Bank Stocks

[Amuthini]

Are bank stocks a good deal now? Share prices of the big 5 seem to have been hit hard recently by the subprime mortgage fiasco.... some of them have already posted what they will be losing, so is it a good time to jump in on financials?

[Thalo]

There's always one of the big 5 that gets hit along with all the rest, even though they have hardly any subprime exposure. Then, just as at the end of the last fiscal quarter, they report record earnings and reiterate no subprime exposure and their shareprice soars. I won't say which one it is because that would be giving a stock tip. Also, I don't want to be seen as guaranteeing the future value of a particular stock. But, to answer your question, there's at least one great bargain out there that has been unfairly punished as of late.

[15-20_God]

of the 5, and I say 5......not 6, it has almost always been a good trade to buy the laggard. at least for me.

[pitz]

My personal theory is that the Canadian banks have mostly escaped the carnage that is unfolding in the US, due to their extremely conservative lending practices.

So at 12X earnings...picking up the big-5 probably isn't a bad idea right now.

[brunes]

Personally I think the US banks, having been hit the hardest, are where the true bargains are right now. Look at this one I just got for example, yield is at 6% now, down 20% in the past 3 months alone. This is one of the 5 largest corporations in the world, it sure as hell is not going anywhere. I may see a bit more downside in the near term but in the long term (or even over the next year) you're sure to see a very healthy gain.

[superdsi]

http://www.redflagdeals.com/forums/showthread.php?t=511869

Read quickly before Mr. Negative gets on the thread.

Due to the butterflies's projected migration path....
(oops I am writng like someone else)

U.S bank/brokerages stocks are a good choice.

I was right about mortage rates (someone wrote they were going to the moon) and I am right about U.S bank stocks. I think Citigroup went up 450% the last time it hit rough patch 10 years ago.

[Bullseye]

http://www.redflagdeals.com/forums/showthread.php?t=511869

Read quickly before Mr. Negative gets on the thread.

Due to the butterflies's projected migration path....
(oops I am writng like someone else)

U.S bank/brokerages stocks are a good choice.

I was right about mortage rates (someone wrote they were going to the moon) and I am right about U.S bank stocks. I think Citigroup went up 450% the last time it hit rough patch 10 years ago.

Whoever this person is, I'm guessing they must have spanked you good in some other thread(s), for you to be so bitter.

[konfusion666]

This is one of the 5 largest corporations in the world, it sure as hell is not going anywhere.

What exactly does that prove?

Wasn't Arthur Andersen the biggest of the Big 5 accounting firms before it collapsed in 2001?

[brunes]

What exactly does that prove?

Wasn't Arthur Andersen the biggest of the Big 5 accounting firms before it collapsed in 2001?

"Biggest of the big 5 accounting firms" means jack squat. I am talking in the fortune 5. If a fortune 5 company like this "unnamed bank" went abruptly bankrupt because of a few bad loans whatever you are investing in would be irrelevant because the resulting economic collapse would put the whole first world into a second great depression.

This bank has over 1.5 TRILLION in managed assets - a few hundred million in write downs is absolutely meaningless. It is way oversold due to retail investor panic. As usual, look to the Oracle for guidance in these kinda of situations - he is jumping on all the US financial firms.

You don't make money following the sheep, you make it by being the wolf.

[pitz]

"Biggest of the big 5 accounting firms" means jack squat. I am talking in the fortune 5. If a fortune 5 company like this "unnamed bank" went abruptly bankrupt because of a few bad loans whatever you are investing in would be irrelevant because the resulting economic collapse would put the whole first world into a second great depression.


Shareholders in Air Canada lost everything, yet the airline didn't skip a beat of flying. Shareholders in Saskatchewan Wheat Pool were wiped out, yet grain shipments continued as normal. Yes, lots of people get downsized, salaries fall, and businesses are 'right-sized', but its not the end of the world, and it would certainly not be a great depression if suddenly bankers actually had to work for a living and be paid proportional to their skills and value they add to the economy.

Overcapacity in the banking industry just means that the weaker players with less efficient business models get squeezed out.

If C pays its people $500k/year each, and another bank comes along and can compete by paying their employees $250k/year each, then guess which one will survive ;).


This bank has over 1.5 TRILLION in managed assets - a few hundred million in write downs is absolutely meaningless. It is way oversold due to


C has 1.89 TRILLION in assets, and 1.76 TRILLION in liabilities. (as of 31-Dec-06, source (http://finance.yahoo.com/q/bs?s=C&annual))

That doesn't leave a big margin of error, especially since they can write down their assets, but they can't write down their liabilities. And since the liabilities are short-term, but the assets are long-term, there is a significant duration mismatch.

Also, there is off-balance-sheet exposure through SIVs and SPE's that hasn't been completely quantified in the market



retail investor panic. As usual, look to the Oracle for guidance in these kinda of situations - he is jumping on all the US financial firms.


But this downturn isn't being led by retail investors, its being led by institutions who are taking advice from the likes of CIBC and other major institutions.


You don't make money following the sheep, you make it by being the wolf.

Sometimes being a contrarian is good, but sometimes you need to know when to avoid the falling knives.

Good luck...

[konfusion666]

C has 1.89 TRILLION in assets, and 1.76 TRILLION in liabilities. (as of 31-Dec-06, source (http://finance.yahoo.com/q/bs?s=C&annual))

Ouch! I hope nobody in this thread was talking about "C" when they used terms like "that unnamed bank". :D

[pitz]

Ouch! I hope nobody in this thread was talking about "C" when they used terms like "that unnamed bank". :D


C, JPM, BAC, WM, WB -- they're all the same. Of course, you really don't know their entire exposure, because lots of it is off-balance-sheet in the form of loan guarantees, and derivatives positions with counterparties that are probably insolvent.