Lately, it seems like everywhere you turn, someone is crowing that they saw the current financial crisis coming. George Soros. John Paulson. Steve Eisman. Armando Falcon. There are so many of them, you wonder who didn't see it coming. The answer is, well, most people. After the jump, have a look back at some of the stocks chosen in the annual investment guides of some leading publications (including, alas, this one) as smart buys in 2008.
Jon Birger, senior writer, Fortune’s Investors Guide 2008
What he said then: “Question: What do you call it when an $8 billion asset write-down translates into a $30 billion loss in market cap? Answer: an overreaction … Smart investors should buy [Merrill Lynch] stock before everyone else comes to their senses.”
What we know now: Merrill agreed to sell itself Bank of America to avoid a Lehman-like flameout in a deal closing in January. Meanwhile, Merrill's shares plummeted 77 percent.
Elaine Garzarelli, president of Garzarelli Capital, in Business Week's Investment Outlook 2008
What she said then: “Garzarelli is advising investors to buy some of the most beaten-down stocks, including those of giant financial institutions such as Lehman Brothers, Bear Stearns, and Merrill Lynch. What would cause her to turn bearish? Not much. ‘Our indicators are extremely bullish.’”
What we know now: As of January 1, none of these firms will still exist. Lehman went bankrupt. JPMorgan and Chase bought Bear Stearns in a fire sale. We all know Merrill’s fate.
Sarah Ketterer, CEO of Causeway Capital Management in Fortune’s Investors Guide 2008
What she said then: Q: “Sarah, where to you see value?” A: “There are [financial firms] that have been tainted by this huge credit problem … Fannie Mae and Freddie Mac have been pummeled. Our stress-test analysis indicates those stocks are at bargain basement prices.”
What we know now: The federal government placed these two lenders under “conservatorship” in September. By then, shares of Fannie and Freddie had lost 90 percent of their value.
Jon Birger, senior writer, in Fortune’s Investors Guide 2008
What he said then: “CEO Jeffrey Immelt has been leading a successful makeover at General Electric, though you wouldn't know it from GE’s flaccid stock price. Our bet is that in a stormy market investors will gravitate toward the ultimate blue chip.”
What we know now: GE’s stock price has tumbled 55 percent percent this year and it’s on the verge of losing its triple-A credit rating. Analysts are nervous about its financial-services division, which provides about half of GE’s earnings.
Archie MacAllaster, chairman of MacAllaster Pitfield MacKay in Barron’s 2008 Roundtable
What he said then:“A lot of people think Bank of America will cut its dividend, but I don't think there's a chance in the world. I think they'll raise it this year; they have raised it a little in each of the past 20 to 25 years. My target price for the stock is $55.”
What we know now: BofA may not have gone the way of Lehman. But investors who sold when MacAllaster told them to buy were shrewd. The bank’s share price now hovers around $14, and it has slashed its dividend in half.
One of our own: James J. Cramer, contributing editor, in his "Future of Business" column in New York Magazine
What he said then: "Goldman Sachs makes more money than every other brokerage firm in New York combined and finishes the year at $300 a share. Not a prediction — an inevitability.”
What we know now: In mid-December, Goldman Sachs’ share price was $78. The firm also announced a $2.2 billion quarterly loss, its first since going public nine years ago.