Random Firings from My Brain

April 23, 2008

Reason # Whatever our economy is going down the tubes

Filed under: Uncategorized — Daniel @ 10:40 am

I own some stock in Rockwell Automation (for some reason) and today I noticed that the share price had dropped over $5 before noon. This represented over a $100 loss for me(mostly insignificant since this is not exactly a retire to live on the beach investment) so I did a little digging. Turns out that while revenues for the company rose 17% for the second quarter, net income is down significantly. I’m still trying to determine why but a spokesperson for the company said something about currency impacts (the unstable dollar?). So basically the company grows but because margins are off (and lets face it, the net profit was still $142 million) the stock is now being dumped like its poison. In all likelihood, its being sold off because major holders want to sell it off before other major holders have a chance. Oh Warren Buffet, where is your buy and hold mentality when we need it? Thats the way the world is, institutions only hold onto a stock to make a quick buck, which leads to people trading stock like they think they’re an expert trader, which makes the brokerages tons of money and on the other side this stock trading behavior leads companies to chase short term net gains to raise the stock price enough that when the CEO’s stock options vest he can cash out and take his pre-negotiated severance pay and retire to the beach (bastard, why didn’t I get an MBA from Harvard or even Stanford, I want my Golden Parachute!). Since I started writing this Rockwell Automation (ROK) has dropped another $0.30 per share. I had planned on cashing out my individual stock holdings at the beginning of the year and putting them in a Roth IRA but the stock market tanked on Jan 3 and I never got a chance(my portfolio lost about $1000 in January). Right now I am holding, hoping that it will go back up to its Dec 31 value but with crap like this happening I guess I shouldn’t hold my breath.

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