extinctionism

Dick Bove Says Banking Is Sound - Time to Buy Financials?

If you give a guy enough chances to call the bottom, eventually he will get it right but how much money will you have left by then?

Here's a comment on Dick Bove from Ticker Guy/blogger Karl Denninger:

Oh Dick Bove! Remember Me?

Yesterday I was infuriated with both Bove and the stock-pumping media, which has done nobody any favors during this crisis, and still continues to attempt to retrospectively rewrite history.

Bove was back out there crooning about Bank America, and he now has a $14 one-year target on it according to Bloomberg, with a claim that "eventually" it will go back to its all-time highs. (When, exactly, is "eventually" Dick? Five years? Ten? Fifty?)

Second, The WSJ covered him again yesterday, and they said this:

Rising star Dick Bove - the Rochdale Research analyst who foretold much of the banking crisis - couldn't disagree more with Mayo. In restarting his coverage of Bank of America Corp. (BAC), he called the economy's bottom. (Bove, like Mayo, recently changed firms.) "My belief is that the economy has turned," Bove said in a note to investors. He said Bank of America's stock price will ultimately "return to its all-time highs."

He foretold much of the crisis?

I was going to be nice, after promising a bit over a year ago to hold his feet to the fire if his call from then proved wrong, but this is too much chest-puffery for me.

Here is what Dick Bove said a year ago:

"This is a generational opportunity to buy (bank stocks) on the cheap."

It was, huh?

In addition:

In fact, on the phone with me, he admitted that he expects a "mild to moderate" recession - remember that while I (and many others) believe we are in one right now, you can't call a recession until you are deep into the middle of it, and often they are not officially called until they are over!

Mild to moderate recession eh?

On March 18th of 2008, about a month from the end of a bear market rally that Mr. Bove called a "generational buying opportunity", BAC closed at $38.93.

Yesterday it closed at $7.48, for a loss of eighty percent from the date of his "generational buying opportunity" call, and he now has a $14 one year price target on the stock, a one-year forward target of less than half of where it was when he issued his "generational buying opportunity" call!

If that sort of performance is a "generational buying opportunity", I (and those who listened to this guy) would like to know what constitutes a reason to sell.

By the way, that's not an "outlier." Wells Fargo has lost half its value, Wachovia no longer exists, Washington Mutual no longer exists, Lehman no longer exists, Citibank went from $20.71 on 3/18/08 to $2.72 last night (a near-90% loss!) and more.

Every one of these stocks above, with the exception of Wells Fargo, has lost more than the broad S&P 500 index, which on 3/18/08 closed at 1330 - a loss of 39%.

And before someone claims that I am "cherry picking" bad banks to make Bove look bad let me point out that the broadest based bank index, the BKX, stood at 81.31 on 3/18/08. Yesterday it closed at 29.61 for a loss of nearly sixty four percent, much worse than the broad S&P 500.

To put this in perspective I issued a long-term SELL on the entire market in February of 2008, with the S&P 500 at about 1350.

If you sat in cash from that point forward to today you avoided a loss of 39% in your portfolio. By the way, my long-term investing signal remains on a sell and while my favored indicator for that has narrowed somewhat in the last month, it remains very close to its widest level in this Bear Market.

I called on Dick Bove's "generational buy" based on that long-term indicator, which at the time was widening (that is, strengthening its "sell" indication) along with my personal analysis and view of credit quality, expectations for unemployment and my outlook for the economy in general forward over the next two years.

I believed at that time Dick Bove's call was just dead-flat wrong and, if followed, was likely to lead your portfolio to ruin.

Dick Bove, in a very long phone call I had with him at the time, argued that one had to give his call a full year to play out before judging it.

Ok Dick, you got your year. Remember Dick, you and I started our email and phone calls over your Bear Stearns opinion - a piece that I wrote and you believed was "unfair".

How did it all work out for people who listened to you a year ago?

Still think I was "unfair" in going off on you for potentially leading people to ruin with what I believed were just dead-flat wrong calls on the direction of the banking sector in the market?

An investor's portfolio, invested per your call last March, has risen or fallen by how much? And how does that compare to my call that the market as a whole was a "sell" (and the banking system was REALLY a sell - call that a SHORT if you want; I did, even though "the street" never uses that term) and therefore the long-term investor would be best off sitting in cash or equivalents (e.g. short-term treasuries or actual FDIC-insured cash.)

