Don’t miss this most recent post on my blog by personal finance specialist Amber Dakar:
Martin D. Weiss, Ph.D. and Mike Larson
The Only Ones Who Warned Ahead of Time
by Amber Dakar
Based on my research, Martin D. Weiss and co-editor Mike Larson are the only analysts that have specifically named nearly all of the major institutions that have suffered a financial failure in this crisis, whether in the form of a forced buyout, a government bailout or outright bankruptcy. Moreover, the failure warnings were issued with no ambiguity and with months of advance lead time, giving the public ample time to escape the dangers.
At the same time, Weiss has provided constructive solutions, guiding hundreds of thousands of investors and savers to the nation’s strongest institutions and safest investments. (For the current lists of weakest and strongest institutions, click here. For information on the safest investments, click here.)
Below are the major institutions that have failed and Weiss’ specific advance warnings.
Bear Stearns failure: On March 14, 2008, the Federal Reserve Bank of New York provided a 28-day $29 billion emergency loan and Bear Stearns signed a merger agreement with JPMorgan Chase in a stock swap worth $2 per share, or less than 10 percent of Bear Stearns’ most current market value. The sale price represented a staggering decline from a peak of $172 per share as late as January 2007 and $93 per share just two months earlier.
Weiss warning: 102 days before the failure, Martin Weiss wrote: Bear Stearns has “sunk its balance sheet even deeper into the hole, with $20.2 billion in dead assets, or 155 percent of its equity; and is threatened with insolvency.”
Source: “Dangerously Close to a Money Panic,” Money and Markets, December 3, 2007.
Lehman Brothers failure: Filed for Chapter 11 bankruptcy on September 15, 2008, a landmark event that froze credit markets globally and began a new era of financial instability.
Weiss warning: 182 days before its failure, Weiss warned that Lehman was vulnerable to the same disaster that struck Bear Stearns. That was not his first warning. In the prior year, he wrote that Lehman was in a “similar predicament as Bear Stearns” because of an even larger, $34.7 billion pile-up of dead assets, or 160 percent of its equity.
Source: “Closer to a Financial Meltdown,” Money and Markets, March 17, 2008; and “Dangerously Close to a Money Panic,” Money and Markets, December 3, 2007.
Fannie Mae failure: Fannie Mae and its sister company, Freddie Mac, were placed under conservatorship of the U.S. government on Sunday, September 7, 2008, with the U.S. Treasury committing to bailout funds of $100 billion for each, the largest bailout for any company in history at that time. Common and preferred shareholders were wiped out.
Weiss warnign: Four years earlier, Weiss wrote “Fannie Mae is already drowning in a sea of debt. It has $34 of debt for every $1 of shareholder equity. That’s big leverage and of the wrong kind. Plus, the company has only one one-hundredths of a penny in cash on hand for every $1 of current bills. Think Fannie Mae can’t go under? Think again.” And 41 months before the failure, Weiss listed Fannie Mae as a stock not to touch with a “ten-foot pole.”
Source: “My Chat With FDR,” Money and Markets, September 24, 2004 and Safe Money Report of April 2005.
Citigroup failure: On November 24, 2008, the U.S. government announced a substantial bailout of Citigroup, devised to rescue the company from bankruptcy.
Weiss warning: On August 6, 2008, 110 days before the failure, Martin Weiss and co-editor Mike Larson broadcast a live webcast naming Citigroup as the number one candidate for bankruptcy. More than 100,000 individuals viewed the broadcast or the recording, and the transcript was distributed to more than 400,000. The following are the banks Weiss listed as candidates for failure on August 6.
And three days before the failure, in Business Week online, Weiss warned, “We’re getting to the critical doomsday question: What happens when a megabank like Citi fails? [Citi] is on the razor’s edge.”
Sources: For the video recording, go to http://www.moneyandmarkets.com/x-list-webinar. For the transcript, go to www.moneyandmarkets.com/x-list-transcript-1 and www.moneyandmarkets.com/x-list-transcript-2. See also November 20, 2008 Business Week article.
