DaveJ

Hold On to W Holding for Better Days Ahead

Actually the chance to buy banks when everyone thinks the end of the financial system is nigh occurs about every 6-7 years. I keep my Moody's Handbook of Dividend Achievers handy for bathroom reading and often look at the stock charts of banks over the last 20 years. You would be surprised how often you can buy financial services companies and have them double in two years. It happens over and over, even with the same large well know companies. You would hardly have gone wrong if you simply bought financial stocks every time they come close to book value. You would probably be better off if you learned nothing about the companies since the financial news would probably have scared you off. The fact of the matter is that most survive and prosper in just a few years.

Banks and insurance companie are worth more than book value for the simple reason that they can generate leverage on safe bond/loan investments. In other words it makes no sense for anyone young to buy bonds. Just buy AIG and let them buy bonds for you with leverage. In the long run they will grow at about 12-15% and never run into the problem of getting too big.