drmalaka

Earnings Season: Fundamentally Flawed

Time to short the banks again. Sure they may go up for a few more days but like the opposite of catching a falling knife, you can not pick exactly where the top of this bull run will be.

I said to a friend the other day, if I told you on Monday that you could short the banks at the price they traded for a month and a half ago would you do it? Well here we are, one week later you can short the banks at the same price they were trading at in early June. Has anything changed to make the banks better companies in the last week?

To top things off, banks like WFC and PNC actually raised their dividend. This is strictly a stock manipulation play. There is no doubt that cash in king at this point in time, so why in the world would a bank look to send more cash out to its shareholders? This is a horrible business decision. They are making dividend decisions based on stock price, not on sound economic principals. They are doing long term damage to their companies in order to prop the stock price up today.

C, MER, PFC, STI, COF and their cohorts will all be substantially lower in a month and a half than they are today.

The author is completely correct about earnings season. The last market rally started at the begining of last earnings season. This rally started at earnings season. All this tells me is that earnings are manipulated and to invest on them is idiotic at best.

Citigroup: A Promising Blue Chip

I think the most time put into this article was finding the graph to insert. You are spot on though, $15 will be in sight shortly. This company is horrible. This is what happens when bankers run companies, they have no clue how to run a business, all they know how to do is steal from the public.

By the analysis that C is cheap based on its historic high, you must be buying ABK and MBI right now as well, look how cheap they are. And what about CFC, that is pretty far of its high.

Liveris bought 1200 shares. What the hell is that? The dude is probably worh gazzillions and he spent an entire $25k on Citi stock. If that is not the biggest sell signal I have ever seen. That is what he spends on his lower end help for the month. Talk about lip service. You probably believe that NObama loves this country becuase he put an American flag lapel pin on the other day.

These 32 Commercial Banks and Thrifts May See the Dung Hit the Fan

Reggie, as always a great article. You have so much back up information that those who throw barbs at you just do not want to do the work and understand what is really happening.

Ebuddy, Reggie did not say sell all those stocks, he has more articles and will select the best shorts. Your points are correct, so the answer might be that those are not on the short list.

The first comment is just a stick your head in the sand attitude. Trust the market, they know. First, don't forget the lowlife scumbags you are trusting. Second, how forward looking was the market in Q3 07 when it ran to new highs? What about NASDAQ in March 2000? To blindly follow that is idiotic, at least take a moment to listen. Read what Reggie and others have to say and then decide who you agree with.

There is very little room in these banks for defaults, it is not like they have a gross margin of 50% so a few defaults would mean nothing. Generally speaking, I would figure that losing all the principal on one loan would cancel out the profits of twenty five or thirty loans at least. If they lent out money at 10% interest the interest payments on ten loans of equal value would cover one complete loss. Then you have to factor in that they only make the spread between what they borrow for and they lend out. Add in overhead and costs and I might be underestimating the number of quality loans one complete loss cancels out.

Reggie you are spot on. If a bank holds a high percentage of these potentially zero value loans (and I agree with your hypothesis that a lot of these will be zero) then that bank is going to be in trouble. I love how you are going about this.

All those above who are so positive on this sector, do you really believe that housing will come back by the end of the year or early next? 11 month supply of houses compared to a usual 5.

Citigroup 1st Quarter Update, As Promised

One time charges? Well next Q and the Q after that and the Q after that they will continue to have one time charges. Investing in this company is the same as closing your eyes and jumping off a bridge.

There is so much toxic waste in these banks that they refuse to write down becuase they no longer have to. They just move them to Level III assets and value them at whatever keeps the bank from going being insolvent.

Every quarter as they banks make money on their normal businesses (although less than in the past becuase of the fact they are now smaller and business is slower) these banks will write off more of the losses on their books. This might go on for years. The same thing happened in the Latin American crisis, the accounting standards were changed so that the banks did not have to take the losses immediately and they could write them off against future profits as those profits came in.

The Truth Behind Earnings Labels

degu what are you talking about? As I recall the market was unstopable from Aug through October, going from 12500 to 14200 after the summer swoon. How great would you have felt writing what you did after that little run?

Investors want to believe good news and that is what they are doing. They did the same thing last fall, how did that work out?

So you think it is rational for a market to be 8% down from its crazy inflated highs after what we know about the credit crisis, soaring commodity prices and a pending recession?

Numbers are coming down but companies are being rewarded for meeting lowered guidance. A ten percent cut in earnings is leading to a five percent drop in stock price and when earnings are met we see a rise in the price. The bottom line is earnings went down.

Could Citi's Deal Signal a Turnaround?

I am sure that having an additional $12bil on the balance sheet will help them survive. However; I do not think that taking a $1.3bil write down on debt which had yet to be written down is positive.

This is just further proof of how much trouble the banks are in. They are selling whatever they can find a market for and offering a discount.

The Coming Crash of 2008: A Result of Overleveraging

Judging from these comments I could not be happier being short. How come everyone is looking for a bottom six months after the top? The top was completely artificial, based on historically high PE ratios and net profit margins.

Stop looking for a bottom in these financials, these are criminal enterprises that stole billions of dollars from their shareholders and to think about investing in them is rediculous. The Fed told us yesterday that they will save the markets but they will not save equity investors in these crappy companies.

This is the same idiotic attitude everyone took with ABK, every other Friday there was a new rumor, first one sent the comapany to 12.5 the next one sent it up to 11.5 and now it below 6.

This economy is a mess. We Americans are a joke. We have spent so far above our means that we have no way to go but down. How many idiots took equity out of their house to buy a new Hummer with 22" wheels? Everyone in this country thinks they are entitled to live this incredible standard of living, flat screen tvs in every room, new lap tops, new cars every three years. Then we look to the government to bail us out. Where the hell do we think the money is coming from? Cool, we tried to help this recession with a stupid 150b stimilus package that we billed to our kids.

For all you bulls who have found a bottom, what makes you think consumers are going to be spending a lot in the comming months? With what money? With the money they have to spend on high priced gas and food because our Fed keeps inflating our every day expenses to save these criminal bankers who should probably be lined up against a wall and executed?

I have been praying for years to see $5 gas, I just can't believe it happened so quickly. There is nothing more satisfying to me than seeing the look on the faces of people spending $100 to fill up their SUV that they drive around in alone.

And for the economic illiterate that said if Obama gets elected then we will be in better shape. Please drop me a line, if he gets elected I would like to sell you all my stock. Yeah, a socialist is going to help markets. Taxing corporations and capital is the way to spur an economy on. Hmmm, who can do better with capital, smart people who made the money, or lazy, stupid, economically illiterate leaches that suck off of society?

Financials and Retail: Not as Dire as They Seem

This might not be the best way to read corporate financials Philip. You might want to check EPS and PEs instead. B of A is a much bigger bank since 2003 so we would expect them to be making more money just because of the aquisitions. But there are more shares outstanding now, so you must compare those relative numbers not absolute values.

As for your calls, the least you could have done is picked some of the better financials. WM is as bad as they get. July 12.5 cheap? I have a feeling WM did not make a loan unless the borrower promised to default. Single digits very soon for this one. And C is no better. They raised cash ten points ago at an 11plus percent interest and now they need more money. I am not sure if the conversion price for the note includes a ratchet down protection like the one MER has, if C has this too then raising money through equity is even costlier.