Washington Mutual failure: On September 26, 2008, Washington Mutual Inc. filed for Chapter 11 bankruptcy protection from its creditors. In the voluntary petition the company listed assets of $32.9 billion, and debts of $8.2 billion, placing it in the top 10 largest U.S. bankruptcy cases in history.
Weiss warning: On August 6, 2008, 51 days before the failure, Martin Weiss and co-editor Mike Larson broadcast a live webcast also naming Washington Mutual as a candidate for bankruptcy: “Most people think that “big” means “safe.” So the first shock to most people reviewing this list is going to be the simple fact that some of the nation’s very largest banks and thrifts could be vulnerable to financial difficulties: Citibank, Wachovia, Washington Mutual, HSBC.”
In the March 2007 edition of Safe Money Report, Weiss and Larson told readers to avoid Washington Mutual “like the plague.”
In the June 2008 edition of Safe Money Report Weiss and Larson wrote, “If you hold stocks like … Washington Mutual (WM), sell and don’t look back.”
Sources: MoneyandMarkets.com “X” List Webcast Transcipt #1, Safe Money Report of March 2007 and Safe Money Report of June 2008.
Wachovia Buyout: In the third quarter of 2008, Wachovia faced a banking crisis. On September 29, 2008, the FDIC announced that Citigroup would acquire Wachovia Corporation’s banking operations. However, on October 3, 2008, Wells Fargo and Wachovia announced they had agreed to merge in an all-stock transaction, apparently reversing the Citigroup deal. On October 12, the U.S. Federal Reserve approved Wells Fargo’s takeover of the bank, thus forming the largest bank branch arrangement in the United States. The acquisition deal was completed on January 2, 2009.
Weiss warning: Also in their August 6, 2008, webcast, Larson stated that Wachovia “…made the fatal mistake of buying the nation’s largest and most aggressive mortgage lender — Great Western Financial — at the worst possible time. And it’s also got some serious exposure to derivatives.”
Also, the headline for the September 2008 Safe Money Report clearly stated Weiss and Larson’s warning: “Failure possible at Wachovia …”
Sources: MoneyandMarkets.com “X” List Webcast Transcipt #1 and Safe Money Report of September 2008.
General Motors Bailout:
On December 19, 2008, General Motors along with Chrysler were approved to receive $13.4 billion from TARP funds with an additional $4 billion to be made available later. However, despite these enormous efforts, as of mid-February 2009, General Motors began contemplating Chapter 11 bankruptcy.
Weiss warning: On October 11, 2005, Weiss wrote: “GM Headed for Bankruptcy.”
Five months earlier he warned:
… that General Motors is “likely to collapse,” that “the consequences for investors will be enormously far-reaching” and that “millions who depend on the company’s value and retirement income will suffer shattering losses.”
Then, on August 31, he issued a second warning in Money and Markets:
“Delphi, GM’s former parts subsidiary, has already threatened to file for Chapter 11 bankruptcy by October 17 if its union does not provide relief. Don’t be surprised if one day, in the not-too-distant future, General Motors does the same.”
Source: “GM Headed for Bankruptcy” Money and Markets, October 11, 2005; “Losers and Winners of the Oil Boom” Money and Markets, August 31, 2005.
Weiss warnings on other companies: Weiss warned that, due to massive losses and financial failures, investors should not to touch the following companies with a “ten-foot pole”:
Aames Investment
Accredited Home Lenders
Beazer Homes USA
Countrywide Financial
DR Horton
Fannie Mae
Freddie Mac
Fidelity National Financial
Fremont General
General Motors
Golden West Financial
H&R Block
KB Home
MDC Holdings
MGIC Investment
New Century Financial
Novastar Financial
PHH Corp
PMI Group
Pulte Homes
Radian Group
Ryland Group
Toll Brothers
Washington Mutual
Wells Fargo & Company
By yearend 2008, 11 of the 25 companies had filed for bankruptcy, been bailed out, or bought out. Virtually all had suffered severe stock declines, with average losses of 81.3 percent. Source: Safe Money Report of April 2005.
