InvestBaboo

A Bull Market That Few Are Buying

The title "A bull market that few are buying" is correct but with an entirely different line of reasoning than this author.

There is a vast amount of cash waiting on the sidelines that is yet to buy into this market that will provide rocket power boost once it starts coming in. It is a matter of when this money will start flowing in and not if the money will start flowing. The money that the author and his friends have will also come pouring in once they realize that you can't fight the trend but given just how much reservation the author has about this I am affraid he may be the last one to get on the train and left as the bagholder.

What I am saying is that facts can be looked at with colored glasses. I could get on either side of the fence and make extremely bullish or extremely bearish arguments. I have been wrong in the past when I have trusted my opinions and invested contrary to the the trend in the market. One day I woke up and realized that fighting the trend was a mistake and I will always invest with the trend and from that deduce either a bullish or bearsih bias. This is because the markets are always right and anyone who argues against it is wrong!

As I keep saying the trend is your friend till the bend at the end and there ain't no bend to see at the present my friends. Articles like this are healthy in the sense that some doze of bearishness is good for the bull market but I urge the readers of SeekingAlpha not to miss the bull market and once-in-a-lifetime wealth creation opportunity that the market has presented us with.

Why This Rally Is Unsustainable

This author is a real basketcase.

XL capital staged a rally to $9.84 from the low digits. To this basketcase author this is a 400% unjustfied rally. He would argue "What has changed in the fundamentals since March of this year to justify a 400% rally?" To those investors who remember seeing XL at 40 dollar plus last year it has barely begun to make up for the decline. These investors were probably shocked and aghast that a 40 dollar stock so quickly ran down to the single low digits in such a short timeframe. The same is true with all other equities the author talks about. The author forgets that these were behemoths once that were brutally punished by the market and have not recovered even to half their original value.

"THE MARKET OVER CORRECTED MANY EQUITIES TO THE DOWNSIDE AND NOW IS BARELY BEGUN MAKING UP FOR THE OVER CORRECTION." There have been significant improvements in the fundamentals that are helping the markets now put proper value on these devastated equities. While the market will not reward them with their 2008 highs (yet!) the market will certainly take them a lot higher than where they are today.

It is exactly this "Cup half empty" syndrome that creates suckers out of people. People like this author always think they are smarter than the market and always try to double guess and/or outsmart the market. There is a whole bunch of these sucker authors on Seeking Alpha who have caused their readers great disservice by influencing them to stay out of this rally. If this author and others like him had simply followed charts and then came up with a rationale to justify why the markets were rewarding the equities perhaps they would not only be wiser but also richer.

As for the author finding faults with the technical parameters of this rally there are thousand other analysts who will look at the same data and argue otherwise. At the end of the day the markets rule and investors are wise to follow the trend till the bend at the end.

Betting on the Big Banks

"Things are never as bad as they seem while they certainly are not as good as they seem" -- so goes the old adage and it is probably an accurate description of the uncertainty surrounding banks.

To know what will happen to banks earnings we need to look at the broader economy. If you make a future prognosis while looking in the rearview mirror you see massive unemployment, foreclosures, even more dramatic fall-off in consumer spending, plunging housing prices and thus plunging equity markets. However, if you survey the scene around you see something interesting happening. Many companies are announcing better-than-expected earnings. Best Buy did it, Bed Bath and Beyond did it, Apple and RIMM blew it out the door and likely Amazon will do the same tomorrow and (get this!!!) JC Penney raised estimates! If it is true that the companies are feeling more optimistic about their future they are probably going to start hiring people. As they start to hire people the fear psychosis that has gripped the nation will start loosening. As people lose fear those that have jobs and money but are affraid to spend will start doing so. When this happens manufacturers that are operating with low inventory and low production capacity will start expanding their operations and they start hiring more people! All these wheels are in motion but meanwhile banks are raking in money as they get money at ridiculously low rates and lend it out at an exorbitant rate making a ton of money which many believe will help them cover the impending loan losses until the economy turns around. And when the economy turns around the banking frachises that have positioned themselves right will become financial behemoths.

Therefore, banks will be fine -- they are not going anywhere. The U.S. of A is not going anywhere -- rumors of her death have been greatly exaggerated. The strongest franchises will survive and thrive. The weaker will be eaten by the stronger ones (Look at what Mack the knife said Morgan Stanley is likely to do with regional banks). Those that invest today in these behemoths will reap huge dividends down the road.

Behemoths as per my book -- JPM, MS, GS, WFC, BAC.

Banks are a longer term investment. For the shorter term bank equities price movement will be driven by traders

Nobody Knows What Bank Stocks Are Really Worth

"Things are never as bad as they seem while they certainly are not as good as they seem" -- so goes the old adage and it is probably an accurate description of the uncertainty surrounding banks.

To know what will happen to banks earnings we need to look at the broader economy. If you make a future prognosis while looking in the rearview mirror you see massive unemployment, foreclosures, even more dramatic fall-off in consumer spending, plunging housing prices and thus plunging equity markets. However, if you survey the scene around you see something interesting happening. Many companies are announcing better-than-expected earnings. Best Buy did it, Bed Bath and Beyond did it, Apple and RIMM blew it out the door and likely Amazon will do the same tomorrow and (get this!!!) JC Penney raised estimates! If it is true that the companies are feeling more optimistic about their future they are probably going to start hiring people. As they start to hire people the fear psychosis that has gripped the nation will start loosening. As people lose fear those that have jobs and money but are affraid to spend will start doing so. When this happens manufacturers that are operating with low inventory and low production capacity will start expanding their operations and they start hiring more people! All these wheels are in motion but meanwhile banks are raking in money as they get money at ridiculously low rates and lend it out at an exorbitant rate making a ton of money which many believe will help them cover the impending loan losses until the economy turns around. And when the economy turns around the banking frachises that have positioned themselves right will become financial behemoths.