Let's also remind readers that one of the outcomes of our conversation back then was that you did not believe the S&P 500 would fall by 25% (or more) forward from that date. I was calling for a sub-1000 SPX, which at the time was a roughly 30% decline.

I was wrong on that call - I wasn't bearish enough. You on the other hand were ridiculously bullish, measured against actual results one year hence.

Where is the media's "white-hot spotlight of truth"? Where is the media's responsibility to properly indicate the accuracy of one's prior calls when putting someone on the air as a person with a claim that they have the ability to make reasonable forward predictions?

None of us get it right all the time, myself included.

But the scrutiny applied to one's claimed prognostications should scale linearly with the audacity of one's prognostications when viewed in the historical light of fact.

Rising star?

From my perspective Dick Bove is more like a "shooting star" - two seconds before "Deep Impact".

Oh, Mr. Bove promised, after our previous altercation on the phone a year or so back, to contact me and go over our respective prognostications one year hence.

Time expired on that promise March 18th and neither my phone or email has seen incoming traffic from him.

Why not Dick?

PS: I'd have emailed you Dick, but you're not where you were a year back. You still have my email Dick, and likely still have my phone number. Feel free to ring me any time.

The End of the U.S. As We Know It: Tracking the Dollar Downward

"The demand for housing will never come back/The demise of the dollar is imminent". According to you , the dollar will strengthen versus housing. Is that the meaning of " imminent demise", i.e. to strengthen?

Seeking Alpha really needs some editors. This is so typical of the ludicrous arguments I read here.

As much as you would love to cry socialism in America and certainly we have large government but not RELATIVE to private enterprise. If Obama and his Fed embark upon this supposed promise to buy ALL the debt that would be over $50 trillion. That seems very unlikely as the mechanisms for debt creation are largely at the retail level (in store credit lines). These mechanisms are in the hands of private enterprise who are now running for the exits in case you' haven't noticed. Gold Bugs and dollar bears were caught with their pants down when it became apparent that the rest of the world is worse off than here and will continue to get worse in comparison. No, we are in an unstoppable deflationary credit collapse. The "stimulus" may slow it down some but unless the energy revolution comes to fruition very soon (energy does what telecommunication did, i.e. CHEAP and UNLIMITED energy) and other tangible innovations to productivity are enacted, then asset prices will continue to plummet for the IMMINENT FORESEEABLE FUTURE i.e. strengthening dollar.

The End of Gold, Part Two

It's nice to hear some common sense here at Seeking Alpha which is in contrast to the usual regurgitated Gold Bug garbage.

What a golden opportunity to short gold at these levels. Reading the comments here, the flaming bullish arguments for inflation persist in complete disregard of mountains of evidence to the contrary. Debt is defaulting at an alarming rate, asset prices are trending down, in fact, tanking (except the intentional bubble in Treasuries that won't last) and income is getting trounced. Please remember that massive "printing" money was also done by credit card companies; any major store was a money printing machine. This is over and the government will never be able to keep up with the destruction of insupportable debt through default.
It is also interesting that the great depression saw huge increase in the monetary base; a lot of good that did. They couldn't catch deflation for the same reasons.

Marc Faber on the Economy, Gold, WWIII

Some are calling a Recession, some are calling a Depression...

I'm calling a Civil War beacuse the government has endorsed crime for far too long. I predict we will revisit a technologically enhanced 1862 before this is over but I hope I'm wrong.

To prevent this: ARREST THE FELONS AND CONFISCATE THEIR ASSETS IMMEDIATELY BEFORE THIS DEVOLOPS ANY FURTHER (instead of "stimulating" them). Again, the civil war ensues because the people in charge of doing the arresting are in fact the ones who need to be arrested, because of this, it will never happen. One more point, the Brainwashing Bubble will pop too and suddenly 80 years of Manufactured Consent Science (advertising) goes poof as the pent up realism becomes unleashed.

Today's True Safe Haven Investments

" If de-leveraging is happening, the de-leveraging will NOT stop at the level of cash, it will go all the way to the physical, the physical assets. Remember cash is also so sort of leverage on physical assets. If there are two person left on earth, one is allowed to have all the paper assets and cash but no physical asset, another is allowed to have everything physical but no paper asset, which one of the two would you prefer to be? "

This makes absolutely no sense, I don't know what you are trying to say.