Weiss warnings of 1990s insurance company failures:
A 1994 study by the U.S. Government Accountability Office (GAO) concluded that Weiss Research far outperformed all of the nation’s major rating agencies, including Standard and Poor’s, Moody’s and A.M. Best, in warning of future life and health insurance company failures, including the failures of Executive Life of California, Executive Life of New York, Fidelity Bankers Life, First Capital Life, Mutual Benefit Life of New Jersey, and others. Source: U.S. Government Accountability Office (GAO) — Insurance Ratings: Comparison of Private Agency Ratings for Life/Health Insurers.
Weiss stock research track record:
The Wall Street Journal reported that Weiss’ company’s stock ratings outperformed those issued by all brokers and independent research firms they covered, including J. P. Morgan Chase, Merrill Lynch, Goldman Sachs, Piper Jaffray, Credit Suisse First Boston, Smith Barney, S&P Equity Research, Morgan Stanley, and 14 others. Source: Wall Street Journal, “Stock Research Gets More Reliable,” June 7, 2005.
The Media Praises Weiss’ Foresight
Newsmax: “Martin Weiss’s prediction of the current economic crisis is uncanny.”
The New York Times: Martin Weiss was “the first to see the dangers and say so unambiguously.”
Barron’s: Weiss is “the leader in identifying vulnerable companies.”
Louis Rukeyser: Weiss provides “a tougher service.”
The Los Angeles Times: “Of the 62 publicly traded companies to file
for bankruptcy protection in the first quarter, Weiss said it rated 36 of
them at least three months before their Chapter 11 or Chapter 7 filing, and 34 of those got ‘weak’ or ‘very weak’ investment ratings of D-plus to E-minus … the lowest-rated shares, including US Airways Group Inc., JDS Uniphase Corp. and Xerox Corp., have lost an average of 33.1%, while the highest-rated stocks are up an average of 14.9%.”
Fortune: Weiss delivers “The most comprehensive source of
information.”
Esquire: Weiss’ company is “the one company [that] … provides financial grades free of any conflicts of interest.”
Worth: “Weiss’ record … is so good compared with that of his competitors, nervous buyers need look no further.”
Today’s Librarian: Weiss was “the only [one] to warn the public in advance about the massive insurance company and bank failures that eventually impacted nearly 6 million Americans.”
{ 28 comments… read them below or add one }
There is only one reason I was able to retire at the age of 38, and that is Martin Weiss and the man who is THE 20th century’s pre-eminent financial analyst, Martin’s father. The prediction’s above are not those “pulled out of the air” as most Wall street pundits; i.e., every blind squirrel finds a nut. The intuitive and analytical senses of Martin Weiss are not to questioned as he has “a REAL track record” to prove it. Time and again he and his firm has predicted every major financial shift since I became “financially aware” in 1980. I look forward to doubling my net worth during one of the two worst financial disasters in 150 years. Martin, thank you, Mike Brown
I REALLY RESPECT YOUR COMMAND AND KNOWLEDGE OF ANALYSIS.UNFORTUNATELY I DO NOT HAVE ENOUGH FUND TO SUBSCRIBE YOUR
PUBLICATIONS REGARDING INVESTMENT .VERY SHORTLY I AM EXPECTING THAT I WILL BE ABLE TO FULFIL MY WISH TO JOIN.
THANKS,
ASHWIN
Martin D. Weiss Reply:
April 10th, 2009 at 7:51 AM
Ashwin, thank you warmly for your interest and enthusiasm! But if you have to scrape up funds to join a particular paid-for service we offer, you should seriously consider taking better advantage of the free educaitonal materials we provide WITHOUT spending a penny for the information. Save that money and use it to build your cash nest egg. Then put that money in the safest possible place you can find, such as Treasury bills bought directly from the U.S. government via Treasury Direct online or in one of the institutions on our list of safest banks and thrifts. That way, you pay no subscription fees, no commissions or any other costs. Save that money for a rainy day … or for when the storm is over and you can buy what you want at far lower prices. - Martin
While I’m registered for the Tuesday event, if recent connections mean anything I’ll be unable to catch it. However, like the previous three, I get it after a day or so via your website. I’m very impressed with the quality of your company’s output and your leadership in it. I’ve taken all my advice from you and your colleagues - I stopped the bleeding by tossing equities that used to fuel my 401K (My RRIF) but are fouling the pot now. I’m learning the ‘be carefuls’ of the commodities game, Gold and Oil specifically, and will shortly jump into the game. I’ll be keeping my business in Canada - I think there are plenty of opportunities for me in commodities here. Thanks for your quality help, and good luck in your purposeful activity - You’re a jewel. NG
Forecasting accuracy ?
