Siusic Dot Com

It caught my attention when I found the stock price of new century finance tumble more than 70 percent yesterday. I used

to work for Encore Credit Corporation whose two cofounders came out from New Century Finance. Some of my former coworkers at Encore Credit went to New Century Finance when Encore Credit went under. The stock price of Encore Credit dropped from $7 to about $1.50 at the time I left but New Century was still trading at above $45. I thought New Century was a much better managed company. It turns out may not be true. It was hard to image it would drop to $5 bucks in 6 months.

The subprime mortgage industry is hit real hard in this house market down turn. I am thinking it is probably be a good time to invest in this industry. I have heard disaster always spells for opportunity. I remember when the dot com bubble burst many internet company were traded at a few dollars. Some of them were facing bankruptcy, for instance, GIGAMEDIA LTD (NASDAQ:GIGM), NETEASE.COM (NASDAQ:NTES), SINA CORPORATION (NASDAQ:SINA) and SOHU.COM INC (NASDAQ:SOHU) Now they are all traded at 10 times of the price 5 years ago.

If we look back after 5 years we will probably see the same curve for the companies in the subprime mortgage industry. It is just very hard to see which one is able to weather through this down turn. Here are the graphs for NEW and ECR and a few others in the industry

New Century Finance (NEW)

Encore Credit Corp (ECR)

Fremont General Corporation (FMT)

Novastar Financial Inc (NFI)

Accredited Home Lenders (LEND)

HOME FEDERAL BANCORP(HOME)

Updated information:
Encore Credit Corp was de-listed from NYSE and is now trading on bulletin board under symbol ECRO.OB.
New Century Finanace was suspended on NYSE and is now trading over the counter under symbol NEWC.PK.

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