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Do not be Bearish on Bear Stearns

          While many of the stocks I review are of very cheap and volatile nature, there a few which I invest in which do not take these factors into account. Consider the broker Bear Stearns (BSC). Usually when you trade through any broker, the specialist or analyst there is always willing to give advice regarding its own stock. In the case of Bear Stearns, I would argue that it is actually beneficial that investors heed such advice and buy some shares of the company regardless the price.
          Speaking in terms of technical analysis, since 1986 when the company released its IPO, the stock has done nothing but increase and grow at high levels. The company's price has increased nearly 250% its first 10 years, 400% the next five years, 110% from 2000 to 2005, and just from 2005 to the present, an increase of nearly 50%. Not even superstar brokers like Goldman Sachs and Morgan Stanley can attest to such growth and stability as each has periods during its stock's history when there were times of high fluctuation. Furthermore through the whole duration since putting the stock on the market, Bear Stearns has never had a dramatic sell off and is currently at the highest levels in its history. Typically, at such high prices I would argue against buying such a stock, but with such amazing growth and stability, there is no avoiding such power and potential.
          While some investors may argue the pricing and other areas of technical analysis are a fluke, Bear Stearns supports such data with its fundamentals. Supporting high earnings and revenue with incredible positive margins quarter after quarter, Bear Stearns is still growing and has the potential to reach incredible numbers with its price. The company is also a dividend stock, when such a commodity is rare for an equity that grows this large. With such luxuries, Bear Stearns represents the ability to be any investor's driving mechanism in their portfolio. With unprecedented resistance against most economic indicators, the nature of Bear Stearns represents a stock which can be bought at any level almost guaranteeing a long term profit. While such a stock may not be suited for short term risky investors, Bear Stearns almost always promises a large increase in capital gains for investors looking to hold on to their shares who share the virtue of patience.

-Dennis Biray
August 20th, 2006

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