to what would happen should WaMu fail and after reading some stories from those customers (via SlickDeals) seems like it took 4-5 weeks for money to be returned. So seeing that a bailout of WaMu would be greater than IndyMac, I can't imagine how long my money would be locked away NOT earning interest.

So do I forgo the attractive interest rates and settle for a lower rate but more security? I'm leaning towards a move back to EmigrantDirect at 3.00%. So far I'm undecided, but I'll wait for this month's interest to be deposited and then I'll make a decision.

Happy rate hunting!

One Love,

Look

Interest Rate Roundup

Rates have come up a tad bit in the last month. Here's the current roundup:

WaMu Online Savings: 3.75%

WaMu 8 month CD: 4.25%

WaMu 12 month CD: 4.50%

Emigrant Direct: 3.00%

ING Direct 3.00%

HSBC Direct: 3.50%

E-Loan Savings: 3.01%

E-Loan 6 month CD: 4.06%

So my in my rate chasing, I moved my matured E-Loan CD into WaMu and dumped it into an 8 month CD. I've been socking most of my savings into the online savings account as well. Due to the turbulence in the market I'm reluctant to move everything into WaMu, so I still maintain my other account at Emigrant Direct. While these rates are better than what we've been seeing, the forecast looks bleak. About a week or two after I opened the 8 month CD, WaMu was offering a 12 month, 5.00% CD which I would have definitely jumped on. I jumped the gun too early, then waited to late and now they've dropped the 12 month rate to 4.50%. So unfortunately looks like there won't be another uptick in savings rates anytime soon :(

One Love,

Look

K.O.'d: Good Money Gone Bad

For most of us, having millions of dollars is a pipedream. For others it's a dream squandered.

Recently released at http://illicitohio.illicitohio.com/tyson are pictures of one of the former houses owned by heavyweight champ "Iron Mike" Tyson. Having earned a reported $300M over his career, he lived quite the lavish lifestlye and spent money like there was no tomorrow. The pictures from the site, however, show how the mighty have fallen. Falling into bankruptcy the "Baddest Man on the Planet's" house went from bachelor pad to plain empty. His residence in Ohio was abanadoned years ago, but suprisingly still looks well preserved. Check out the pictures after the jump. One of my favorite views is of the 10,000 sq. ft. indoor swimming pool complete with a sundae bar.

O the parties they must have had… Anywho, if you were rich would you want a mansion like this? What would you do with $300M?

Mo' Money, Mo' Problems.

One Love,

Look

Game Day at Shea

Went to the Mets vs. Cardinals game tonight, with the Amazin's coming out victorious of course. Of course it's the last season at Shea stadium (and at Yankee Stadium incidentally) and its a bit sad to see them tear down the stadium. Citi field looms in the background of Shea and beckons a new era for the Mets.

Its sad to see that sports are so often referred to as a business. Whatever happened to "for the love of the game?" Undoubtedly the new stadium will offer less seating and more luxury suites for those who can pay. That means more revenue for the team, but less accessibility for average fans.

What happens if the economy doesn't rebound in the coming years? Less luxury purchasers? Companies cutting back on client outings. Ill timed I suppose. Also how is Citibank feeling about paying all those millions for the naming rights to the new Mets stadium? After all the pain its been going through, wonder if the person responsible for that decision got the ax.

S'all for now.

One Love,
Look

Financial Crisis: The Broken American Dream

It's been quite some time since my last post and much has transpired. The housing market in the U.S. has collapsed with Countrywide Bank being bought by Bank of America, BearStearns the fifth-largest investment bank collapsed and was absorbed by J.P. Morgan, Freddie Mac & Fannie Mae have tumbled as a result of the housing debacle forcing government guarantees, IndyMac was taken over by the FDIC, Lehman Brothers is facing the way of BearStearns, S&L's like WaMu and Wachovia have had their balance sheets come into question. So where does this leave little investors like us?

They say don't panic. Easier said than done. Since the turmoil began last August, my portfolio has seen double-digit percentage declines and the bleeding has still not stopped. Following the "buy low, sell high" adage, I've bolstered these falling positions by purchasing additional shares. While I'm getting these shares at a "discount" this strategy will only bear fruit if a rebound occurs. So since I'm young I'm holding my breathe and blindly sticking to my guns. That's not to say I'm totally exposed to the market. I still have a considerable cash balance and just recently invested in a bond fund to diversify away from my stock exposure. Jumping ship and selling shares seems like the wrong thing to do. Interest rates are at all time lows so there leaves growth possibilities very low. I guess the only thing it would do is to stop the losses. This may be good for someone at/near retirement, but my time horizon is too long to have my money just sit and do nothing. No risk, no reward right?

So what happens if a rebound doesn't occur and we enter a prolonged bear market recession? Well the buy & hold strategies, the dollar cost-averaging and the long term views will end up destroying my retirement plan. No social security to count on, a fledgling 401k. What's a boy to do? Time will tell. I'll suck it up until I can take it no longer and decide what my next plan of action is.

So for those rate chasers, a mini-update. IndyMac failed so I wouldn't recommend pouring cash there (seeing that it might be a process to get it back), but here's the latest rates:

• HSBC - 3.5%
• WaMu - 3.3%
• ING Direct - 3.0%
• EmigrantDirect - 2.75%
• Citi - 2.65%

Good luck investors!

One Love,
Look

2008 Honda Accord

Wasn't planning on buying a car anytime soon, but unfortunately wrecking our 2001 Acura Integra = me purchasing a 2008 Honda Accord for the folks.

Parents are going with the top of the line EX-L V6 w/ Navi trim. Lucky me!

Been using some online sites to get some quotes including: http://www.edmunds.com/, http://www.autobytel.com/, http://www.cars.com/ and have gotten the hassle of salesmen calling me at work all day.

Current outlook is for a pricepoint of ~$29,000 OTD, including all fees, destination, other junk. Hopefully the price will come down in a bit with the summer driving season and the intro of the new 2009 models.

I'll keep ya posted.

One Love,

Look