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Barron's rings the bell for financials (XLF), (KBE), saying business is improving even as their...

Barron's rings the bell for financials (XLF), (KBE), saying business is improving even as their stocks go in the opposite direction. The TBTF's, regionals (KRE), trust banks, life insurers - all are cheap based on any number of metrics. "No catalyst?" How about better-than-expected earnings, an uptick in the economy, and even some loan growth? "There could be a stampede back into these stocks," says fund manager Matt Lindenbaum.
Comments (29)
  • The Geoffster
    , contributor
    Comments (4010) | Send Message
     
    I'll believe the banks are cheap when Europe sounds the all clear, foreclosures drop, the unemployment rate drops and governments begin living within their means. In the meantime, I'm holding onto my gold.
    15 Oct 2011, 01:23 PM Reply Like
  • User 487974
    , contributor
    Comments (1105) | Send Message
     
    Yeah, a stampede to sell into whatever rally should materialize!
    This is a head fake folks, and talking heads like this will cost you your money and your hair!
    Your hair you ask?
    Yeah, when you pull it out by the roots for listening to this dribble.
    Take all rallies as selling opportunities, unload into them, the big money is.
    Jerry
    15 Oct 2011, 01:28 PM Reply Like
  • Econdoc
    , contributor
    Comments (2944) | Send Message
     
    He's right. Time to Buy.
    15 Oct 2011, 01:29 PM Reply Like
  • ltsgt1
    , contributor
    Comments (1376) | Send Message
     
    When the S&P rallied up over 20 points with an abysmal 627M volume on Friday, it looks and smells like a bull trap. Time to buy, not.
    15 Oct 2011, 02:14 PM Reply Like
  • wyostocks
    , contributor
    Comments (7653) | Send Message
     
    Even if he is right, the prudent thing to do is sit tight. They'll be plenty of time to buy if the things mentioned by Geoffster ever come to pass in our lifetime. Don't hold your breath though.
    15 Oct 2011, 01:39 PM Reply Like
  • Bouchart
    , contributor
    Comments (757) | Send Message
     
    If you want exposure to financial stocks, consider regional or local banks. The big banks' balance sheets are too opaque and too exposed to Europe. Also, small banks might benefit from the large banks raising their debit card fees and the like.
    15 Oct 2011, 01:41 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    Hard to see a lasting bullish upswing in the markets long term without the financials coming along.

     

    The XLF seems to be screaming "Value" at this level, down 25%!, so if your bullish I can't see why you wouldn't load up at this point.

     

    Perhaps the market is making the marks for the banks that they won't make themselves.
    15 Oct 2011, 01:44 PM Reply Like
  • Michael Stuart
    , contributor
    Comments (149) | Send Message
     
    And one especially bad rumor out of Europe will whipsaw you for a 30-40% drop in the course of a week. Sorry, until that mess is taken care of putting your money in financials is as safe as playing brand new biotechs.
    15 Oct 2011, 01:56 PM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
     
    I would check the riot cams first. There also seems to be a little bit of a bank run on boa right now too, which could spread to the other fee chargers. Otherwise, back the truck up!

     

    Now, go dig up your Oct 08 barron's, and have a look at what was written during that month. ;) Look familiar?
    15 Oct 2011, 02:36 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5231) | Send Message
     
    Insurance companies are not banks, but seem to have been tarred with the same brush as far as being financials. KIE is the insurance ETF.

     

    Also, regional banks don't have the same type of opacity on the balance sheet, you can verify that they have adequate capital. Financials is not just the big five Wall Street banksters.
    15 Oct 2011, 02:52 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Yep. CB has been undervalued for over a year. People can of course apply a macro view on top of it and for buy and sell decisions but fundamentally it's cheap.
    15 Oct 2011, 05:04 PM Reply Like
  • wyostocks
    , contributor
    Comments (7653) | Send Message
     
    Tom
    Your point on regionals is well taken but when the sell off of banks is on, they all get taken to the woodshed together regardless of fundamentals.
    15 Oct 2011, 05:24 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5231) | Send Message
     
    CB has very good quality assets, mostly corporate bonds. If bonds are so popular right now, it's puzzling that investors won't pay up for insurance companies that own mostly bonds.
    15 Oct 2011, 08:15 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5231) | Send Message
     
    I haven't done much with the regionals, I was in and out of RF, at prices quite a bit higher than today, ditto SNBC.

     

    WBS has worked out for me, seems to have been hammered on their earnings, but still good long term.
    15 Oct 2011, 08:17 PM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
     
    Here is some perspective:

     

    For at least another hundred years we must pretend to ourselves and to everyone, that fair is foul and foul is fair, for foul is useful, and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into the daylight.