What about this from 6th November 2008 - http://www.moneyandmarkets.com/big-moolah-to-be-made-27918
The Dow May Have Hit Rock Bottom …
Based on several technical indicators that I monitor, I am willing to go on record with the following statement …
The October 10 nominal — meaning the non-inflation-adjusted — low in the Dow Jones Industrials, at 7,884.82, may well end up as the low for the entire bear market.
THAT BEAR MARKET BOTTOM FORECAST was BUSTED within days.
Martin D. Weiss Reply:
April 10th, 2009 at 7:18 AM
James, you’re referring to an article by another editor. I respect their work and publish it in Money and Markets. However, I do not tell other editors what to write or what to believe. Their opinions and forecasts are entirely their own. - Martin.
I enjoy reading and agree with all your newsletters. Is there a play on the ted spread and crb index? If so, how and when? Thanks for helping me and hopefully U.S.A.
Martin,
Laborious investigative economic research coupled with good ol’horse-sense pays off. Your conclusions are clear and unfortunately prophetic.
Do you forsee a potential for martial law if credit, food and utilities cease? If so, how do we survive, besides storing up canned goods and water?
What effect will diminishing oil and gas (Peak Oil) have on the economy?
Thank you.
Lynne
US taxpayers are restricted to only claim $3000 in losses per year on their income taxes. (This is for losses on stocks.) Losses in excess of this amount can be “carryover”ed to subsequent years, but still limited to $3000 per year.
However, if you invest in an oil well and it is a dry hole, you can claim that whole investment loss in the year it occurs.
This has to be the greatest tax injustice on record!!
How do we get this fixed?
Still awaiting my backordered Ult. Depr. Surv. Guide and am anxious to reposition.
Hope some consideration of short term plans are in it. Not enough time left for long term at 86. We should elect you PRESIDENT.
Martin:
This march/April bear market rally is killing the emerging market short ETF’s - do you see the same melt down coming in emerging markets, as there has been not much reversal given the swine flu scare. I trust your judgment but an impending decline in emerging markets is a question for me now. China seems to be responding.
Hello, is ‘Bankrate’ a reliable ratings source for credit unions and banks? I was unable to find my credit union on your link but found it on Bankrate and was dismayed to see the rating at 3 stars. My credit union told me 6 months ago that they had a 5 star rating.
Thank you.
Martin,
I came across your Money and Markets site by accident about a month ago and was very impressed, so much so that I purchased your book. Your Newsletter and email alerts are the first thing I check in the morning. At this time, we are in the process of getting our finances in order to weather the impending storm. We can’t Thank You Enough for your willingness to share your financial wisdom and insight with everyone who’s willing to listen. There are millions of us who are in debt, have little to stick away or invest and are sinking further into the abyss. But, your sincere concern for our welfare and your willingness to share your knowledge and insight (for free) speaks VOLUMES about the person you are and your firm. You are not using our fear to put even more money in your pocket. Due to that, you will gain a multitude of new loyal customers and faithful readers like us. Your book is wonderful! You explain the complexities of the financial world in terms that the layperson can understand and put into practice. Again, Thank You, Thank You. And God Bless you too.
I am glad Martin is having this dedicated forum. The previous format often has contraditing perspectives which can be confusing at times.
Sir: I appreciate your opinions and your man up in Montanna. Most of the other opinions I can take or leave, but never the less, I’m appreciative of your e mail letter.
I’ve developed the similiar viewpoint of many rural westerners of hoarding various precious metals. It seems all precious metals are equally comfortable being buried with meadow muffins and cattle guarding their whereabouts for future use……silver, gold, lead and brass will all be useful when our phoney leaders cow us into the corner.We pray it happens while we are still young enough to participate in a useful fashion…….
