palsboss

Top Market Cap U.S. Banks: A Long Term View on Value

I absolutely agree that financials will provide great long-term opportunities for investors. Problem with the advice given by all of the various websites, newspapers, magazines, etc., is that they never seem to talk about price. At current prices, I don't think there is value. First, many stocks are trading at prices similar to prices 3-5 years ago when the markets were great. Second, the market doesn't seem to be flush with value investors. Instead, it seems like a casino where you can make short pops on short-term positions. Stocks trade on any kind of rumor or news, whether relevant or not. So I would like to see some articles that recommend financials at specific price targets.

Economic Outlook: Bracing for a Rocky Road?

So supposedly home mortgage rates will drop. Possibly to 6%. But that is unlikely to spur interest in homebuying. You have to be a fool to want to buy a home right now unless there is a compelling reason (such as buying into a very good neighborhood that would otherwise have been impossible. Its all about jobs and so long as people worry about jobs then no one will buy. With unstable jobs, lenders will be really tough on lending. People seem to forget that there is a basic equation when it comes to figuring out the price of housing. Home prices will stabilize at the point where monthly payments in particular neighborhoods meet the income levels of those who choose to live there. Rather than figure out home much home you can afford, instead, you should figure out how much in monthly payments you can make and find a loan accordingly. What is the point of living in your "dream house" if you are only going to get kicked out of it after a few years. I see the takeover as a sign of how bad things are and how much worse they will get in the short run.

Ten Banks That Will Be Hurt by the Takeover of Fannie and Freddie

I guess saving Lehman is next?


On Sep 08 12:11 PM GregY wrote:

> I am tired of the government manipulating the markets, first browbeating
> the industry into ridiculous lending practices, and now not letting
> it to find a clear value. And that is done by "conservatively&q....
> minded government, what can we expect from the next one? They are
> turning the markets into another form of taxation. I am no longer
> putting any new money into this or vote Republicans.

Fannie, Freddie Headed for Conservatorship

Why did financials rally after-hours after the news of the bailout? It makes no sense to me. Some stocks are close to their same share price before the financial markets tanked (before August 2006). Its as if investors are totalling ignoring this fact.

Earnings Preview: AIG

I sat up late on Wednesday night debating if I should go long or go short on AIG. In Tokyo, the U.S. market opens at 10:30PM. Perfect time to get in dinner, maybe a workout and a walk with the dog.

So SocGen downgrades it, UBS and BoA upgrades it, then analysts chime in with positive earnings expectations. So going against my instincts to short the stock from its opening price, I decide to pick up some shares at just under $29 bucks. I figure that maybe these idiots are right. Then at the close on Wednesday, AIG drops the equivalent of a financial A-Bomb (just like I suspected it would) and of course, it shaves-off over $4 bucks. To reduce my average share exposure I picked up some additional shares riding the price down. But now I sit with unrealized losses when I could have made a hefty profit in 1 day. Enough to buy an E-Class Benz.

So my conclusion is that analysts have no more particular skill than I have as a commoner. With the free research that is available out there and my gut instinct about where markets are going, I am far better off ignoring most analysts comments and sticking to my guns.

I suspect AIG will recover in the coming days as I think it is way oversold. I also think the loss, albeit huge, should not have surprised anyone given global metrics right now. So buy for the long-term, but trade on the volatility in the short.

And ignore the analysts. Go with your instinct. It is probably correct.