Tomorrows market?

[al_bundy]

if i had a nickel for every time a CEO has promised something

 

[CitricAcid]

The thing with Citigroup is that they ALREADY cut their dividend, as I noted from $2.10 to $1.28 a year, which is already factored into the yield, Wall Street expects a loss (by most estimates) of -$0.57 a share next quarter from what I've heard, but speculating anything even farther in advance will be tough to do. Taking big risks on the dividends are not fun to do as a one-day decision of cutting it to 0 or 10 cents pretty much completely mitigates one of the big reasons you bought them 8)

 

[ziggy29]

Speaking of high yields, BAC is paying almost 11%. Ken Lewis reaffirmed today that the bank doesn't plan to cut the dividend, but Wall Street doesn't see it that way.

Companies generally don't "plan" to cut dividends, but sometimes things don't go according to plan and cutting them is necessary to remain solvent.

 

[newporttony]

Companies generally don't "plan" to cut dividends, but sometimes things don't go according to plan and cutting them is necessary to remain solvent.

Sure, but I will reiterate--someone's going to make a lot of money on the financials.

 

[ziggy29]

Sure, but I will reiterate--someone's going to make a lot of money on the financials.

Agreed, and I said as much earlier in the thread. I don't know how far down the financials will continue to fall, but when they hit bottom the leading names in the sector are going to be almost once-in-a-lifetime buying opportunities.

But my crystal ball isn't working, so I don't know when that will be!

 

[al_bundy]

back in 1987 to 1992 or so, the general market recovered very fast but financials were the last ones to do so

 

[CitricAcid]

Agreed, and I said as much earlier in the thread. I don't know how far down the financials will continue to fall, but when they hit bottom the leading names in the sector are going to be almost once-in-a-lifetime buying opportunities.

But my crystal ball isn't working, so I don't know when that will be!

It is almost a defeatist/self-deprecating attitude to take, but the way I look at it, compared to 12 months ago the financials are certainly a bargain. What they will do in 6 months or even 2 years will be hard to see, but the price we are getting at now compared to 12 months ago is already a bargain. Over time, if you have a broad index of them, the survivors will be incredible bargains, and they've already gone through the blue light special. So looking back in time 3 years from now, July 10th, 2008 may not be the BEST time to buy, but it will be better than buying on July 10th, 2011.

 

[newporttony]

It is almost a defeatist/self-deprecating attitude to take, but the way I look at it, compared to 12 months ago the financials are certainly a bargain. What they will do in 6 months or even 2 years will be hard to see, but the price we are getting at now compared to 12 months ago is already a bargain. Over time, if you have a broad index of them, the survivors will be incredible bargains, and they've already gone through the blue light special. So looking back in time 3 years from now, July 10th, 2008 may not be the BEST time to buy, but it will be better than buying on July 10th, 2011.

I think you are exactly right. The sector is off 55%+ and many comapnies are trading well below book value. I believe Benjamin Graham would be a buyer at these levels.

 

[al_bundy]

It is almost a defeatist/self-deprecating attitude to take, but the way I look at it, compared to 12 months ago the financials are certainly a bargain. What they will do in 6 months or even 2 years will be hard to see, but the price we are getting at now compared to 12 months ago is already a bargain. Over time, if you have a broad index of them, the survivors will be incredible bargains, and they've already gone through the blue light special. So looking back in time 3 years from now, July 10th, 2008 may not be the BEST time to buy, but it will be better than buying on July 10th, 2011.

can you look in your crystal ball and tell us the companies that will still be in business and those that will be bought up at $1 a share or less the way Bernanke is talking about?

 

[CitricAcid]

can you look in your crystal ball and tell us the companies that will still be in business and those that will be bought up at $1 a share or less the way Bernanke is talking about?

Oh, I have absolutely no idea and that is why a more indexed approach would be best, and I certainly do not know which will recover the best. In other words, what I am saying is that the only thing I know is that I don't know. More that, over a longer time frame, the broad financials will recover, and quite well considering their current prices.

 

[al_bundy]

why are current prices such a bargain? i can think of a lot of big firms that were around in the mid 1980's that aren't around today due to bankruptcy or getting bought out at firesale prices

 

[RockOn]

Well, I'd say that pretty much covers the entire spectrum of market forecasts. I hope you can get a refund on the time & life effort you expended on that analysis.

Maybe it's better to use this time (and your feelings & reactions to the current market environment) to pick an asset allocation that will let you be less concerned and able to spend less time fretting over where the market's headed.

And then we can all get back to the business of getting a real life.

My point is really that I think we are at a major inflection point in this country, which way it turn out will affect us for a long time. No matter what the asset allocation is. If we only knew what the outcome of all these serious problems will be in 3 to 5 years, we would could easily invest to be much better off. Are major banks actually insolvent and pending bankruptcy? That is a really good question.

I'd rather be concerned about that type of question than whether I am 40/60 or 60/40 or have enough small caps. Asset allocation is a minor concern compared to the prospect of a depression, hyper-inflation, the next boom, or such.

 

[ziggy29]

I'd rather be concerned about that type of question than whether I am 40/60 or 60/40 or have enough small caps. Asset allocation is a minor concern compared to the prospect of a depression, hyper-inflation, the next boom, or such.

Actually, IMO that makes asset allocation more important than ever.

