Friday, August 1, 2008

Not-so-Fast Money

In the June 19 blog, I mentioned how the Fast Money wizards all chose Berkshire-Hathaway (BRK) to outperform credit-crisis victim Ambac Financial (ABK) by the end of the year. I vociferously disagreed with them saying that Ambac didn't have much more to lose either technically or fundamentally while the chart of Berkshire showed it to be in the middle of a downward slide. Looking at both charts today I'm going to stick out my tongue at D-Rat, K-Fine & Company and yell “I told 'ya so, nah-nah-nah.” As of this writing, Ambac is up over 90% since its June 19th close of $2.03 while the Berkshire Class A shares (the really, really expensive ones) are down almost 7%.

But I must tip my hat to another CNBC bobble-head, Jim Cramer, who went out on a limb and said that the market put in a bottom on July 15th. If he's right that bodes especially well for Ambac. Technically, the stock appears to have bottomed out at the beginning of July and if you had been a brave soul and picked it up then for a little over a buck, you'd be ecstatic with a near 300% return a month later. The stock was one of the biggest market movers today, gapping up 24% at the open on news that it reduced some of its credit risk. Any more good news involving risk reduction by other credit institutions will really set this battered sector on fire.

Well, there's still five months to go to see if Berkshire can come back and overtake Ambac but if the worst of the credit crisis is over, I certainly wouldn't bet on it.

Have a great weekend! I'm off to the beach for some much needed R & R.

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