contrarian@coalmine

WaMu Shows, Again, Smart Money Can Be Wrong

You state, "don’t make a financial company your largest position, unless it has a very strong balance sheet and no liquidity issues, plus superior management, like Berkshire Hathaway (BRK.A)".

I'm always amused that investors place blind faith in the Berkshire Hathaway portfolio, with the assumption that there are no potential ticking financial bombs hidden somewhere in the vast insurance empire; nor do they question the high P/E ratios of some of the BRK.A core investments, especially consumer staple companies, that sell at premiums simply because Warren Buffet consumes them (i.e. invest in what you personally like).

Armchair quarterbacking is great sport--"don’t make a financial company your largest position"-- but, it's worthless as advice for future investment returns. I'll stick with "Buy low, Sell high".

Barron's Goes Bullish on Banks, Again

I'll take the second derivative of this contrarian arguement and state the following investment thesis: if the majority of Wall Street pundits think that the calling of the bottom in financial stocks by major financial media sources is a contrarian indicator, then perhaps the bottom in financials is actually here, and that covering one's shorts is the prudent measure (i.e. taking profits on a short bet during maximum fear,distain,or capitulation within a sector or at a targeted stock).

Remember, stock bottoms are always reached, and they're rarely reached, even at the worst of times, at zero. It's the counterpoint of stock valuations never quite moving beyond the finite ceiling of the "greatest fool", who knows he's always the last to the party, and has no willingness to place the bet that he isn't.

contrarian@coalmine