Monday Oct 20 2014
IBM stock price is tanking in pre market trading Monday. The reason is lower earnings and declining prospects, world wide.
This is simply anohter puzzle piece falling into place. This suggests thw five year bull market in stocks is ending.
IBM was THE blue chip stock when I first became a broker in 1973. Every portfolio contained IBM if you had a growth fixation. Louis Gerstner transformed IBM from a computer maker to solutions provider. Apparently the market for solutions is falling.
This is another example of why we study the reporting of per share earnings in ACCT 3312. As nervousness rises, investors react quickly to bad news. IBM is still making lots of money, just not as fast as investors would wish, and so the stock price falls.
Lesson, stock prices can and will fall as they did in 1973-74 evenwhen companies are making good money.
Yahoo;s Mayer goes to Plan B. The new female CEO for Yahoo is now looking to invest money frrom the sale of assets. The idea is to latch onto a growth vehicle. Hmm, how many times did Dell and MSFT try this and fail? With the stock market prospects down, this looks even more challenging.
Professor Elam 
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