jdl51

Whitney Gets Bearish: Will She Be Right Again?

"You're missing the forest for the trees. Wall Street loves people who are only capable of seeing the surface of the circumstances..."


Some 94 percent of S&P 500 companies have reported to date, and 80 percent of those have beaten earnings expectations, which would be the highest percentage of companies beating estimates for a quarter since Thomson Reuters began tracking the data in 1994.

If I wait until hyperinflation, economic financial collapse, or whatever the doomsday scenario is these days, I'd have lost a terrific opportunity to make a lot of money. It appears that most of the doom and gloomers base their financial opinions on their political beliefs, that it's impossible for the economy to improve under the current administration. That thinking clouds their judgment, in other words, a big tree is blocking their view.

Whitney Gets Bearish: Will She Be Right Again?

No fundamental reason for the recent rally? How about most companies earnings met or exceeded analysts' estimates. Most companies are seeing slow improvement in the economy. 3rd quarter GDP growth was over 3% compared to a negative 6.5% in the 4th quarter last year. The rest of the world's economies are back on the road to expansion. I mean, come on. There may be bumps in the road ahead, but we are in much, much better shape than we were a year ago when everyone thought the world was coming to an end. Last September the DJI was at 11,500. I don't see these levels as outlandish by any means in a growing economy compared to what lay ahead of us this time last year and then compared to what's to come.

Where's the Outrage at the Banks?

"Whoa there for a moment, lets be fair and think back in the early 1990's when our government who regulates our banks told them and other financial institutions to ease credit for those who normally cannot qualify for a home loan."

Let' be fair and tell the truth here. The CRA was implemented to stop banks from redlining neighborhoods that they were taking deposits from but refused to lend to. The banks were never "forced" to lend to anyone but were required to lend to qualified borrowers in neighborhoods that they serviced. The banking fiasco had its roots in irresponsible lending to just about everyone, not poor unemployed ghetto folks. If that were the case, we would not be having foreclosures in every neighborhood in the country, but would be limited to a few homes in the poorest neighborhoods that the right constantly tries to blame for the collapse of the whole financial system. You'd have to be an idiot or completely ignorant of how the system works to believe that. Banks went on a lending binge to anyone that walked in the door regardless of qualifications because they were more interested in making fees, securitizing the loans, passing them on to investment bankers who with the collusion of the rating agencies, sold them to an unsuspecting world and then the cycle repeated itself until it collapsed. And to multiply the problem, investment banks sold insurance policies, but they couldn't call them insurance policies because those are regulated so they called them credit default swaps. They sold them to anyone who wanted one, again to collect the fees on something they never thought they would have to pay off. Unfortunately the whole house of cards collapsed. The previous administration didn't believe in regulation and looked the other way while all this was going on instead of jumping in and putting a halt to it or at least try to regulate the derivatives industry which would have lessened the losses considerably. If you want to blame someone, blame the mortgage brokers that sold these subprime loans to people they knew wouldn't be able to pay, the appraisers that juiced their numbers, the regulators who were asleep at the switch and the ratings agencies that didn't bother to do their due diligence and check the underlying mortgages. Any link in that mortgage chain would have put a stop to the whole mess, yet all of them were too greedy to do their job responsibly.

Bank Earnings: Reality Check Ahead

So no concrete information, just passing on a rumor is the best you can do? How about some facts instead of printing a comment from another article. Some experts? Are these the same experts who haven't reliably predicted any of the catastrophes the financial system went through the past couple of years?

Should You Invest in Banking Stocks?

Betting on financials, or the market in general, to go down this time of the year is more often right than not. We are still feeling the effects of the meltdown in real estate but things are less bad than they were a year ago. I sincerely doubt that BAC and C have hit their highs and anyone holding these two, especially BAC, should make out very well in the long term. 0% from the Fed, 5% mortgage rates and 14% +/- on CC added to BAC's Merrill acquisition, it would be almost impossible not to make a ton of money.

What's Citigroup Really Worth?

Whatever the reason, a 500% return in six months ain't bad. It seems that the market being based on speculation and not fundamentals is news to most posters here. Right now financials are the latest and greatest. Last couple of months it was tech. What it's going to be next month would be more helpful instead of always analyzing history. It's always been a game of guessing right, and I do mean guessing.

Are Financial Stocks Preparing for 'The Fall'?

Robert0713 wrote:

"You realize, don't you, that you're now just a welfare queen? sucking off the hind tit of the taxpayer? and you're proud??"

Obviously one of the pissed off ones. Too bad, so sad.

CDS: The Sabotaging Asset

This is the crux of the financial meltdown. The U.S. banking system could have handled a few percent of mortgage defaults, albeit with some pain. What it couldn't handle was the multiplying of that default liability potential a thousand fold. The CDS formula was developed around 1997 and by the time Clinton left office the CDS market was only a few hundred billion, hardly enough to bring down the worldwide financial system. Calling them swaps instead of insurance, which they are, was designed to by-pass the regulatory agenices. In hindsight this was a monumental mistake.

"Credit Default Swaps were invented in 1997 by a team working for JPMorgan Chase[7][8][9]. They were designed to shift the risk of default to a third-party, and were therefore less punitive in terms of regulatory capital.[10]
Credit Default Swaps became exempt from regulation with the Commodity Futures Modernization Act of 2000, which was also responsible for the Enron loophole. U.S. Sen. Phil Gramm (R-TX) introduced the Act on behalf of financial industry lobbyists. The Modernization Act was rushed through Congress as a companion bill to the omnibus spending bill, the last day before the Christmas holiday[11]. It by-passed the substantive policy committees in both the House and the Senate so that there were neither hearings nor opportunities for recorded committee votes [12]. The omnibus spending bill, which was 11,000 pages long, is the financial plan the government requires for everyday operations. President Clinton signed the bill into Public Law (106-554) on December 21, 2000."