Merrill's Bad Surprise, Countrywide, & A Sell

I know that I'm not alone on this, but I swear that Merrill Lynch had said just a couple of weeks ago that their write down would be about $4.5 billion. Then when they announced in their earnings report that they wrote down $7.9 billion instead.

What the, huh? Now this is just wild to me. How could they be that far off in their initial guidance? CEO Stan O'Neal said,

"As of the date we preannounced, the amount we were indicating was within the range of evaluations and as we looked at it and went back and examined it in the context of why -- where the markets are, we believe it's appropriate to be at the conservative end of the range," O'Neal said."

Well, that is great. But why not be conservative before now? A write down is just devaluing your own assets. No money has changed hands. Merrill just doesn't think their assets are valued as much as they used to.

This just goes to show that Merrill didn't hedge it's risks nearly as well as the other big investment banks. It also makes me think that the much bally-hooed bank bailout fund might not be as imminent as commonly thought.

If the bailout fund was a go, Merrill would not have written down this much. They would have had another outlet for their "bad" assets. Not good.

Countrywide, the downtrodden and beaten mortgage lender continues it's slide. Today the stock fell another 8%. If closed today under $14. The company reports their earnings (or the lack thereof) on Friday. If the company misses, which I have a sneaky feeling it will, look for the stock to around the $12 mark.

And it is getting to be that time of the year...I might be a little early but it's time to sell off your losers and hangers-on for tax purposes. My eyes are set on Quest Diagnostics (DXG). The company reported less than stellar earnings. It has gone nowhere overall and down over 4.5% today. I am selling the stock at a loss of 2.9% since I added it to my portfolio.