Financials Getting Slaughtered

Wow! This market is taking a beating. I was looking through companies at their 52 week lows and the list goes on and on. Many of these stocks are trading at prices that would have appeared unfathomable before last year. Some of these companies deserve their low share prices and others have been taken down unfairly. In this market it is difficult to tell the difference. Here are a few companies trading at or near their 52 week lows:

SunTrust Bank (STI) set a new 52 week low dropping to $7 per share yesterday. There are fears that SunTrust will not pass the government’s stress test and will not qualify for future assistance.

Wells Fargo (WFC) dropped to $13.69 which is its lowest price in 12 years. I am still buying Wells shares because I think that the bank will be saved. It’s hard to have any conviction about any bank stock at these levels.

Capital One (COF) dropped below $10 and American Express (AXP) dropped to $13 amid concerns over rising credit card delinquencies. The pain is just beginning in the credit card industry. This makes me wonder about the credit card portfolios at Citigroup (C) and Bank of America (BAC). They have already gotten TARP funds twice; any additional TARP funds may mean that nationalization is coming.

Dow Chemical (DOW) is down to $8.62 per share and now sports a market cap that is almost half of the proposed 15.3 billion dollar purchase price for Rohm & Haas (ROH).

United States Oil ETF (USO) is down to $23.45. Oil demand has fallen off a cliff. I don’t know how long this will last but it looks cheap at these levels.

General Electric (GE) is trading at $10.81. It could hit the single digits if the market keeps declining. The stock is yielding 10.80% and looks cheap if held for years.

US Bancorp (USB) hit $10.73 yesterday.

Comments

[pacman1947:]

Mark,
Compare the stock prices with the period before the bubble of the late '90's and you will see that the fall is much worse than you observe for just the past year. In fact, measured in Euros, the DJIA has fallen more since Bush 2 took office in 2001 than it did during the Great Depression 1929-1932.
The markets are not even close to bottoming. The monetary system was stronger in the late '20's than today!

Feb 18 08:33 AM

[Jim Hawthorne:]

Yes, the financials are getting slaughtered. Yes, many of these equities are trading at or near their 52 week lows. Yes, many of these are facing the delightful choice of insolvency or nationalization.

Are any of them really 'cheap'? When you're buying a deck chair on the Titanic, is any price 'cheap'?

Feb 18 08:39 AM

[who:]

What is driving the markets down? Has much changed since November? Is the market reacting to O's attempt to manage the crisis through dynamic duo Larry and Tim, now also in charge saving the auto industry.

European banks doing better then expected, US banks' CEO say Jan was good, so why the drop?

Feb 18 08:57 AM

[venividivici:]

Sorry Jim. I actually agree totally with your comment but I hit the negative button by mistake.

Feb 18 09:09 AM

[AndrewBaker:]

I agree with Jim. I've tried to support financials because we need a working financial system, but they are just too costly to hold. I went long hoping the Obama administration's bail-out would at least engender some positive movement, but I've been hit hard in the pocket as a result. Now I've bought a more highly geared long play (for today only!) which I hope will help me recoup; before I go short again, which is the only way if you want to make money from financials right now.

Feb 18 09:34 AM

[WardW:]

It's really sad, some of these were great companies, and insolvency is not out of the question.

Going forward I don't have a lot of faith as long as corporate management keeps living in the past. For example, GE just released a statement about Jeff Immelt refusing a bonus for 2008:

"the company's "strong operating performance" wasn't reflected in the company's stock price."

Tell these guys the 20th century ended a decade ago, and the corporate culture that caused this mess isn't the right medicine to fix it.

Feb 18 09:55 AM

[Gloom and D...:]

Put your money into the Physco accounts because by the time Wall Street and the press are through scaring everybody and getting everybody upset, there will be a need for more physc help than there was after 9-11. People are getting upset with all this negative talk and attitude from Wall Street and the news media, better hope that nobody goes postal on Wall Street.
I want to believe in the Obama administration and in its efforts to help resolve the problem. At least they are making a attempt. Wall Street and the news media could help if they would stop with the negative attitude and give it a chance. Stop scaring people and maybe people will start spending and no further job loss will occur once it has begun.
I would say that it is expected for most companies to have bad quarterly financial reports due to this crisis and the stock market has fallen enough for this reason. I see no reason why stock prices should fall again when the actual reports come out, intead, they should go up on the companies with good reports. Wall Street needs a change of face.
If somebody wants to focus on something, it seems to me that it should be on rules (laws) and regulations to prevent this from happening again. The rescue plan is in place so on to the next phase. Why waste valuable time talking badly about the situation, get to work to fix it and prosecute anybody that is found to be directly responsible for contributing to it.

Feb 18 10:08 AM

[Landman:]

Hedge Funds and Institutional Investors are using Triple Bear Short ETF's to pound financial companies into the ground.

Feb 18 10:23 AM

[Dr.Jackpot:]

Someone wrote this morning that Alan Greenspan favored nationalization of banks. Wasn't he the whole cause of this ripoff in the first place? Is there no justice called for here?

Feb 18 10:57 AM

[One Eyed Guide:]

Good article.

