Big day for Countrywide

Here's another example of the wacky world of Wall Street. This morning, Countrywide Financial, the troubled Calabasas mortgage lender, reported a third-quarter loss of $1.2 billion - its first quarterly loss in 25 years - and the stock finished the day up 32.4 percent, to $17.30. Why? Because Countrywide said it expects to return to profitability in the current fourth quarter, and despite the dubiousness of that claim, investors want to think it means the housing market is starting to turn around. Well, maybe not all investors. From the WSJ:

"On one hand, they are trading at a big discount to book value, but what exactly is the book value?" said Steven Persky, chief executive of Dalton Investments LLC, a Los Angeles investment-management firm specializing in distressed assets. "The risk is that the market is very illiquid," he said, "and it's hard to know the real value of the assets on its books because the credit quality of those assets is under question."