roger maxims

Three Financial Stocks Worth Holding

I love this article. The author says Wells Fargo has "excellent management" and JPMorgan has "solid management", which presumably made the wise decision of concentrating most of their risks in the US housing market. And then the markets failed them.

Also, I applaud the fact that "the BOA name has significant goodwill". It very much explains the $16.24 portion of its current quote of $16.25, the remaining penny being the cost of the share certificate some may soon want as a momento.

The only case where shares of a company plummeted and now represents a bargain is when the steep fall was caused by margin calls on its shareholders, not the company itself.

Bear Stearns: Why It's Safe to Bet Against Joe Lewis

Everyone, please extend your wise counsel on this conundrum that I cannot figure out:

1. If JPMorgan is Bear Stearns' biggest counterparty, wouldn't it be forced to buy Bear out at any given price? If not JPM will go bankrupt = either a bullet in the stomach or one in the heart.

2. If JPM may fail because of the BSC fiasco, wouldn't GS, MS etc want to jump in and acquire JPM at US$2 a share? Otherwise, as JPM's counterparty they may also face bankruptcy.

3. What is preventing investment banks from going through waves of mega-mergers like automobiles (3 left) and aerospace (1 left) industries?

4. In case i-banks are nationalised and therefore tied to the tighest strait-jackets in terms of leverage, would there be any point at all in their indepedent existence from commercial banks?

5. How is any kind of risk management effective, when on 30 times leverage, the markets you deal in move more than 3.33% a day?