IYF Forum Topics
- All Comments on IYF
- General Discussion on IYF
- Financials Have Bottomed? Readers Say We're Nuts [view article]
- Financials: How - And When - We Reached the Bottom [view article]
- Financials Future Still Uncertain [view article]
- The Calm Before the Next Bank Storm [view article]
- Scarlett O'Hara, Doris Day and Financial Market Tumult [view article]
- Apple: Dead Last In Exploited Horse Race? [view article]
- Speed with Which Financials Have Fallen Is Disconcerting [view article]
- Writedowns and Capital Raised by Financial Firms [view article]
- Speculation, Swaps and the Price of Oil [view article]
- Time to Exempt Mortgage Securities from Mark-to-Market Rules [view article]
- Financials Down 6.1% - Like the Days of the Tech Bust? [view article]
- NAR's Lawrence Yun Continues to Mislead on Housing [view article]
loading ...Recent IYF Articles
- Mortgage Market Problems Creating Higher Extension Risk
- Financials Have Bottomed? Readers Say We're Nuts
- Financials Future Still Uncertain
- Financials: How - And When - We Reached the Bottom
- The Calm Before the Next Bank Storm
- Scarlett O'Hara, Doris Day and Financial Market Tumult
- Financial Recovery? Time to Wait and See
- Citigroup Posts Large Loss, but Outlook for Financials Improving
- Apple: Dead Last In Exploited Horse Race?
- All Is Well , Madame la Marquise
- Full List of Articles »
Financials: How - And When - We Reached the Bottom [view article]
Good article and good points by DSB. I do however agree more with Tom. DSB, by the time your 5 points have occurred we'll be past the bottom of the economy but we'll be LONG past the bottom of the market. Of course the level of risk is high right now, but the return potential is pretty high too. My vote is that the market is way ahead of the economy right now and the long term values are just too good to pass up. ReplyFinancials: How - And When - We Reached the Bottom [view article]
Just like most folks on this site, I'm no expert at this. But let's consider people on opposite sides of this 'bottom vs. no bottom' debate:No bottom: Jim Rogers, Soros, John Paulson, Phil Falcone, Jim Chanos
vs.
Bottom: Hank Paulson, our trusted govt., Bill Miller, author Tom Brown
First, we have a list of investors who have had a very long record of being right and succesful and who continue to bet against the financials and sell the rally (see WSJ today). Then we have the Pollyanas like Miller who's actually ranked in bottom 28% of fund managers by Morningstar for his 10yr performance and Tom Brown who's had a mixed record at best with his blunders like First Marblehead and CCRT.
Its a rout for the no-bottom team. Reply
Financials: How - And When - We Reached the Bottom [view article]
Very good article. Im in even though it may not be the final bottom. ReplyStromeyer Jr
Financials: How - And When - We Reached the Bottom [view article]
Historically, during a major credit crunch the stock market bottoms before the credit markets start to recover which may be another reason to be bullish. (On Wednesday morning I went long IXG which is the iShares global financials ETF but I am ready to sell at any moment).My question is how much credit derivatives such as credit default swaps (CDSs) are tied to commercial real estate (CRE) prices? I am asking because U.S. CRE prices are having a significant decline. Reply
The Calm Before the Next Bank Storm [view article]
Saw that the housing sector was the big winner last week and did a little more research on it. This article (www.greenfaucet.com/fa...) argues that housing may finally have reached a bottom. Check it out if you're interested in buying. Reply
Financials: How - And When - We Reached the Bottom [view article]
Saw that the housing sector was the big winner last week and did a little more research on it. This article (www.greenfaucet.com/fa...) argues that housing may finally have reached a bottom. Check it out if you're interested in buying. Reply
Financials: How - And When - We Reached the Bottom [view article]
Good points DSB and good article Tom. I do however agree more with DSB. Any analysis of the financials without taking into account the macroeconomic picture is in my opinion, worthless. The underlying problems as to why the financials got into this mess have not been cured. ReplyFinancials: How - And When - We Reached the Bottom [view article]
Where is your macroeconomic analysis? What about the fact that the rate of defaulting debt obligations is increasing? J. Dimon says that PRIME loan losses could triple.I agree that the Financials are undervalued by traditional metrics, however I don't expect to see a bottom until a few things occur (which we probably won't be able to ascertain until after the fact):
1) Defaulting debt returns to normalized levels
2) We have a ratings agencies overhaul, which will allow IB's to trade paper as freely as before they lost trust.
3) Oil falls & remains below $130
4) We have clear indication that unemployment has stopped increasing, CPI is 'contained'
5) We have 2 consecutive quarters without a large/mid sized bank encountering problems.
As 10+ years of inappropriate growth, which has obligated the govt. to back more paper than they are technically able, there must be a proportionate contraction based on the true valuations of not only the foundational collateral, but every derivative link in the chain above it (leverage). We have seen some of this, however this unwinding is very complicated, and the derivative debt spawned from this foundation is in the Trillions of dollars. The level of risk inherent to the market right now is higher than I think most people realize. I have heard quite a few 7 figure heavy hitters defend the JPM/BSC deal as having avoided catastrophe. If you have time, peek behind the curtain to see the moving parts of these statements...
Also, something to note is the velocity of money. Let's assume the above leads to a contractionary environment... As the VM slows (people & businesses unable or unwilling to spend for a variety of reasons, including difficulty in taking out loans), banks will lose out on a lot of transactional business. On the other side of the coin, they still have massive cashflow obligations that they support.
If inflation persists, and grows, big time pressure will be (is) on the fed to raise rates. Remember, they conducted emergency rate cuts in order to keep the banks from failing. When that wasn't enough, they just gave them money. The root of WHY, is defaulting debt - which is the crux of the matter, as articulated by Hank Paulson on CNBC the other day. If they have to raise rates, they kill banks.
Reply
demand
Financials: How - And When - We Reached the Bottom [view article]
Don't count your money while you're still at the table. ReplyMarkets
Financials: How - And When - We Reached the Bottom [view article]
blowhard full of convictions on calling bottoms and tops. ReplyThe Calm Before the Next Bank Storm [view article]
thats the whole problem. there are many people who think gloom & doom will go away if you dont talk about it.this situation could have been topped if gloom & doom had been predicted & acted upon.like in days of yore-if someone had cancer it wasnt mentioned in hopes it woul go away.weird ReplyFinancials: How - And When - We Reached the Bottom [view article]
Tom, this is one of the best articles I've seen on this site and I do appreciate your blow by blow account around July 15 - although I must point out that you failed to mention SEC's move on the short sellers. Whether that had impact on the capitualation, nobody really knows but the results did speak for itself.I'm long XLF and ABK - with at least 1 year horizon. XLF - am expecting US$25-30 by 1 year and as for ABK - I hope to see it go back to US$25, maybe not in a year but perhaps in the next 2 years... I'm sure if that happens, its worth the wait. Reply
Financials: How - And When - We Reached the Bottom [view article]
author's call on Citi a few year's ago was spot on, it had a great run. Given the rebound in the last hour, we could be on a nice leg up in the financials. (long UYG). ReplyThe Calm Before the Next Bank Storm [view article]
Totally agree. You may not like the doom and gloom, but analysis should not be based on hopes and preferences, but on facts. The debt of consumers, and yet more homeowners, have yet to hit the bottom line of financial institutions. ReplyThe Calm Before the Next Bank Storm [view article]
Agreed, though I think we'll get a pull back and if the volumes are there, we may get a pretty hefty push upward for BAC to hit upper 30s again. (I guess that's a good thing - can't believe how far its come down.) Reply