The great shares tumble

March 6, 2009
The great shares tumble

After the Dow Jones Industrial Average fell to the lowest since 1996 and Citigroup dropped below US$1 for the first time, investors may find that buying equity in global brand names is cheaper than their products. -- ST PHOTO: NG SOR LUAN
AT RUTH'S Chris Steak House in Manhattan, where a Cowboy Ribeye costs US$47 (S$73), the price of a share in the restaurant chain would cover the 80 cents sales tax on a side order of potatoes au gratin.
A visitor to a Citigroup Inc branch in New York could either pay US$3 to withdraw cash from an automated teller machine or buy three shares of what once was the world's biggest bank by market value.

NOT EVEN WORTH A PAIR OF PANTIES
According to Bloomberg news, a share of Tiffany & Co also doesn't go very far. The world's second-largest luxury jeweler has dropped 56 per cent in 12 months after consumer spending fell in last year's third and fourth quarters.

At US$17.13, the closing price in New York on Thursday, two shares will cover the US$32.51 price, including sales tax, for hand-engraving initials on a US$115 sterling-silver money clip, according to the store's website.
... more
A General Electric Co share, whose price has plunged 80 per cent in the past 12 months, would purchase a 26-watt EnergySmart light bulb that's not supposed to burn out for five years.
After the Dow Jones Industrial Average fell to the lowest since 1996 and Citigroup dropped below US$1 for the first time, investors may find that buying equity in global brand names is cheaper than their products - although not always a better buy, Bloomberg news reported.

'If you put X amount of money into Citi at 99 cents a share, you may end up eventually with zero,' said Brian Sozzi, an analyst at Wall Street Strategies in New York. 'Go to Dollar Tree and put down that 99 cents and you might get a can of soup. You'll have something to eat and a lot fewer headaches.'

The Chesapeake, Virginia-based discount retailer's shares have risen 41 per cent over 12 months as the recession has deepened, compared with a 48 per cent decline for the Standard & Poor's Midcap 400 Index.

Even after the Standard & Poor's 500 Index fell 49 per cent in the past year, stocks may continue to decline, according to Mr Sozzi.

'You trust what the market is trying to tell you,' he said. 'You can't believe what's on these balance sheets.'

The S&P may fall another 40 per cent, based on a price-to- earnings ratio of less than 7 during the trough of the 1981-1982 recession, said Patty Edwards, founder of analytical firm Storehouse Partners LLC in Bellevue, Washington. The S&P was valued at a 10.16 ratio on Thursday, according to data compiled by Bloomberg.

The index fell to the lowest in 13 years yesterday, closing at 682.55.

'Is the problem that stock prices are too low or prices on consumer goods are too high?' Ms Edwards said in an interview. 'I'd love to tell you that this is overdone. The problem is I don't believe that.'

At Thursday's closing price of US$1.86, it would take about four shares of General Motors Corp to buy a US$7.99 Bosch Iridium-Fusion spark plug for a four-cylinder Chevrolet Cobalt, according to AutoZone Inc's website.

A Sunday edition of the New York Times sells on city newsstands for US$4, eight cents less than the cost of one of the publisher's shares. Ruth's Hospitality Group Inc, the Heathrow, Florida-based owner of Ruth's Chris restaurants, dropped to 86 cents on the Nasdaq Stock Market yesterday, the lowest since the chain was taken public in 2005.

Read also:
Wall Street hammered
Citi stock falls under US$1.55