Law of Supply & Demand Is Dead for Gold & Silver

The Free Market is a term that must be examined with caution. This was the mantra of Reagan and all those since. Has it produced a good result? Unequivocally no! Necessary government regulation was stripped in its name thus weakening the government and leaving it vulnerable to monopolistic corporate takeover. Since the Free Market mantra was first institutionalized through the Gingrich revolution there has been little efficiency gain from the "piratization" of formerly state operated ventures. Wild volatility is terrible for all business except the quick buck casino speculators. Why work when you can flick at your computer? The hallmark of the the last 4 decades of anti government Free Market hooliganism has been an economy entirely defined by M/A, expatriation of capital wealth and productive capacity and the total absence of fixed-capital investment in our own economy. The finely tuned synergistic relationship between government and private enterprise was decimated under its name, the results we see today: America stands at the precipice of a depression and the possible collapse of civilization itself.

The solution to bad government is good government, not no government.

Here's are a few examples of government spending and legislation that would create a return on investment. 1) End the war of terror and earn trust be being trustworthy, honest and peaceful 2) Redeploy the military from the 7000 military bases in 130 countries rebuilding our energy and transportation infrastructure (better than throwing down the toilet in banker bailouts to ponzi schemers) 3) Increase the short term capital gains tax and decrease the long term capital gains tax and give special tax incentives only to those who invest long term in our country. 4) Lock up the Mortgage Fraud criminals and make them an example never to be forgotten. Take our money back while we are at it even if we have to go to Switzerland to get it. 4) Outlaw all off balance sheet vehicles, all unregulated exchanges and painstakingly monitor every cent that crosses our borders.
5) End offshore tax havens.
6) make business know that if you incorporate in America, then manufacture in China and then try to sell back to America you get heavy penalties.
7) End social Security checks to the wealthy who don' t need it.

There is no way that Freedom or Free markets should be extended to mean the right to commit crime. Creative criminality in the digital age is a challenge that needs a challenger fit for the job.

Personally we can withdraw our money from the system and make sure it goes into investments we understand and that benefit our communities and the planet over the long term. Goodwill not Freewill.

Today's True Safe Haven Investments

I like palladium here too but am watching the $USD due to institutional insolvency and their ATTEMPTS at deleveraging (kind of like an over weight couch potato inspired by his TV to do an Olympic 31/2 off the high platform .. a belly flop being the likely outcome). BK's equal capital destruction=bullish for the dollar= bearish for PM's.

The fact is US dollars are becoming more scarce and in demand. Hard to believe but true. There's is nothing even in the distant future to lead one to believe that there will be that kind of leverage to ramp things up to previous levels for a very long time.

One could do a short platinum/long palladium play here and balance the two on a percentage basis (NOT on a nominal basis!)

The Rebirth of Gold and Silver Stocks

"in this inflationary super cycle".

that's a real stretch given the blatant capital destruction occurring today. How will Lehman help to inflate things? Or Bear? Or Merrill? Or AIG? The fact is this is a deflationary supercycle based on housing returning to affordable levels (at least another 30% south of here.)

Law of Supply & Demand Is Dead for Gold & Silver

1) I don’t believe there is a conspiracy concerning gold and silver more than the usual short term speculative frenzies that are indeed a huge factor- traders do follow fashion.

2) This article does not take into account the difference between institutional and retail demand. Institutions were selling bullion in bulk and the futures were perfectly synchronized (actually, trading at a premium) to spot. Retailer buyers were buying up the small size coins (one ounce) causing a temporary backlog due to a sudden surge, hence the so-called discrepancy.

3) He minimizes the capital destruction in the financial markets as a reason for the rally in the US dollar and again minimizes the effect of the dollar on the POG.

4) He cites year over year demand in the retail space without any reference to the demand (or lack thereof) at the higher prices

5) He fails to note that the POG has plummeted very rapidly and that retail gold is not stockpiled in large quantities. All of a sudden, it’s a good deal and everybody wants to buy it at once. He would need to cite the typical available retail supply/demand on a month-to-month basis. Again, as I mentioned, he fails to take into account a sudden surge due to the affordability factor.

