Minyan Mailbag: Options Expensing
Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next column with that very intent.
Don't GAAP rules mandating options expensing come on line 15 June? IBM (IBM) announced the impact of options expensing on earnings and continues to be pummeled.
Is this priced into the general market concerning stock prices? Doubt it.
I don't think it is priced in. I think the market is in denial. We bought IBM volatility very cheaply for this reason as well as pension issues. IBM has had a stealth crash just like many other big companies one by one: General Motors (GM), Wal-Mart (WMT), Ford (F), Microsoft (MSFT), etc.
The largest component of the SP 500 is financial stocks. After Friday's break-down in the transports, this is really the key sector left to see how the broader averages will perform.
I think Minyans know where I stand. We see a continued ratcheting up of volatility with fits and starts. The cancer seems to be in phase 2 now.
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