RB9562

News Flash: Major Market Turns Aren't Announced In Advance

Tom,
You touched on valuations quickly but I think that is such an important point to speak on as to where financials are now.

Bears want to point to the fact that business models will have to change with de-levereging and the end of structured finance. Which is true!

But this simply means the stocks should not zoom right back up to their extreme levels of 18 months ago. Most financials are down 60-90% from those levels.

Bull case is that these companies just need to strip out the destructive divisions and let the core businesses shine again (Wealth management for the IBs and the deposit bases for the banks).

I think this recent run-up was the removal of a default premium in many of the financials. After the govt stepped in for FRE and FNM there is much less worry of a BSC repeat in another financial.

I see prices drifting at these levels (after IB earnings) for a bit of time while investors re-evaluate the pricing and financials continue to restructure their businesses.