iShares Dow Jones US Financial Sector (IYF)

All Comments on IYF

  • commenter
    jack_gott
    Jul 30 07:07 PM
    On Ben Graham, Bank Stocks, Jason Zweig and Tom Brown [view article]
    I know what Graham would be saying if he were alive today: "GET ME OUT OF HERE !!! HEY.....CAN ANYONE OPEN THIS COFFIN? GET ME OUT OF HERE !!!!!" Reply
  • commenter
    Alex
    Sebastian
    Jul 30 06:29 PM
    My Website
    On Ben Graham, Bank Stocks, Jason Zweig and Tom Brown [view article]
    With all due respect to Mr. Gannon, I feel that you may need to go back to and re-read your copy of "Investment Analysis." If you even own own...

    You said:

    "Graham saw every investment as a black box – and that didn’t trouble him. A lot of investors spend a lot of their time worrying about the inner workings of the companies they own – Graham never did. He didn’t look inside the “system”, i.e. the company itself; instead he looked only at the outputs – the financial statements. He spent almost no time worrying about a business’s management, corporate culture, or future prospects." (Note especially the last item on the list of things Benjamin Graham would barely consider)

    Benjamin Graham said in the last few pages of Chapter 11 of The Intelligent Investor:

    "We suggest that analysts work out first what we call the 'past-performance value' which is based solely on the past record...The second part of the analysis should consider to what extent the value based solely on past performance should be modified because of new conditions expected in the future"

    Although I have found other articles written by Mr. Gannon to contain good analysis, I feel that the above seriously comprises his authority to speak on Benjamin Graham and value investing until he goes back to the books.

     Reply
  • commenter
    Geoff Gannon
    Jul 30 04:21 PM
    My Website
    On Ben Graham, Bank Stocks, Jason Zweig and Tom Brown [view article]
    Regarding going long the preferred and short the common – I suppose Graham would call this a related hedge in all cases (when he wrote “related”, he just meant he wasn’t hedging by shorting another company, or a basket of stocks – like an ETF today).

    However, Graham’s operations involved convertible senior securities. He did, however, do a lot of other long/short combinations in a do it yourself kind of way. Most notable was when he bought DuPont and shorted GM, when DuPont owned a lot of GM, thereby buying DuPont for next to nothing regardless of how GM traded. The most common opportunity for this kind of operation today is when a smaller, faster growing partial IPO goes through the roof while the larger, slower-growing parent initially holds a lot of its stock in the new entity.

    I almost mentioned the idea of trading a company’s debt one way and the common the other in this post – however, I decided Graham would never do that in the current environment, because the possibility of bailouts, gov’t assistance, etc. could make the debt too unresponsive as your common got crushed. If this wasn’t the case, Graham would probably look for situations in which he thought you could somehow hedge the risk of a financial collapse while betting that, absent a total collapse, the common was way too cheap.

    Anyway, if the preferred was convertible, then yes that fits Graham exactly. If not, I’d still say it’s a related hedge; but, it’s not quite what Graham did.
     Reply
  • commenter
    Raja41
    Jul 30 12:06 PM
    On Ben Graham, Bank Stocks, Jason Zweig and Tom Brown [view article]
    There are lot of small community Banks , who have no exposure to subprime very solid financials, you just have to look for them.One of them is FCCc.ob Reply
  • commenter
    Charlie
    Stromeyer Jr
    Jul 30 08:51 AM
    On Ben Graham, Bank Stocks, Jason Zweig and Tom Brown [view article]
    I like this piece, and have a question:

    A popular trade in Brazil about a month ago was to go long the preferred shares of Petrobras while simultaneously shorting the common shares. This was a very successful trade, but would it qualify as a "related hedge"? Thanks.

    Disclosure: I engage in related hedging, trading Brazilian equities, and am long many financial companies but few here in the U.S.     Reply
  • commenter
    archman82011
    Jul 30 07:33 AM
    On Ben Graham, Bank Stocks, Jason Zweig and Tom Brown [view article]
    buyitcheap:

    I too, first started reading Tom Brown's articles a few years ago.
    Yes, he knows his sector, and yes he does like to buy when there is carnage out there. He also has been dead wrong enough times to offset many of his successful buys.

    As a hedge fund manager, in good times, Tom pockets a ton of $$, so he can afford to make huge mistakes when they happen. The average person cannot afford blowups.

