Market Wrap-Up for Nov.23 (C, DE, MS, JPM, BAC, GRPN, NFLX, more)

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Market watchers pointed to a poor showing in the auction of German government bonds for today's market weakness. This development has certainly added another layer to the crisis of confidence in the Eurozone.

The financials were once again selling off today, including shares of Morgan Stanley ( MS ), J.P. Morgan ( JPM ), Citigroup ( C ), and Bank of America ( BAC ). BAC is now heading toward the $5 mark, and it wouldn't surprise me a bit if the company were to plan a reverse split, as its embattled competitor Citigroup did back in May. That split failed to put a floor under Citigroup shares, however.

This development shows, thankfully, that investors realize a reverse split is nothing more than an accounting maneuver. Until a company's fundamentals begin to turn up, a stock's direction - reverse split or not - is most likely downward. As I've said many times, we remain on the sidelines when it comes to the financials in general. Our stance contrasts the view of many mainstream pundits who claim there's plenty of "value" in the sector.

The selling in the market was pretty widespread, but one name bucked the downward trend today. Deere & Co. ( DE ) reported a solid earnings report this morning and was one of the very few names ending the day in the green.

Groupon and the IPO Game

I couldn't help but notice the share price of Groupon ( GRPN ) break its IPO syndicate price of $20 a share today (closing at $16.95). If you remember, the stock debuted on Nov. 7 amidst plenty of controversy surrounding the company's accounting methods and recent personnel shuffling. The stock ran up on its first day toward the $30 level, but it's been a steady drip down from there.

Although many skeptics in the business media warned investors about the company's prospects, plenty of retail investors still put their hard-earned capital in the stock. That gamble is certainly not working out for the "hot money" players.

Netflix Fiasco Highlights the Dark Side of Share Buybacks

Netflix ( NFLX ) has spent over $1 billion on share repurchases since 2007, all the while depleting the company's cash hoard. Much of those shares were bought back as the stock climbed toward the $300 level, prior to its implosion down below $70.

What happened to all that money the company squandered buying back shares? It's gone to a place I like to call "share buyback heaven."

And as I have pointed out in the past, company insiders often benefit the most from buybacks. They may have lucrative stock options that need to be exercised, and guess what? The company itself buys those shares from the insiders.

This development from Netflix further reinforces my belief that share buybacks are a waste of company money and more often than not, wind up hurting investors. In contrast, the idea of repurchasing shares is often sold to investors as a purely positive thing - both by the business media and the company itself. Then a situation like Netflix comes along and people get up in arms. I only wish people were more skeptical about buybacks in general. Maybe then, companies would use the money to boost their dividend payouts rather than wasting it buying back shares at high prices prior to a big drop.

One last note on Netflix, the company announced a secondary offering of $200 million in new shares at $70 each, and another $200 million in bonds convertible to stock at $85.80. The timing couldn't have been any worse, as shareholders argued why the company didn't sell shares when the stock was trading more than 4 times higher ($300) a few months ago.

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Thanksgiving Newsletter Will be Delivered Tomorrow!

Thanks for reading everybody, and I'd like to wish everyone a Happy Thanksgiving. Be safe traveling if you are on the road. I will be sending out a newsletter tomorrow, so be sure to check it out if you are home or when you finish up eating for the day!

Just a reminder: Friday is a half-day session for the markets, but we will be covering the action as usual, and will also send out our normal newsletter.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Stocks

Referenced Stocks: BAC , C , DE , GRPN , JPM

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