     

    The best way to destroy capitalism is to debauch the currency. By a continuing and ongoing process of inflation, governments can confiscate, secretly, and unobserved, an important part of the wealth of it's citizens. There is no subtler or surer way of overturning the existing basis of society than to debauch the currency... The process engages all of the hidden forces of economic law on the side of DESTRUCTION, and does it in a manner, which not one man in a million years is capable of diagnosing..

     

    These are quotes i have framed and hanging in my office.
    15 Oct 2011, 03:24 PM Reply Like
  • tclark13
    , contributor
    Comments (133) | Send Message
     
    Fool me once, shame on you. Fool me 46 times, shame on me. I don't have to catch the bottom or the top. The middle 70% is just fine by me. Happy to wait for some evidence of improvement, which I ain't seeing...yet!
    15 Oct 2011, 05:23 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9927) | Send Message
     
    Cheap, maybe? But even cheaper is much better!
    15 Oct 2011, 07:47 PM Reply Like
  • cynic2011
    , contributor
    Comments (652) | Send Message
     
    This group of posters is just a bunch of sheep,all following the same conventional wisdom.

     

    the time to invest in anything is when nobody wants it. based on this thread,now must be the time.
    16 Oct 2011, 06:20 AM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    Cynic,

     

    Forming opinion about bearishness by reading the comments on this site are misguided - the people here are better informed but very opinionated and by and large very bearish like me. This website is tiny in its audience and not a representative sample of the market's opinion on this topic.

     

    There's a reason why banks in the form of XLF are off 25% from their 52 week high and down more than 60% from their all time high. The question is whether it is catching a falling knife (the value trap) or a mispricing. We are told to respect Mr.Market so he is telling us something here.

     

    Barron's audience is much larger.

     

    Just read/watch CNBC and MarketWatch and you will form exactly the opposite opinion - everyone wants you to buy banks because they are a screaming buy just as the Barron's article says.

     

    Who are the sheep?
    16 Oct 2011, 11:47 AM Reply Like
  • ltsgt1
    , contributor
    Comments (1376) | Send Message
     
    If you want to buy financial as they are trying to nickel and dimes their ways to profitability, you are really testing your luck.

     

    I could be wrong but I don't think banks make whole lot of money charging grandma and grandpa with various bank fees. The fact that they're doing that is indicative of how desperate they really are.
    16 Oct 2011, 06:09 PM Reply Like
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Each of us invests based on our view of the World which is constantly being shaped by events and the slant of reporters. The financials are an essential part of any recovery that may eventually occur. Without participation of the financials there will be no recovery. The "banks" need an incentive to lend. That incentive will be demand driven as businesses grow an require additional financing. As of today, I see little demand for more loans coming from the private sector. Another factor affecting the banks is profitability. Today with rates as low as they are there is little incentive for banks to loan to any borrower having the slightest risk of repayment failure. Rates need to rise before we see the banks move back into lending. I am watching for these signals and am seeing what I think are the first signs of demand increase in the distance but no improvement in rates as of today.
    16 Oct 2011, 06:42 AM Reply Like
  • Uncle Pie
    , contributor
    Comments (2726) | Send Message
     
    Why even bother with American banks when you can own Australian and Canadian ones? Good dividends, reasonable valuations, and operating in much healthier economies than the USA.

     

    Long: National Australia Bank, ANZ Bank, Royal Bank of Canada and Canadian Western Bank.
    16 Oct 2011, 10:38 AM Reply Like
  • jstratt
    , contributor
    Comments (2248) | Send Message
     
    An interesting explanation on JPM's one time adjustments in their just released earnings form FT Alphaville. The article title is "Banks’ accounting went through the rabbit hole"
    16 Oct 2011, 03:18 PM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
     
    ZIRP + Twist = inverted curve.

     

    Barron's left that out.

     

    fixed.
    16 Oct 2011, 03:28 PM Reply Like
  • harout19
    , contributor
    Comments (2) | Send Message
     
    The banks are smart and they will recover some how. Fortune 500 companies dont die out (usually)...on the other note

     

    Join my blog. Subscribe now!
    http://bit.ly/otD9Dt/
    16 Oct 2011, 04:14 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    They will recover, through bailouts...
    16 Oct 2011, 08:02 PM Reply Like
  • amsc
    , contributor
    Comment (1) | Send Message
     
    hMMM.. VOLATILITY LIVES ON! We are in the midst of a slowing economy period. These companies must be showing all these wonderful earnings from government contracts i guess.
    17 Oct 2011, 10:38 PM Reply Like
  • Derek A. Barrett
    , contributor
    Comments (3534) | Send Message
     
    Wow TVIX up 22% today
    17 Oct 2011, 10:44 PM Reply Like
  • Sleestakk
    , contributor
    Comments (121) | Send Message
     
    Heh, financials are cheap? Look how Barron's hopium panned out.
    9 Nov 2011, 10:59 PM Reply Like
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