Everything I read is that many of the banks you mentioned are techinically insolvent which means that stockholder equity is zero.

The stock price is just going down to reflect this. There may be a few good banks but it is hard to figure out which these are.

The decline in financials is also pushing down other stocks which are much easier to value. This is a buying opportunity, but it is outside of financials.

Feb 18 11:12 AM

[Bingo 2:]

Gee Whiz Mark- Next time try to tell us something we do not know!. We CAN read you know!

Feb 18 12:28 PM

[Mark Riddix:]

That is the difficult part, trying to determine which of the financial companies stocks will have any value 3 to 5 years from now.


On Feb 18 08:39 AM Jim Hawthorne wrote:

> Yes, the financials are getting slaughtered. Yes, many of these equities
> are trading at or near their 52 week lows. Yes, many of these are
> facing the delightful choice of insolvency or nationalization.<br...
>
> Are any of them really 'cheap'? When you're buying a deck chair on
> the Titanic, is any price 'cheap'?

Feb 18 01:04 PM

[Mark Riddix:]

Good point. Greenspan was a big believer in unregulated free markets and now he wants temporary bank nationalization. Some people blame his "easy money" policy for the crisis.


On Feb 18 10:57 AM Dr.Jackpot wrote:

> Someone wrote this morning that Alan Greenspan favored nationalization
> of banks. Wasn't he the whole cause of this ripoff in the first place?
> Is there no justice called for here?

Feb 18 01:05 PM

[monday1929:]

Yeah, an accounting change that turns zeros into hundred dollar bills.


On Feb 18 08:13 AM eddie6442 wrote:

> It's becoming more apparent every day that some very powerful people
> want the US economy to crater. When all it would take are a few "emergency"
> accounting &amp; regulation changes to alleviate the downward spiral
> to "catastrophe, anyone with half a brain can figure this out! <br/>It's
> logic 101 : If A, then B.............
>
> SIMPLE!!!!!!!!
>
> IMHO

Feb 18 01:15 PM

[monday1929:]

If those shorts are wrong, or even mos-timed, they will be slaughtered. Do you object to free-markets? Would you like to ban all selling?


On Feb 18 10:23 AM Landman wrote:

> Hedge Funds and Institutional Investors are using Triple Bear Short
> ETF's to pound financial companies into the ground.

Feb 18 01:25 PM

[sheople:]

When you own a home it does not matter how "nice" the house looks. If the foundation is crumbling, the house is doomed. The foundation of our economy was built on jobs, manufacturing to be specific. We shipped those jobs out of the country. Our foundation is shot. Mark Riddix is pointing out how bad our house is beginning to look. Nothing is being done to fix our problem. We just remodel and reface the house while it's foundation continues to erode.

Feb 19 08:44 AM

[stocon:]

Can you elaborate on these few "emergency changes that would straighten out this mess?


On Feb 18 08:13 AM eddie6442 wrote:

> It's becoming more apparent every day that some very powerful people
> want the US economy to crater. When all it would take are a few "emergency"
> accounting &amp; regulation changes to alleviate the downward spiral
> to "catastrophe, anyone with half a brain can figure this out! <br/>It's
> logic 101 : If A, then B.............
>
> SIMPLE!!!!!!!!
>
> IMHO

Feb 19 11:56 AM

[bobbobwhite:]

The tried and true Occam's Razorheld in such high esteem in olden days is tragically no longer held up as the best , or even a considered, answer to any problem today in any human situation.. To the contrary, the more confusing and complicated anything can be made is now the approved way of doing everything in our world's business and gov't operations. It truly seems that the more complicated something is made to be to outsiders, the more respect and admiration it gets from involved pseudo-intellectuals who do not realize nor care that that way lies eventual failure and madness as surely as getting sucked down into the LaBrea tarpits. It is enevitable that it will fail, but it works long enough for them to finish their personal career cycles and be then replaced by thers who themselves learn to enhance and perpetuate in their own ways that benefit them the most at the greatest cost to consumers.

Having and encouraging many complicated and confusing layers of something that is purposefully made that way to buffer and prevent full and easy understanding and disclosure is the new world order primarily done to justify outrageous and unwarranted costs to consumers and citizens. Yes, yet another scam upon the common earning and taxpaying citizenry. What else did you expect from the ultra rich? And, don't expect full exposure to stop it. Who makes the rules? Right again.

Feb 19 12:30 PM

[NutritionFacts:]

Geezus these SA articles really are getting worse.

I mean, who is this guy, to just real off a bunch of stocks and their prices to us?

"United States Oil ETF (USO) is down to $23.45. Oil demand has fallen off a cliff. I don’t know how long this will last but it looks cheap at these levels."

LOL!!!

Feb 19 04:54 PM

[User 360455:]

History will show, that the United States committed suicide.

In 2008, we arrived at a crossroad:

Had we chose to mercilessly murder -- with complete disregard for the magnitude or scope -- of any and all faltering financial institutions, we may have been able to avoid the fate which has yet to fall upon us.

Instead, we choose not to contain and eradicate the contagion, but willingly distributed into the greater economy in the hopes of diluting it's negative effects.

Where will the value go when it leaves the Dollar?

Feb 19 07:04 PM