    I think we are in the 7th inning of this credit crisis, now that MER has finally just started throwing away junk that they think is worthless. I personally think we need to see BAC come clean on all the CFC crap that they picked up in their deal. CFC was one of the worst lenders out there and I cannot believe we have heard nothing on that front.
    Once we see "all" financial institutions doing the same, we then can get to the 8th and 9th innings, which will be signaled by stabilizing home prices, reduction of inventory, and stabilization of consumer debt.     Reply
  • commenter
    buyitcheap
    Jul 30 07:04 AM
    On Ben Graham, Bank Stocks, Jason Zweig and Tom Brown [view article]
    Great read! Tom Brown a number of year's ago made a great call on Citi and that's when I first started to follow his articles. He's a guy that knows this sector. And he appears to like to buy amidst financial carnage, as do I when the deals are great, so his buy recommendations make sense. Reply
  • commenter
    Swiss_Buffet
    t
    Jul 30 06:34 AM
    On Ben Graham, Bank Stocks, Jason Zweig and Tom Brown [view article]
    While the original article by Zweig and this rebuttal makes a good read, it is speculation only and the impossible attempt to read the mind of a guy who died quite a few years ago. The practical relevance of these articles are therefore naught. Nobody except Graham himself would know what he was doing today. Reply
  • commenter
    Tesa
    Jul 29 11:20 PM
    Predatory Banking Practices Undermining the U.S. Consumer [view article]
    Obviously the writer has a valid point, the over draft should be applied to actual case of overdraft and not be sorted or forged to produce extra undue income. I would say the case for mortgage insurance is along the same lines but only worse. From what I understand these insurances are termed in a manner which makes them extremely unlikely to be cash-able in any event in most states so they are not really a form of insurance but rather a source of income for the banks around the world. Reply
  • commenter
    CDS Price
    Seeker
    Jul 29 12:24 PM
    U.S. Bank Default Risk Rises; European Bank Default Risk Falls [view article]
    Always a good one.

    Besides, any one of you guys could tell me where I can get CDS price?

    Thanks in advance.

    Except for CMA datavision and markit, I'm looking for free info on credit default swaps price, thanks a lot.     Reply
  • commenter
    Charlie
    Stromeyer Jr
    Jul 29 10:32 AM
    Jason Zweig on Graham and Bank Stocks: 'The Un-Intelligent Investor' [view article]
    najdorf, please read this piece on why economists look at the prices-to-rents ratio:

    www.frbsf.org/publicat...
     Reply
  • commenter
    Charlie
    Stromeyer Jr
    Jul 29 09:56 AM
    Financials: How - And When - We Reached the Bottom [view article]
    Thanks for your answer, Swiss_Buffett, which I agree with.

    Disclosure: One of the board members of a company that I advise is a manager at State Street in Boston.     Reply
  • commenter
    Swiss_Buffet
    t
    Jul 29 09:45 AM
    Financials: How - And When - We Reached the Bottom [view article]
    Charlie Stromeyer Jr, you asked: Do you agree with some analyst whose name I don't remember who said that in terms of business recovering that first the trust banks will recover then the commercial banks and then last the investment banks?

    I would agree trust banks recovering first appears very likely. I doubt they are at risk at all. Sure their base for earning their fees will get smaller, but essentially they do not take own risks, only handle other parties investments/portfolio. I think State Street Boston is a good example of such a bank.

    If commercial banks will recover more quickly than a Merrill or Lehman? I would not want to wager a bet on either side. I'd say it's very much a case by case affair. Certainly Merrill and others like Bears (gone) and Lehman (almost), Drexel (gone), Salomon (gone), Kidder (gone), Barings (gone) have the rare talent to blow themselves up every couple of years with one new financial trick/fad or another. The only one smarter than the rest appears to be Goldman, but the final verdict is not out yet on GS. As a group the investment bankers appear to have virtually no risk management in place and are a greedy bunch altogether without much interest other than enriching themselves as quickly as possible. This works to their benefit as long as the particular fad in question works well (usually some 5 years), then when it's reckoning time they will go like: OK, tough luck. We didn't see that coming etc etc blah blah.... For the bigger ones (MER, LEH) they can fall back on the Fed or some other friendly Wall Street arrangement (Chase buying JP Morgan and now Bears, Citi swallowing Salomon). The others are gone, with a more or less golden parachute. Rinse and repeat.

    All in all I'd say commercial banks operate more conservatively than the investment banks do. BUT their "conservativism&q... can be very reckless too, as can be seen now with Wachovia and UBS, among others.

    What I find interesting is that even community banks and small regional banks and S&L's have subscribed to this lastest round of real estate bust. The principle of "knowing your customer" has been neglected wholeheartedly almost universally at all institutions small or large. Greed, once again, got the better of bank managements all over U.S. but not only in the U.S. I live in Switzerland and are the proud producers of one of the ugliest cases, UBS...     Reply
  • commenter
    Charlie
    Stromeyer Jr
    Jul 29 08:49 AM
    Bespoke's Financial CDS Index [view article]
    Thanks for posting your CDS index. Because I don't trust the ratings agencies, I have been watching CDSs and CDOs since early June 2007 via markit.com and bloomberg.com.

    Disclosure: No current positions in either CDSs nor CDOs.     Reply
  • commenter
    Ames
    Tiedeman
    Jul 29 07:18 AM
    My Website
    Financials Have Bottomed? Readers Say We're Nuts [view article]
    I say anyone claiming this should be institutionalized for no less than 6 months. Reply
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