The Real Expert

Metrics, Mortgages and Analysts

Cindy, your articles on ETFC do have some validity, but your analysis often lacks credibility because you tend to leave out the multiple layers of risk involved. Any analysis that fails to adequately adjust any potential reward with the risks is biased at best and dangerous at worst. I think if you started covering risk more adequately, you would be seen more as a messenger of insight rather than a cheerleader for ETFC by those of us who understand things. Present a fair and balanced view and let readers decide. Don't worry, most of these readers are too emotionally attached to ETFC to change their minds anyway.

"Those calling out that the mortgage and banking industry have problems are absolutely right; we hear about it every day and the 200 point drop in the DOW validiates the problems. Why would I need to write about that since it is so obvious?"

Not exactly Cindy. You forget a few weeks ago when so many banks CEOs and others were making fraudulant claims that the wrost in the banking crisis was over or how the pundits continue to understate the real estate problem. That is why the Dow rallied back over 13,100 by may. Look at it now. You do need to remind people of the banking and real estate problems because they are enormous. People have short memories, especially when the memories are bad. They tend to embrace even the most suspect optism while erasing a bad past. This is basic behavioral finance. And the failure to understand and circumvent these natural instincts is what often makes investors make poor decisions.

"The fact is, E*Trade's comments in June's conference are something that is not generally known to the investment public. Since that information indicates E*Trade will be able to maintain unique performance differences in comparison to the industry, I felt those comments needed more publicity."

Cindy how can you say this publically available information is not known to the public? Are you saying some of these diehard ETFC fans are ignorant? That would be the implication. I cannot say I would disagree with you in that case. Still, I would have to believe that even a novice investor holding many shares of a distressed company would be watching for every announcement, conference, etc. they could find.

"I have shared my "Due Diligence" in deciding that I am going to hold on to my long position in ETFC. If you don't feel the same, then sell out your position or don't bother buying the stock."

Due diligence is only helpful if it's conducted in a prudent manner. One of the most important parts of the due diligence process is risk analysis. And for you to basically say "if you don't like my 'due diligence' reporting on ETFC then just sell or don't buy it' is an attempt to shut off any critics who have recognized the fact that your "due diligence" is not as diligent as it could or should be.

Cindy, I understand your frustration. Jbmaria makes personal attacks against you on a daily basis. And many times, the tone or true intent of printed words can easily be taken more harshly by the one it has been directed to than the writer intended. I'm sure this applies to most attacks made by jbmaria. While a bit of flare here and there never hurt anyone, I think it is obvious jbmaria often takes things to an extreme perhaps with a bit of playful rather than malicious intent. While I agree with jbmaria on many points, I certainly do not agree on the manner by which he or she choses to counter your commentaries. Hopefully, jbmaria will wean himself off of the personal attacks. Maybe they could come once every 20 posts instead of 20 attacks per post lol.

Prescient11, you just don't get it do you. Even if ETFC went to $20, you still would be wrong. The risk is way too high at this point and there are many much better investment opportunities with much lower risk and equal if not better potential returns. How many times do I have to say that? If you people think ETFC in the best of scenarios will rise back to its previous highs anytime in the next few years, you will be sadly disappointed. Even if the company makes it through this mess it will be faced with massive dilution. What that means in general is ETFC would have to be doing at least twice as good (assuming a conservative 50% dilution) as it was a years ago when the market soared. And that is not going to happen for a long time if ever.

I have no position in ETFC so I have no bias. I'd love a compelling reason to go long or short ETFC but I do not have such a resaon at this point. However, I would say that if I had to take a position it would be short based on the financial industry in general. I continue to take short positions in many of the banks (LEH, BAC, MER, BSC, etc.). You had better believe most of the banks are going considerably lower, including C ($15-$16) BAC ($18-22) and others. MER could have MAJOR problems. It could be cut in half at these already low levels.

The Online Brokerage Wars: E*Trade Offers Compelling Risk/Reward

To okletsroll....bullish for many years (as my position has been for many years previously) with the caveat that there will most likely be a correction in commodities by around 2010-2011. From there I expect a strong rebound and strong performance through 2014. Gold may last a few years longer.

If you are stuck in the Dow or other US index, you are throwing your money away. With the real inflation rate at over 10% and the Dow at around 8000 (adjusted for the dollar since 2001), I hope you can see why the US equities (with rare exceptions) will be a poor investment choice.

The Online Brokerage Wars: E*Trade Offers Compelling Risk/Reward

To Wez...gold, commodities, oil and emerging markets don't have to go parabolic forever, nor do i expect them to. But I have been in them for several years now an I will guarantee you they will do well for several more years. When the time comes to exit I will, but until then I certainly won't be wasting my time in US equities (other than shorting the financials after rallies and buying oil). Sounds to me like you are a bit upset that you missed the boat. Stick in their kid. There is still plenty of upside in oil, gold, Latin America and China.

