Arohan

American Express Calls Investment Banks' Bluff

Your article is confusing

It is not impossible to have the following two things occuring at the same time:

1. Individual consumers are stretched and are having issues with their credit, including the super credit worthy ones. This is what is affecting Amex and,

2. Asset valuations at the banks for the mortgage assets (created in the past) have been marked down significantly and there is not much markdown left to take. Additionally, the investment banking activitiy may have picked up in pockets. The banks are also restructuring and disposing off assets, etc. Additionally, some consumers may be pulling their deposits out of Indymacs of the world and putting them at Bank of Americas of the world. Therefore it is quite plausible that some of the banks had a better quarter than what the street thought and the things may indeed be improving for some of the banks. In fact, as liquidity continues to come back in the market, you may find a lot of previously marked down assets written up as the market begins to be able to price them

You are comparing apples and oranges and jumping to conclusions

As Merrill Reports, Short Squeeze in Financials Continues

Regarding your last observation on the panic buying failing spectacularly, you may be right. I would also like to add to this: Financials today offer spectacular values to long term investors.

It always boils down to whether you are a short term oriented trader or a long term oriented investor

Predicting the Financial Sector Rebound

Well written. I would be wary of shorting any financials right now. Some sense is coming back to the credit markets and it will not be long before some of the companies start writing up their assets that were written down too far

In any case, all this is relevant only if you are looking for the short term. Longer term, financials are terrific values right now. I can't see a world where financial sector is not relevant, neither can I see some of the premier names today disappearing.

How To Buy a Bank (and Other Beaten-Down Stocks)

Loved the analysis. I have been aggressively buying financials over the last few months including C, BAC, CFC and WM and have written quite a bit on this on my blog. IBN and RBS look intriguing so thanks for the tip

Financials: Insiders Buying on Consistent Basis

Thanks Todd for a good summary of how many value/vulture investors think that the financials are very good buys right now. I have been advocating my readers to start buying financials for some time on my site (www.arohanvalue.com) as this may be an opportunity that one finds very rarely for some outsized gains

Consumer Spending is Up, But at What Cost?

This is quite scary. There was too much excess in the system and some sort of sanity reset is much needed. There is too much emphasis put on increasing same store sales, etc and people are encouraged to consume out of recession, but this may not be the best for the long term. You want consumption, but quality consumption and hopefully there is a happy medium that maximizes consumer value and producer value

arohanvalue.blogspot.c...

Bank Stocks: Dividend Yield Post Subprime Meltdown

The dividend cut (WM) was widely expected and is in now. It is still a respectable 3.5%. Once the market comes out of the doldrums and assuming WM survives, the dividend will be ratcheted up again. So if you are investing now, you may actually get a very good yield on the money invested.

However, the risk in WM is not something everyone is going to be comfortable with

arohanvalue.blogspot.c...

As Banks Opt Out, What is the Real Purpose of Paulson's Super-SIV Plan?

You maybe onto something here. Maybe ADIA could have gotten the equity for cheaper had they waited. Although, it is still a conjecture at this point to extend this theory to BAC and JPM. But as you said, who knows what exposure lurks unseen?

arohanvalue.blogspot.c...

It's Raining Petro Dollars - One Deal at the Time

It is just investment as you pointed out. US companies have been taking stakes overseas for a long time now and there is no reason why companies outside US cannot do it. We will see more of these kind of deals as other economies grow

arohanvalue.blogspot.c...

Large Banks: The Worst Is Yet To Come

Banks already present a nice opportunity for investment. I would argue that the entire financial sector now is what would qualify as special situations investing. arohanvalue.blogspot.c...

Bank Stocks: Dividend Yield Post Subprime Meltdown

Mouthwatering!!!

You forgot Washington Mutual (WM) at almost 11% yield

While the ripples of the sub-prime fiasco may take some time to subside, an opportunistic investor will do really well to pick up some of the quality names today at a bargain price. The financials will eventually recover, meanwhile it is nice to collect these dividends as an incentive to wait

Long BAC and WM

I have also written about the opportunity in financials at arohanvalue.blogspot.c...

- Arohan