On Sunday, JPMorgan Chase said that it will acquire rival Bear Stearns for a bargain-basement $236.2 million, or $2 a share. It is unbelievable that the once 5th largest investment banks in the world went into total collapse in just a few days.
Furthermore, the stock price went from around $90 in February to a low of $2.84 on March 17. JPMorgan is happy that it bought Bear Stearns for such a low price, but many Bear Stearns employees lost their entire life savings because they were too dependent on the stock.
Many people are still worried and are affected by the credit crisis. Due to this news, many stocks went down again. If the Fed is going to reduce the interest rate by a full percentage to 2%, then we’ll be certain that the economy is going further down. Looks like it is bargain hunting day on Tuesday again, where many stocks have been “discounted”.
Also, just one advice, there is no point of buying BSC now hoping for a rebound since the most JPMorgan is going to pay is $2 a share. Do not buy just because it is cheap. IMO, the financials in the US is a mess right now. It is like a bomb has been planted and waiting to be exploded. The question is, who is going to be the next victim?
