In this article, we'll further research Goldman Sachs (GS), JPMorgan (JPM), Bank of America (BAC), and Citigroup (C). Readers should view the previous articles to gain perspective on this article. That said, in response to the feedback I have been getting, I am going to do a series of articles that examines the aforementioned issues. We'll start off with the current market environment before researching and conducting analysis of the research. At the end of the series I'll give an investment recommendation based on the conclusions reached from the research and analysis.
Current Market Environment
Researching firms and deciding which one is worthy of investment is one thing, you still have to look at the current market environment and figure out how you are going to execute the investment. That said, right now the market is forming a minor high after re-testing the high of the year. We'll see how the market responds in the next few weeks: In other words, if we can push through the high of the year. I wouldn't be and I'm not making new long commitments. I'm waiting for the opportunity to short sell this market. I don't think we'll get through the high of the year. If we do, I am prepared to either sit on the sidelines or initiate a small long position. What that means, if the market were to decline 10-20 percent, investors should consider buying shares of the company or companies recommended at the end of the series.
Research of Financial Performance and Positions
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Revenue is declining at all four financial services firms: Declining revenue is a bearish input into an investment recommendation.
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Net income is increasing for JPMorgan and Citigroup, however, Goldman Sachs and Bank of America aren't increasing net income.
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JPMorgan has the least risky revenue followed by Bank of America and Goldman Sachs: The larger the standard deviation of revenue the smaller the average revenue-standard deviation of revenue.
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JPMorgan had the least risky net income followed by Goldman Sachs and Bank of America. Citigroup's average net income was negative.
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The thing that stands out here, Bank of America didn't have negative cash flow from operating activities between 2008 and 2011. All of the other financial services firms had negative cash flow from operations at some point.
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Bank of America had the most stable cash flow from operations followed by JPMorgan.
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In terms of book value of equity, JPMorgan and Citigroup outperformed in this category: Bank of America performed well, but Goldman Sachs is really lagging in this category.
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With regard to total assets, JPMorgan is leading the group followed by Bank of America. Citigroup and Goldman Sach's total assets aren't above 2008 levels.
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Citigroup lagged the other firms in terms of increasing the amount of cash on the balance sheet. Bank of America raised a substantial amount of cash.
Disclaimer: This article is not meant to establish or continue an investment advisory relationship. Before investing, readers should consult their financial advisor. Christopher Grosvenor does not know your financial situation and ability to bear risk and thus his opinions may not be suitable for all investors.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
