The rumors that sent shares of Countrywide Financial (NYSE: CFC) up more than 50% yesterday were extraordinarily indistinct. nearly laughably so, according to some reports. From the Washington Post coverage:

The deal, rumored for months, could come “very soon,” although it could be delayed or fall apart all together, the Wall Street Journal reported on its web site, citing public familiar with the matter.

So humans familiar with the matter — whatever that means — say that a deal could happen very soon, but it might take longer, and it might not happen it all.

It reminds me of the old joke about the weatherman saying “It might rain tomorrow.” It might. It might not. But a prediction that is true no matter what happens is pretty much worthless.

UPDATE: Now Bank of America (NYSE: BAC) has agreed to acquire Countrywide for $4 billion. That’s a problem for

public who bought Countrywide yesterday, as it’s a reduction of about $500 million to the company’s market cap at the shut of trading yesterday. The Countrywide deal is a rare take-under, as shares are trading down more than 15% on the announcement of the deal.

How should investors have played Countrywide on the speculation of a deal? Stay absent! It’s all rumors and, to quote the best investment advice John Bogle ever received, “Nobody knows nothin’.” apart from for some citizens who do: There are reports of suspicious trading in Countrywide calls, indicating possible insider trading.

But that’s illegal. The bottom line is that: whether you did know something about what would happen with Countrywide, you are, by definition, an insider, and it’s illegal for you to trade on it. whether you didn’t, you were just speculating.

Original post by Zac Bissonnette

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