Monday, December 7, 2009, 7:25AM ET - U.S. Markets open in 2 hours and 5 minutes.
From ClusterStock, August 12, 2008:
Financial stocks are nowhere close to a bottom. Net charge-offs and non-performing loans are still growing. Banks will have to raise more capital to plug balance sheet holes, further diluting current shareholders. Etc.
So goes the bear argument. Tom Brown at Bankstocks.com begs to differ.
As my guest Barry Ritholtz of Fusion IQ and The Big Picture and I discuss, Brown points out that, historically, markets tend to anticipate improving metrics rather than respond to them. If you wait to see improving loan performance, argues Brown, you'll miss most of the rally. Brown compares today's crisis to the crisis and recover in the early 90s.
If you waited until 1992, when chargeoffs started to improve, you would have missed half of the rally:
Remember, the market is a discounting machine: it anticipates key events so early on the vast majority of investors don’t even think those events are possible. In the case of the financials now, that means stock prices will turn higher (and already have, I believe) when most investors believe that things are still getting worse. It happens every cycle.
So there’s no use trying to concoct your own list of mental milestones. Instead, go back and look at what happened (and in what order) during the last major credit crackup, in 1990-91. If you do, you’ll see that the bears have things all backwards. By the time their wish lists happen, the stocks will be zooming.
The danger, of course, is that you could have used a similar line of reasoning to argue that the sector bottomed two months ago. It all comes down to what happens to the value of the assets on the balance sheets: If they continue to drop and banks are forced to take more multibillion-dollar losses, Meredith Whitney will be right. If not, Tom Brown can continue riding this rally to victory.
Note: Tom Brown will join me on Tech Ticker this Thursday to defend his views.
Enforce the naked short selling! Why-oh-why have a rule that you don't enforce? Obviously, the SEC proved that they COULD enforce it, if they chose to. I could care less if it adds a time delay to trades. That couldn't hurt, either. I guess that with the financials recovering, the hope was that the shorts would get their teeth kicked in. But, they showed that they have the horsepower.
Bank stocks will go down another 40%.
If you are going to sit on cash, why not sit on a falling stock that will rise before you would have bought it with the cash.
Bank stocks will go up 200%. Based on precisely the same rationale as comment, "Bank stocks will go down another 40%."
I'm waiting for the commercial real estate side to throw it in..........talk about writeoffs !!!!!!! The effect will include one hell of a wrestling match as the partners on commercial deals will: A.Fight for additional cash to finish wip. B.Try and simply walk. C.Litigate. D.Wiggle out of PGs. E.All of the above............ Want to see paralysis within committees ? At least residential loans are qualified by simple measures but not on the commercial side. Was that "another shoe" or an earthquake ? "Everyone stay calm !"
Who, besides day traders, would be so concerned about accurately picking the bottom? XLF, VFH and other financial sector funds are great buys right now. They may go down more, but if you're in it for more than a couple months, they're a great deal.
Thanks to the likes of Meredith Whitney, Michael Price and Barry the Bellicose I am picking up C, JPM, WB and their preferred shares cheap. If they go lower I pick more of the shares up. Listen, if you want to make $$$ you have to buy when their is good old fashioned blood on the streets. Thanks to these one trick pony analysts the time is NOW to buy C, WB, JPM..
After JPM chase announced the result and it was better than the expected one market went up assuming we already at the bottom and time to go up. Look at the data for housing and credit crunch. Makes it clear that there is stil pain in the market. To come out of the housing slump itself 6 months are required. Right now sell off is the best option. Another point to consider is the oil price which is continuously going can bounce back to high.
How about that John Edwards? I read that he is in collusion with the banks to fund a massive program to come into your neighborhood and kill your puppies! I'm for it! What do you think?
How CONVENIENT that all of this bad news broke on the day that the naked short selling "rule" expired... How CONV-E-E-E-E-N-I-E-N-T...indeed...
These big banks deserve all the fallout they get. There CEO and CFO filled their pockets with Millions & Billions over the past 5 years, so they are fine, if they fail they will get bailed out, but not the homeowners that bought those home at bank inflated pirces, if they walk away it takes 10 years to repair their credit, the banks are back up and running the next day.
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Reedersong - Tuesday August 12, 2008 03:01PM EDT
Pandering.