Mick Weinstein The Week's Best Stock Blogs

When JPMorgan Chase upped its offer for troubled investment bank Bear Stearns to $10 a share early this week, market bloggers were quick to recognize the larger implications of this shotgun wedding (underscored when Bear chairman James Cayne and his wife sold their entire stake in the company for a "mere" $61 million) at the Fed's behest.

A Crisis Averted, Not Solved

• DealBreaker summarized the latest development well, concluding that "[s]peculators, bond-holders and dissident shareholders have been greatly rewarded for owning Bear Stearns" stock since last week's initial $2 offer.

• "If [Morgan's new offer] does not confirm that Morgan's initial offer amounted to highway robbery, I don't know what does," says Vahan Janjigian. "With Morgan's new offer the government is still assuming most of the risk by guaranteeing Bear's toxic mortgages."

• Wall St. veteran Roger Ehrenberg is troubled by the latest events, which create significant value for equity holders on the Fed's dime: "Bottom line: BSC would be in Chapter 11 if not for the Fed's intervention ... conveying the equity holders any value at this point is simply writing a check, courtesy of the U.S. taxpayer. This sets an awful precedent that the Fed won't soon live down, to the detriment of both the U.S. taxpayer and the financial markets in general."

• Michael Steinhardt finds market action since the Bear Stearns fiasco to be surprisingly optimistic, yet believes that very lack of punishment is troubling: "It rests on the hope, belief and happiness that the Fed and Treasury will stop at nothing to prevent the system they failed to regulate to suffer any of the extreme downsides of capitalism.... I'll be optimistic when I believe the bad stuff has either played out or has been solved. For now, a crisis was averted ... but the crisis was not solved."

• "The Prince of Wall Street" concurs -- he believes that by meddling in the Bear Stearns mess, "the Fed has entered a quagmire of competing interests." The regulatory environment governing the financial sector will end up dramatically different: "While many on Wall Street may like the safety that the Fed provides as a lender of last resort, many on Wall Street will not like the changes that are coming."

• The options market suggests that $10 a share may not be the final offer, notes David Gaffen. Yet Gaffen adds that some investment bankers say they wouldn't bet on JPMorgan "sweetening the pot again, or another buyer swooping in to take over beleaguered Bear."

• Andy Kern is stuck on the how and why of the debacle. The first lesson that came to his mind was straight from Warren Buffett: "Don't buy what you can't understand." Kern: "Was Bear a simple and understandable business? Of course not. Their investments were so complex that it is not unlikely that no single individual at the firm understood them all. If this is true, then it is even less likely that ordinary investors understood them."

• But venture capitalist and tech/finance commentator Paul Kedrosky doesn't think it's reasonable to hold investment banks such as Bear Stearns fully accountable for inflating the credit bubble that created this mess: "Shorting the bubble would have been disastrous; avoiding the real estate sector would have had your results trail your competitors disastrously."

An ETF Phoenix from the Ashes?

Amidst its troubles this week, Bear Stearns was somehow able to launch the first actively managed ETF, the Bear Stearns Current Yield Fund (YYY). YYY invests in short-term fixed income instruments denominated in U.S. dollars -- learn more about it on Bear's website. Until now, exchange traded funds were (at least on paper) passive vehicles designed to capture the performance of particular indexes.

• Murray Coleman of Index Universe has a nice overview of the new fund and its broader implications, noting that Bear managed to beat out a long list of larger industry players rushing into what they hope is a gold mine in ETF investing.

• Rob Wherry of SmartMoney explains that YYY is "the first offering to combine the strengths of a fund manager with the trading flexibility of an ETF... If [actively managed ETFs] do wind up delivering on the hype, they could steal away money that could've gone to funds that charge high fees or are experiencing ... poor performance."

• ETF analyst Tom Lydon wonders if "investors [will] go for it. If there was any skepticism about an actively managed fund, will the Bear Stearns name on this one hurt it?"

Commodities Crumble, and a Satellite Radio Hook-up

Commodity prices recently pulled back sharply, following an extended period of price gains. Bloggers were aiming to explain the phenomenon and the investment implications, with a variety of answers:

• Is the entire commodities investment theme "broken down by the side of the road like an old car driving up a mountain in the summer. You know, ‘cause it overheated?" asks portfolio manager Roger Nusbaum. Nusbaum's a longtime believer in commodity exposure, since it "add[s] in a little zig to my stock market zag," but believes a commodities position should be moderate: "With a 3 or 4 or 5 percent weighting the consequences for being wrong are much less, which makes managing a portfolio much easier."

• Eben Esterhuizen sees speculators as the reason behind the volatility, estimating that it'll continue throughout the year. If a recession kicks in, prices will move lower -- history "rejects the notion that emerging market growth will continue to support commodity prices during a U.S. recession."

Finally, the Department of Justice approved the merger of Sirius Satellite Radio and XM Satellite Radio Holdings this week. The decision pleased stockholders in the two companies, but is there hope in the long run for satellite radio as a business?

• Erick Schonfeld of TechCrunch asks if combining the two money-losing companies is enough to ensure their success: "Satellite radio is a superior product to terrestrial radio, but it still faces two main challenges: it is not free, and you really only need it in your car. With the increasing diversity of music choices on the Web (both legal and not) and the ubiquity of iPods, terrestrial radio is the least of Sirius/XM's worries."

• The M&A Researcher is surprised that no conditions were attached to the merger. "Not unprecedented, but this does border on inexplicable."

• Mike Caggeso from Money Morning wonders "whether now is a time to jump in [to these stocks] with both feet ... or whether the surge will cool on the heels of valuations soon-to-be posted by analysts, who no doubt are bleary-eyed and caffeine-drunk from crunching the numbers through the night." Caggeso concludes that much will depend on what stipulations the FCC attaches.