You can either choose to place your bets on one of these scenarios and be ruined if you are wrong, or place bets that will allow at least some of your investments to prosper in any of these environments. The latter won't make you rich because the performers will merely offset the losers, but you're much less likely to be ruined.

 

[RockOn]

Actually, IMO that makes asset allocation more important than ever.

You can either choose to place your bets on one of these scenarios and be ruined if you are wrong, or place bets that will allow at least some of your investments to prosper in any of these environments. The latter won't make you rich because the performers will merely offset the losers, but you're much less likely to be ruined.

IMO, trying to avoid ruin by balancing everything so well that there is little upside is about the same as being in cash. I would much rather know whether the current crisis is going to go away, or get worse, and act on that basis. When I look at prices in the last few weeks for BofA, Wachovia, Fannie Mae, and GE for that matter, I am getting worried that things might actually be different this time. Can this country prosper without readily available cheap credit? Call that a buy signal if you wish but if the financial blowup doesn't stop soon, a better buy signal may be at a lot lower price than right now. Of course, I waiting for someone with the crystal ball, or the MBA degree, to tell me how bad things really are with the financials.

 

[Nords]

My point is really that I think we are at a major inflection point in this country, which way it turn out will affect us for a long time. No matter what the asset allocation is. If we only knew what the outcome of all these serious problems will be in 3 to 5 years, we would could easily invest to be much better off. Are major banks actually insolvent and pending bankruptcy? That is a really good question.
I'd rather be concerned about that type of question than whether I am 40/60 or 60/40 or have enough small caps. Asset allocation is a minor concern compared to the prospect of a depression, hyper-inflation, the next boom, or such.

IMO, trying to avoid ruin by balancing everything so well that there is little upside is about the same as being in cash. I would much rather know whether the current crisis is going to go away, or get worse, and act on that basis.
When I look at prices in the last few weeks for BofA, Wachovia, Fannie Mae, and GE for that matter, I am getting worried that things might actually be different this time. Can this country prosper without readily available cheap credit? Call that a buy signal if you wish but if the financial blowup doesn't stop soon, a better buy signal may be at a lot lower price than right now. Of course, I waiting for someone with the crystal ball, or the MBA degree, to tell me how bad things really are with the financials.

I feel like I've read this somewhere before:
Winning Financial Freedom to Do the Work You Love

 

[RockOn]

I feel like I've read this somewhere before:
Winning Financial Freedom to Do the Work You Love

Thanks for the link, I'll see if he agrees with me.

 

[unclemick]

Thanks for the link, I'll see if he agrees with me.

Nords?? You are sending him there naked and unarmed?

Yikes!

heh heh heh -

 

[cute fuzzy bunny]

Well, I'd say that pretty much covers the entire spectrum of market forecasts.

I feel like I've read this somewhere before:
Winning Financial Freedom to Do the Work You Love

 

[RockOn]

CFB, how much are you down this year so far, still cranking in those 14% returns? Expecting 14% returns, now that's really really really .

 

[RockOn]

Nords?? You are sending him there naked and unarmed?

Yikes!

heh heh heh -

I know very well where he sent me, don't worry Unclemick I'll be ok.

 

[cute fuzzy bunny]

CFB, how much are you down this year so far, still cranking in those 14% returns? Expecting 14% returns, now that's really really really .

I honestly have no idea. I've been a little too busy to worry about things that dont matter very much.

Its also quite pleasing to not be a [edited by mod] who cant do math.

 

[RockOn]

I honestly have no idea. I've been a little too busy to worry about things that dont matter very much.

Its also quite pleasing to not be a [edited by mod] who cant do math.

Nice! Keep up the good work!

Hey Nords, are there no boundaries on the ERF? I seem to remember you jumping on me awhile back for much less. If I remember right I was proven to be correct on that one, after the CFB abuse.

 

[cute fuzzy bunny]

At least you knew who was being talking about and the proper context.

We can be a little vague sometimes.

 

[Hamlet]

Any interest I might have had in BofA ended when they bought Countrywide. I don't want to own a bank that basically threw out all underwriting standards and gave loans to anyone who could fog a mirror. BofA seems to think that they have a grasp on the size of the Countrywide problem, but I have enough doubts to avoid the stock.

I don't really follow Wachovia. Fannie shareholders may be in trouble, but the bondholders will get paid. It may cost us taxpayers some money in the end, but I don't think it will threaten the fabric of society.

GE's earnings weren't great, but they seem to be holding their own.

Credit is widely available to credit-worthy individuals. It's less available than it used to be (and it costs a little more), but that is probably a good thing.

The last thing we need in this country is more credit.

IMO, trying to avoid ruin by balancing everything so well that there is little upside is about the same as being in cash. I would much rather know whether the current crisis is going to go away, or get worse, and act on that basis. When I look at prices in the last few weeks for BofA, Wachovia, Fannie Mae, and GE for that matter, I am getting worried that things might actually be different this time. Can this country prosper without readily available cheap credit? Call that a buy signal if you wish but if the financial blowup doesn't stop soon, a better buy signal may be at a lot lower price than right now. Of course, I waiting for someone with the crystal ball, or the MBA degree, to tell me how bad things really are with the financials.

 

[Nords]

Hey Nords, are there no boundaries on the ERF? I seem to remember you jumping on me awhile back for much less. If I remember right I was proven to be correct on that one, after the CFB abuse.

I give up.

You have a nice life now...