Anyone like bank stocks?

[Milton]

Originally Posted by brewer12345

Have you, um, looked at the balance sheet of the typical US retail bank? Most of them hold securities, but the vast majority of these portfolios are treasuries, agencies, and GSE backed paper (i.e. stuff with implicit or explicit US gummint guarantees).

Point One: If you compare the Tier One ratios of US retail banks to other options (e.g., Canadian banks), you will see that the American banks are far from the most solvent.

Point Two: The ongoing weakness of the US dollar will effectively cancel out any capital gains that may occur. Are you, um, aware that the US$ has steadily declined relative to pretty much all major currencies over the past few years, with no end in sight? This trend will only accelerate if China pulls the trigger on all the US debt it currently holds (not saying that will happen anytime soon, but see China threatens to trigger US dollar crash - Telegraph). Guarantees issued by the federal government are increasingly suspect.

[roadtoharvard]

Anyone have thoughts on USB? Yielding 5.28% battered by sub prime fears and buffett pick.

[Hamlet]

I've bought it recently. We will see.

Originally Posted by roadtoharvard

Anyone have thoughts on USB? Yielding 5.28% battered by sub prime fears and buffett pick.

[clifp]

I have been looking to sell puts on USB in the hopes of picking it up lower. USB is one of the most profitable banks in the US. I suspect that the next year won't see a profit increase but with high secure dividend and PE in the 10-11 range, I am not to worried about dropping below 25.

[brewer12345]

Originally Posted by Milton

Point Two: The ongoing weakness of the US dollar will effectively cancel out any capital gains that may occur. Are you, um, aware that the US$ has steadily declined relative to pretty much all major currencies over the past few years, with no end in sight? This trend will only accelerate if China pulls the trigger on all the US debt it currently holds (not saying that will happen anytime soon, but see China threatens to trigger US dollar crash - Telegraph). Guarantees issued by the federal government are increasingly suspect.

Dunno about you, but I am a USD-based investor and I spend dollars every day, not euros or yen.

If the feddle gummint's money is no good anymore, I've got bigger problems than a few bank stock positions. And the USD circling the bowl is hedged via other ositions.

[Hamlet]

I'm investing in guns, canned goods, and gasoline.

Originally Posted by brewer12345

Dunno about you, but I am a USD-based investor and I spend dollars every day, not euros or yen.

If the feddle gummint's money is no good anymore, I've got bigger problems than a few bank stock positions. And the USD circling the bowl is hedged via other ositions.

[wildcat]

Originally Posted by roadtoharvard

Anyone have thoughts on USB? Yielding 5.28% battered by sub prime fears and buffett pick.

USB is a pretty conservative bank and as far as I know, they don't have much exposure to the subprime debacle. One of their gems is the payment processing biz. Good margins & cash flow positive unit that doesn't get a lot of attention.

[unclemick]

Originally Posted by Hamlet

I'm investing in guns, canned goods, and gasoline.

In the 70's it was freeze dryed food - 7 years worth.

heh heh heh - still have my 10% joint venture in a Patented gold mine from 1973 or so. And a few shares of UBS(not USB) - that's Swiss don't cha know.

[hayekcapitalist]

I like BAC. Micro factors: At or slightly above its 52 week low; reasonalby low PEG; +-5.4% div yield; good at consolidating large acquisitions with accretion to bottom line and just bought Chicago's LaSalle bank; possibly largest credit card issuer in the world (has a government contract for same)= makes $ from fees; not "over"-exposed to mortgage lending;.

Macro factors: U.S. economy is stronger and more resilient than acknowledged by many ergo if economy does well banks nad BAC will perform accordingly.

Caveat: Fed will probably cave to political pressure to cut rates presenting increased moral hazard to responsible adults.

[rawg]

Originally Posted by hayekcapitalist

I like BAC. Micro factors: At or slightly above its 52 week low; reasonalby low PEG; +-5.4% div yield; good at consolidating large acquisitions with accretion to bottom line and just bought Chicago's LaSalle bank; possibly largest credit card issuer in the world (has a government contract for same)= makes $ from fees; not "over"-exposed to mortgage lending;.

BAC does look pretty good, my getting in would be about $46.

[Milton]

Originally Posted by brewer12345

Dunno about you, but I am a USD-based investor and I spend dollars every day, not euros or yen.

Well, you can bury your head in the sand ignore the ongoing debasement of the currency if you wish. We are all free to make our own investment decisions, which is as it should be.

Personally, I look for the best risk-reward balance I can find, and am not wedded to any particular country or currency. And I like to travel and purchase imported goods (pretty difficult not to, these days).

[unclemick]

I bellied up to the bar and bought BAC(then Fleet Boston) and good old JP Morgan in the 90's when they were getting hosed due to Argentina defaulting on loans.

Done good.

If nobody loves em again for a while - may buy some more.

heh heh heh - regular NFL season gets going good in September - also my usual stock picking time.

[FIRE'd@51]

I have noticed that the implied volatilities are lower on BAC options than some of the other big money-center banks. Could the market be telling us something about relative risk?

[Running_Man]

Originally Posted by unclemick

I bellied up to the bar and bought BAC(then Fleet Boston) and good old JP Morgan in the 90's when they were getting hosed due to Argentina defaulting on loans.

Done good.

I am mystified how with just a minor correction to see people talk of these bank stocks like they are the deal of the century. Bank of America is down 11% from it's all time high. In the early 90's BAC and JP Morgan dropped 75% from their high. In the last 9 years any gain from holding this stock is primarily the dividend as the stock is only averaging a 1.6% gain per year from it's capital appreciation.

Bank stocks are like auto stocks capable of wide swings back and forth. to get a little dip in them as we have so far does not make them comparably cheap as they were in the early 90's. The Fed and the capital markets are awfully worried about the state of outstanding loans to make this stock look like an absolute bargain. At 12 I'd be willing to look at it and think the worst was priced in. At this price you'd be thinking the liquidity squeeze and deflation of the housing assets as a non-factor to future performance of banking, a scenario that I do not see having hit any kind of a bottom.

[al_bundy]

Morgan Stanley is now trading below it's 52 week low. the others are getting close. earnings warning season starts after labor day. i would wait at least until next quarter's conference calls to see what their exposure is and what is the damage.

last numbers i heard with new lending standards something like 30% of 2005 and 2006 buyers are locked out of the mortgage market

there is just as much political pressure on the fed to keep rates than cut them. bernanke is going to be up for another appointment by the next president. if he holds rates it's going to be a democrat in the white house who is going to ride the white horse of bringing an economy out of recession. if he cuts rates than who knows what will happen. remember what happened with Bush/Greenspan even though it was really Perot who cost Bush the election. and the Fed is the least political job there. Reagan and Bush both complained about Paul Volcker and Greenspan and their high rates.


PPI wasn't exactly stellar today, so the chances of a rate cut may have just gone down

[Running_Man]

Originally Posted by brewer12345

AFAIK, CSE doesn't do much/any subprime lending. They are basically a small commercial lender.

The market is tossing stuff out regardless of fundamentals or anything else. I think that financials and other hard hit sectors are close to finding a bottom.

CSE Down 12% today must be a bad day for small commercial lenders, bottoms are sometimes further down than they appear.

[al_bundy]

TMA

Thornburg Mortgage down 46% today. COO was on Larry Kudlow and said dividend is delayed and they are having trouble funding mortgages. He said only 38 mortgages out of 30,000 or so are in default.