Under subtitle : What to do with Failed Coporate Giants, Monoliths and Mammoths, second paragraph - you list several institutions including Wells Fargo, that could “hit the skids”. Yet Warren Buffet, the self made billionaire owns 7.2% of Wells Fargo and stated in his last year end report that Wells Fargo is sound and he would put 100% of his holdings in it if he had to chose only one stock! Mr Buffet’s reputation as a prudent and knowlegeable investor has survived many crisis and in my humble opinion is not to be questioned. Therefore the question that comes to mind is: Aren’t you going zealously overboard in your assessment of those financial institutions?
Martin,
I put a considerable amount of faith in your diligent work and track record in forecasting the mortgage crisis long before anyone would consider the possibility. Additionally, your original white paper on the mortgage crisis to Congress was a masterpiece providing a window into the future before most of the fallout occured. The mere fact our entire financial system seems to be dependant on real estate values as are the OTC derivatives, should not come as a shock why were are where we are today. This said, it is difficult for me to determine why you believe deflation will win out over hyperinflation. It is agreed that there must come a limit at some point the bailouts won’t work anymore. However, there are a lot of 401Ks Congress has apparantely considered tapping at some point too. Maybe we will end up in the middle somewhere? In short, my two most trusted analysts are 180 degrees apart on their philosophy. The only problem is that they have both been historically right!
Martin,
For sure, I know how YOUR going make it through this mess! With my, and others subscriptions! Based on your cataclysmic forbodings I’m seriously considering closing my three (3) Jumbo IRA CD’s, forgoing current earned intrest, paying my tax lliability, and putting the residue in my pillow case! Why would I do that? Because I beleive you have the answer for YOU, but I’m damn sure you don’t have an for me! With front end back end loads Gold, ETF’s, and other customary investment vehicles offer much greater risk than any potential rewards I’m willing to undertake!This Time, I think the Robber Barrons have taken us to an UNKNOWN fork in the road! I think I’ll just Set up CAMP and see what happens!
Thanks!
Paul
Martin,
I like to read you every day. though all u ‘r analyst are great but i like to read your blogs more. what do you think about S& P in next 3- 6 months. because there are rallies and investment like reverse etf are 52 week low.
thanks
a chopra
Hi,
I am totally new to investing money and just wanted your opinion on the value or danger of investing in precious metal stocks or gold and silver certificates at this time. If the stock market crashes will they retain value or be hit by paniced sell offs? Or will they retain their value and rise as investers flee to percieved safer commodities? Would it be prudent to wait for the crash and buy precious metals then and perhaps other stocks?
Steve
Dear Martin,
I am one of very few people I know who made 10% more on my investments, during the same period the Dow Jones fell 40%. I have read you and similar authors for many years. Thank you for opening my mind to the critcal thinking necessary to survive these types of markets. Oh by the way, the other people who did well during these tough times are all friends I directed to Martin Weiss. Thanks again… David
Where do I go to read your answer to my question and opinion on Morgan Stanley Smith Barney. Are my concerns illegit and is Vanguard one of the the best places to be right now?
I would like to see your reply to charles banks on 4/ll
With all due respect, it strikes me as inadmissible to omit the name of Lyndon H. LaRouche from the honor roll of those who have, with clarity, precision and true courage, pointed out the fact that we have sold ourselves into slavery to a bunch of usurious counterfeiters.
So now that this oversight is corrected,
I remain,
Yours Truly,
Rick DeLano
WHere is your list of the safe Banks for treasury bills?
I hope for the sake of this country that the Feds fall and fall hard for being too big. I will support and root for Ron Paul and others who are on the crusade to abolish the Federal Reserve who has gotten us into this Depression and even deeper into it with their illusion of recovery as an excuse for their excessive debt spending. I thank all of you in Weiss Research for giving me the forsight to get my money out of AXA Financial’s 401K plan and into precious metals before I lost all my money in the crash. My losses were limited to just 20% whereas my colleagues who left it in AXA lost 60% of their retirement and even with this “rally” they are still at a 30% to 40% loss although they only admit 10% but I know better.
I do not believe that we are heading into inflation, yet. No jobs, prices falling, economies around the world contracting, at the greatest rate ever, lead to deflation. I wanted to know what Martin thought about this.
CL