forgetalpha

Yes, Financial Companies Can Be Analyzed

Your'e reasoning behind your assumption that a value investor such as Graham would buy financials now is fairly unwarranted. Just because Buffet bought banks in the early 90's at the bottom of a financial downturn does not mean in any fashion that this is in fact the bottom of this crisis, a crisis which Buffet himself is one of the worst if not the worst he's ever seen. While the stocks of financial companies have been punished severely, that simply does not mean they have to return to the mean just quite yet. The deteroration in financial stock prices now is unprecented because the breadth of the problems is unbelievable. A value investor would not buy financial stocks at current levels because doing so WOULD be a speculation because you would be speculating that the bottom has come, ballance sheets are all better, and that capital ratios are adequate across the board. Pretty much there is way too much speculation that would need to be done in order to decide to buy a financial stock right now, and thats why any prudent investor would'nt. Notice how financials are swinging like pendulums, up 20 percent one day, then down 15 the next. A true value investor shouldnt have to look at the ticker every day to worry about his money, that's one of the most evident and important differences between investors and speculators. Funny how so many people chomp at the chance to put Graham/Buffet/Zweig/va... investing down a notch...do more research and stop making outlandish claims just so you can get published on SA.