Jimmy Lathrop

Is There a Margin of Safety in Financials?

I agree with every point in the article. But I also believe David Fry's thesis that for the time being financials are in a trading range which are not rationally related to the fundamentals of the industry. These companies are being pumped up by their prop desks, sovereign funds and traders looking for a quick buy and sell on daily momentum. Maybe everyone is waiting for a big bank to collapse. Maybe people are waiting for the election. Maybe there will be a big event such as a terrorist attack, natural disaster or a Black Monday which will rip apart the curtain which has hidden the ugly parts of these companies. In any event, it may take a while for the bottom to be reached, so if you are short, its better to be early than to be late. Disclosure: Long SKF