To Oregon duck...."high-flying lawyers"? Impressive. You apparently know very little about investing to even consider Siruis. I predicted its forced buyout or bankruptcy over 5 years ago due to obvious in that terrible industry with little growth prospects. Why would anyone invest in a company that gives away all of its equity to the CEO and Howard Stern?

Stick to divorce court because you obviously lack the ability to analyze companies strategically. As far as e-trade as an investment, at best it will be many years before teh stock price recovers to previous levels and a lot of sweating bullets from your forehead. You'd be better off in oil, which is certain to go up further. Look at the risk/reward of e-trade vs oil.

The conclusion is obvious. None of you should ever buy any distressed securities. It is the most difficult call to make and can only be done well by the best of the best CONSISTENTLY. While you might get lucky here and there, over time you will get burned net net.

To methusalaw...Thank you. I wrote it thinking I would get attacked as I have when I submitted articles for Seeking Alpha, which I no longer do. The reason is because Seeking Alpha selectively censors submissions as if their staff know more than the authors. I found that they were more interested in created market buzz than helping investors.

As an example, I submitted part 1 of a part 7 series of 2 page articles explaining how the government manipulates economic data. Seeking Alpha did not publish it and gave me no reason. Only after pushing for an answer did they tell me "it was not something that generated investment action."

You tell me that not understanding how the government understates inflation by 200% or overstates GDP, and other things is not important.

In short, Seeking Alpha is a joke and it will NEVER attract and retain real experts like myself - experts that could have warned you all about the catastrophe we see today and in the future - experts who left Wall Street due to the disgust seeing them screw everyone - experts like me who have no vested interests and would like to help investors - because they are clowns focused only on generating a casino mentality for the market. That is why they cover what Cramer says on his show. Why would any serious investors care what Cramer says except for shorting ideas?

The Online Brokerage Wars: E*Trade Offers Compelling Risk/Reward

Call Schwab and ask them why they refused to give any guidance during the current banking crisis to the active trading seminar crowd?? Ask them why they continue to sucker old folks in by making them believe they can "do it themselves."

Listen to me kids. You Cannot do it yourself. You will lose. Trust me, unless you are following someone who is really sharp. And you certainly aren't going to find that person on TV or the financial publications. They are all meant for the sheep. Your best bet is to stick with commodities and emerging markets for the next few years.

The Online Brokerage Wars: E*Trade Offers Compelling Risk/Reward

"Talk to Chuck"???? Successful? Are you nuts? have you ever tried talking "to Chuck"? All you get is some young kid who is clueless and reads from a piece of paper. You can't get more clueless than a discount broker and Liz Sonders is a clown.

People let me cue you in on something about Schwab. Early in 2008, I contacted Schwab and offered to speak at one of their active trader meetings (for free) at the upcoming event (which was 3 days before Bear Stearns was bailed out).

I wanted to help people because I was one of only a few of the people in the world who predicted all that we see today and wrote about it in a book a few years back.

I knew that the media was not really telling people what was going on in the banking collapse and felt that the most important thing would be to provide some guidance and risk considerations to these Schwab clients (since I knew they were 100% lost).

When I went to this event to meet up with key contacts, I was shocked to see that the event consisted of mostly elderly people and the seminars were beginner level - they were teaching the elderly the basics of technical analysis and other things. I was shocked! I wondered, WTF is Schwab doing suckering in desperate elderly people into the most dangerous period of the market now?

Surely they would be having an expert speaker to discuss the current banking crisis, wouldn't they? Not at all. The whole day it was ignored as if it did not exist. They had some guy from one of the lame duck shows on CNBC speak during lunch. And although many in the audience had specific investment questions regarding oil, banks, Bear Stearns, real estate, gold and so on, this fellow was unable to give any decent advice - reason? Because he was clueless. He is on CNBC - what do you expect? Those who appear regularly on TV have no clue what is going on. They are marketers and entertainers.

After following up with Schwab officials the following week, I was sent to some kid who was in charge of these events. He did not bother to even call me...he emailed me with the response..."sorry but we have speakers booked through 2009."

Of course what I was offering (for free once again) was to help guide investors through the current banking and real estate mess NOW, not after 2009. All of this proved to me that Schwab is a complete joke, and no better than the other discount brokers, which are much much worse than the REAL Wall Street brokers.

My advice? Stay far away from Schwab. They are very dangerous because they try to position themselves as advice providers when they are complete idiots. All you have to do to confirm this is call one of their reps and ask for market guidance. They will read off the list of BS they have been told to push "stay invested, think long term, diversify." Wow real valuable. But do not dare ask about options unless you are ready to assume the risk of getting wrong information as I have.

I'd stick with e-trade. At least they don't pretend to offer expert advice and fail to deliver. Always stay away from deceptive people/companies and Schwab is as deceptive as they come in my opinion.

As far as investing goes, why risk investing in any financials when there are so many better opportunities out there. if you aren't in oil, gold, other commodities, China and Latin America, you're just lost.