mrbill

Stocks on the Verge of... Something

"Wasn’t it the CEO of Bank of America (BAC) who said they had plenty of capital, but took billions in TARP — who then said the dividend was safe, but then cut it in half — who subsequently said the dividend is now safe, but cut it again to one penny?"

Good point. Sadly most people, especially in the US have short term memories. In the US, not only can you fool us once, but several more times, and then some.

Berkshire Hathaway: Proof That the CDS Market Is Irrational

It is rational to be irrational if you believe that it will save or make you money.

Example:

1. Bank XYZ is healthy, all others are not

2. Depositors take all there money out of all the banks, including XYZ

3. You don't, because you know XYZ is healthy

4. All banks fail and you lose your money because you were being rational

5. The irrational people who pulled their money out early got to keep it

So the irrational end up being the rational, and the rational, irrational.

I hope this makes sense, otherwise you will lose all your money trying to change the world.