Therefore, banks will be fine -- they are not going anywhere. The U.S. of A is not going anywhere -- rumors of her death have been greatly exaggerated. The strongest franchises will survive and thrive. The weaker will be eaten by the stronger ones (Look at what Mack the knife said Morgan Stanley is likely to do with regional banks). Those that invest today in these behemoths will reap huge dividends down the road.

Behemoths as per my book -- JPM, MS, GS, WFC, BAC.

Banks are a longer term investment. For the shorter term bank equities price movement will be driven by traders.

Why BAC Will Beat: Understanding a New Bull Market Is Not Underway

There is a fundamental problem with your key premise that everyone is in collusion here for the benefit of each other.

If such were the case then there should never have been a financial stock meltdown of the kind we saw in 2008. So when the market is going up (like it has been the past few weeks) everyone is colluding together and when the market is going down it is because the whole system is corrupt and investors have caught on to this?

I do agree with you though that we allowed the system to become corrupt through lax regulation. The pendulum is now swinging to the other extreme and we may end up over regulating. A balance will be found in the future. While the United States may not possess the perfect system it is by far the best system that exists in the world today. For a while it may appear that we have compromised free enterprise but the American spirit is strong and we will allow free enterprise to flourish but under the right conditions.

The Next Leg up in Financials

I agree.

The stocks Jason talks about as well as 35 plus other low priced stocks that are preparing for a major run-up are part of my Slumdog Millionaire portfolio which has had a return of 10.4% since I published it on April 8, 2009.

Michael Mayo Ratings

Mayo is a moron.

Go play back his strong buy recommendations on Lehman TWICE before it tanked at which time he conveniently discontinued coverage.

Mike Mayo's Seven Deadly Sins of Banking

Michael Mayo is a moron.

He has made several bad calls in the past recommending Lehman TWICE (not once) and then when it fell to toilet just discontinuing coverage.

Whitney comes out today and says things are really not that bad and advices not to short financials ahead of earnings!

Financials (with the exception of the regional banks) will continue on with their rally tomorrow.

PPIP Is RIP: What a Dead Cat Can't See, A Dead Cat Don't Know

If the banks don't want to sell their own toxic assets because they can now use mark-to-market and look good why are then banding together to buy someone else's toxic assets? True, there is a govt bailout of sorts happening here (since the purchase of these assets is largely funded by the govt and a majority of the risk taken by the govt/taxpayer) but we know the govt will hold the foot down on these purchases assets which automatically puts a floor on the prices for these assets which means the only direction the prices will then move is up! I think you (the author) is needlessly pessimistic and have your head so deep inside depression's ass that you are failing to see the light at the end of the tunnel.

Stock Rally Built on Fundamental Sand

Dear Author:

You are in denial.

The rally is happening because investors have concluded that we are not looking at Great Depression 2.0. Based on several leading indicators investors have also concluded that recovery is under way. Therefore, it is wrong to value S&P earings below $50 and stocks were being valued as if they were.

It is really that simple. Dow has the power now to scream past 8000 and after that investors need more clarity on the earnings picture for any further upward move.

Are 'Phoenix' Stocks Getting Ready to Rise?

Thanks, Cam Hui! If the U.S. economy does the turnaround this year as I suspect this list of stocks may have some huge winners!

Nationalizing the U.S. Banking Sector: There's No Choice

The banks are playing the "Hope" game just like the rest of us are. While gloom and doom surrounds us there is an optimistic streak within us all that one day things will start to turn around and all will become well over time. To support this conclusion we look at historical facts (Such as how long recessions have lasted since WW2, etc.). The dark side that we chew on from time to time yet ignore is the possibility that this time we may have dug a whole so big that it will en up becoming our grave. If you listened to Ken Lewis or Vikram Pandit on TV you will see that they all think that given enough time all these assets will be worth more and their problem will naturally fix itself. However, they ignore the fact that while they wait for this turnaround their impaired balance sheets makes them unable to do enough lending which is exactly what is needed to start the turnaround they are hoping for in the first place. This vicious cycle will continue until such a time all involved will come to the conclusion that banks have to be nationalized, taxpayers will have to take the loss, and lending activity to begin again, and the economy slowly brought back to life. We all know that when Government spends money it will be a stupid spend and when a nationalized bank lends money it will make several hundred mistakes and make mone-losing loans however this excess is part of the medicine we need to get money flowing in the economy again.

Thinking the Impossible: Could Bank of America Go to Zero?

With all the doom and gloom I am at a loss to understand why in the world major bank execs did considerable insider buying and put their own personal money on line in the last two weeks. This includes Ken Lewis and his BAC executives. Do they know something we don't? In the past two years I have learnt that things are never as bad as they seem and also they are never as good as they seem. The true situation is somewhere inbetween. To me this all sounds like a game of confidence building in our economy. If the administration succeeds in injecting a healthy doze of confidence into our system with a "workable" plan then it is quite possible that we may have defined the floor price for all the bad assets and the money on the sidelines will come pouring in to lift us all out of this misery.