6) I waited for a long time for palladium coins from nwtmint back when there was not much volitility. The fact is, due to volatility in the spot and future markets, the capacity of the retail component to respond simultaneously is not possible nor has it ever been. These dealers operate on a very tight margin and don’t stock much as a result. Kind of like Dell.

7) Gold and silver were way above their monthly moving averages.

8) We are in a deflationary credit collapse, which is the opposite of hyperinflation. The hyperinflation already took place.

10) Commodities typically respond to recessions by going down.

11) Volatility is typical of the PM markets and is nothing unusual to be alarmed about.

12) Based on TA AND sentiment, gold can go to $650 ish and silver to $9 and change and we’ll see after that.

My complete guesses:
13) Gold equities could bottom here because they could respond favorably to the drop in the price of oil (along with general equities), which has been a real impediment to their production costs. These equities are ahead of the curve and may have already priced in a bounce off the $650 levels (if it actually does bounce there).

14) All bets are off for either direction should we get anymore big implosions on Wall Street like AIG tomorrow. Gold could go to $1000 or $400. $2,500 is not happening anytime in the foreseeable future.

Interesting, I was just reading about this topic this morning at a website I recommended to a friend yesterday...

Here’s “Mish” on conspiracy psychology…

globaleconomicanalysis...

Law of Supply & Demand Is Dead for Gold & Silver

1) I don’t believe there is a conspiracy concerning gold and silver more than the usual short term speculative frenzies that are indeed a huge factor- traders do follow fashion.

2) This article does not take into account the difference between institutional and retail demand. Institutions were selling bullion in bulk and the futures were perfectly synchronized (actually, trading at a premium) to spot. Retailer buyers were buying up the small size coins (one ounce) causing a temporary backlog due to a sudden surge, hence the so-called discrepancy.

3) He minimizes the capital destruction in the financial markets as a reason for the rally in the US dollar and again minimizes the effect of the dollar on the POG.

4) He cites year over year demand in the retail space without any reference to the demand (or lack thereof) at the higher prices

5) He fails to note that the POG has plummeted very rapidly and that retail gold is not stockpiled in large quantities. All of a sudden, it’s a good deal and everybody wants to buy it at once. He would need to cite the typical available retail supply/demand on a month-to-month basis. Again, as I mentioned, he fails to take into account a sudden surge due to the affordability factor.

6) I waited for a long time for palladium coins from nwtmint back when there was not much volitility. The fact is, due to volatility in the spot and future markets, the capacity of the retail component to respond simultaneously is not possible nor has it ever been. These dealers operate on a very tight margin and don’t stock much as a result. Kind of like Dell.

7) Gold and silver were way above their monthly moving averages.

8) We are in a deflationary credit collapse, which is the opposite of hyperinflation. The hyperinflation already took place.

10) Commodities typically respond to recessions by going down.

11) Volatility is typical of the PM markets and is nothing unusual to be alarmed about.

12) Based on TA AND sentiment, gold can go to $650 ish and silver to $9 and change and we’ll see after that.

My complete guesses:
13) Gold equities could bottom here because they could respond favorably to the drop in the price of oil (along with general equities), which has been a real impediment to their production costs. These equities are ahead of the curve and may have already priced in a bounce off the $650 levels (if it actually does bounce there).

14) All bets are off for either direction should we get anymore big implosions on Wall Street like AIG tomorrow. Gold could go to $1000 or $400. $2,500 is not happening anytime in the foreseeable future.

Interesting, I was just reading about this topic this morning at a website I recommended to a friend yesterday...

Here’s “Mish” on conspiracy psychology…

globaleconomicanalysis...

The Disconnect Between Supply and Demand in Gold & Silver Markets

"Disclosure: Author holds positions in GLD and SLV."

What more do you need to know? All that yabbing from another paper junkie!

If people were interested in holding the physical metal, they would and then the price wouldn't be collapsing. A lot of unsubstantiated conjecture here: Manipulation, PPT, Conspiracy, Gold Competing with Dollars, Dealers and U.S. Mint Out of Supply.

Did one person here ever take delivery on a futures contract and not get it?

Where is the proof that the U.S. Mint can't get supply? Maybe they stopped producing because nobody was buying at the high prices...Did you forget disaster of the First Spouse coins when Gainesville bought so many they were practically giving them away?

I might buy at $650 in a couple of weeks. Just in case Mad Max prevails...otherwise there's no point.