streetTRACKS KBW Bank ETF (KBE)

All Comments on KBE

  • 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
    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
  • commenter
    najdorf
    Jul 29 12:58 AM
    Jason Zweig on Graham and Bank Stocks: 'The Un-Intelligent Investor' [view article]
    Why should rents value real estate when owning a home provides a large amount of intangible satisfaction to the homeowner and is heavily encouraged by many aspects of our government's policy (mortgage deduction, low interest rates, support for FNM and FRE, recent housing bill, etc.)? Who do you know in America outside of major cities that rents their primary residence by choice rather than financial necessity? I know my grandmother, who in hindsight appears to have sold her house at the top of the real estate market in order to pay very cheap rent while someone else takes care of maintaining the house. But my grandmother is a lot smarter than the average person. Most people want to own a home no matter what the costs, and our government keeps looking for ways to encourage them to do so. It's possible that if some of the governmental supports dropped out and rents stayed low more people might make the shift to renting, but as housing prices get beat up I see a lot of people trying to re-access the 3000 square foot component of the American Dream. Reply
  • commenter
    bearfund
    Jul 29 12:00 AM
    Jason Zweig on Graham and Bank Stocks: 'The Un-Intelligent Investor' [view article]
    If you use rents to value real estate, you will find that prices are still absurdly high. Go ahead, try it. It really is a great way to look at valuation. Reply
  • commenter
    Alex
    Sebastian
    Jul 28 08:30 PM
    My Website
    Jason Zweig on Graham and Bank Stocks: 'The Un-Intelligent Investor' [view article]
    Right now I am starting to look for way out of the money calls for financial stocks maturing in '10. My reasoning is as follows: it is hard to call which stocks will rebound and by how much, but if the firms don't go bankrupt they will have likely rebounded enormously from these levels by then and if that is case, these options will have gone up in value by considerable orders of magnitude. This is a financial buy and hold strategy which allows for small investment that will yield potentially hundreds or even thousands of percent gains with limited downside (barring bankruptcy). Reply
  • commenter
    Geoff Gannon
    Jul 28 07:58 PM
    My Website
    Jason Zweig on Graham and Bank Stocks: 'The Un-Intelligent Investor' [view article]
    "Do you happen to know if Graham ever invested during a massive credit crunch?"

    Graham ran a partnership (in some form) from 1926 - 1956. His worst period was 1930 - 1932. The fund (which like a lot of investors had done some buying on margin) declined by 50.5% in 1930, 16% in 1931, and 3% in 1932. This was largely because Graham was unable to maintain his normal hedges (he had to cover his shorts in 1929 - 1930). Throughout the entire period, Graham was still making quarterly distributions to owners of 1.25% a quarter. As a result, the fund's capital was badly depleted by 1932.

    Several investors withdraw all their money. However, Graham eventually recovered - making over 50% in 1933 alone.

    As a side not, it was at the near nadir of his career (in 1932) that Graham began work on Security Analysis. That book was shaped by his experiences in '29 - '32.

    Sorry if that doesn't answer your question directly - it's as close as I could come to giving a good answer to Graham's investing in extreme circumstances.     Reply
  • commenter
    LarryH
    Jul 28 05:16 PM
    Financials: How - And When - We Reached the Bottom [view article]
    The bottom has been reached, but be prepared for 20% to the downside? There is no way I can take you seriously. Reply
  • commenter
    Charlie
    Stromeyer Jr
    Jul 28 09:13 AM
    Jason Zweig on Graham and Bank Stocks: 'The Un-Intelligent Investor' [view article]
    Sorry, I made a typo. Actually, the total credit default swap (CDS) market doubled in size every year from 2000 to 2007 (which doesn't include the growth of the total collateralized debt obligation (CDO) market.) Reply
  • commenter
    Charlie
    Stromeyer Jr
    Jul 28 07:54 AM
    Jason Zweig on Graham and Bank Stocks: 'The Un-Intelligent Investor' [view article]
    Good article, and here is a question:

    Do you happen to know if Graham ever invested during a massive credit crunch? For example from 2002-2007 credit derivatives grew about 5X, and also Libor/OIS spreads are now higher than they were in March 2008. Would Graham have known that stocks historically bottom before the credit markets bottom?

    Additionally, I can think of about 11 reasons home prices should continue lower but you don't have to take my word for why they should go lower - you can just look at what futures on home prices are pointing to.     Reply
  • commenter
    E Nuff Sed
    Jul 27 08:20 PM
    Financials Have Bottomed? Readers Say We're Nuts [view article]
    I am with Tom here, the gloom and doom is way over-done. Look at this forum - the bears out number the bull 5 to 1.

    Not every financial is toxic. Even the big offenders like C, UCB, AIG, WB, etc. have taken the kitchen sink write-offs. (If I remember correctly, AIG write down was forced by the auditors) and raised capital.

    People and companies are still going to take out loans and want financial services and insurance. Also most of the CDO's are still producing virtually the same income as before even though their value has been written down 50%+ because of an illiquid market.

    The private equity boys will be making a killing buying them at 25cents on the dollar. This is the time to go long on LUK, BX, KFN & FIG.
    Reply
  • commenter
    oldtrdr
    Jul 24 09:53 PM
    My Website
    Financials Have Bottomed? Readers Say We're Nuts [view article]
    I've got to agree with Dusty and Jimmy on this one....btw, I'm overweight financials, too, but BDCs, not banks, either commercial, or I-Banks, and am even MORE overweight energy, with a position in SDS as a hedge, to boot.

    old trader     Reply
  • commenter
    NutritionFac
    ts
    Jul 24 05:18 PM
    Financials: How - And When - We Reached the Bottom [view article]
    I heard there are about 100 other banks on the verge of going the same way as IndyMac et al. Can't remember where though.
    Frankly it's ridiculous to think you can pin the tail on the donkey like this. Any serious trader/investor would know that. More than ridiculous; dangerous.     Reply
  • commenter
    Tom Brown's
    Intern
    Jul 24 01:01 PM
    My Website
    Financials Have Bottomed? Readers Say We're Nuts [view article]
    Nevermind Tom, I didn't see your new article. Processing... Reply
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