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I've been dca'ing in, more over the past two weeks when things were sliding...now I'm smiling. My last purchases before this week's uptick put me nicely in the black on most and in the black for this year on my overall financials. The only one that is still red overall for me is WB, which I had given up on for the short term. I too could not resist BAC's dividend.
I made a decent sized purchase of the KBE - mostly for the dividends and the hope that over the next 3-5 year period it would significantly outperform the market. I never expected to get within a day of the "bottom". Although I wouldn't be too surprised if they go lower again - I'm hoping they will as I couldn't get all my planned purchases made due to a snafu.
So what do you think of BAC purchase of MER? MER was up a lot yesterday but then fell at the end of the day. It looks like another bad day for the market and a worse day for bank stocks.
i'm not an expert but i think of an I-bank in 3 ways. debt, assets and people producing revenue for services and selling products.
for debt i've read rumors that BoA is putting all of Countrywide's debt into some new company they created and may not pay the creditors back. don't know the details or if they can do the same thing with MER. But assume they have to pay back the debts.
Assets are the paper that MER owns and is expected to produce revenue in the future. you can make an educated guess on the future asset performance over a period of time
3 is the wild card. if BoA doesn't take care of the hotshot revenue producers they can leave and maybe take clients with them. some of these client relationships go back to college and grad school. #3 is like any of the mostly IP companies out there now. unlike manufacturing they rely on the knowledge of their people and if the best ones leave there is nothing there. they still have the patents, but the good people are smart enough to create new patents or find new ways to produce revenue.
if BoA screws up #3 than the debt is still there and the return on the investment they made will plummet and they will be in trouble for a long time
Where will these Merrill hotshots go? It's going to be interesting being that Merrill has always prided itself on its' independence and strength.
Unless these guys go independent, they've got nowhere to turn. The only solid wirehouse firm right now is Goldman Sachs and most Merrill brokers don't reach the quota to work there. Very interesting time in the market right now.
there is Chase, Morgan Stanley, a bunch of hedge funds and other companies. if there is a good trader at ML who doesn't like the new regime he probably won't have trouble finding a job
there is also an article on housingwire today about how countrywide may hurt BoA. Fannie is starting to do more audits of loans gone bad and having the lenders eat the loss if it finds something in the paperwork that is against their rules.
there is Chase, Morgan Stanley, a bunch of hedge funds and other companies. if there is a good trader at ML who doesn't like the new regime he probably won't have trouble finding a job
impossible for everyone to move, but say BofA doesn't treat people well and the top 1% of the revenue producers get better offers? that top 1% may be responsible for say 10% of revenue or more.
don't know how good BofA's benefits package is but i've heard of the I-Banks benefits packages and they are top notch. probably better than almost every other company out there.
Top brokers leave because they get financial offers to do so. In today's environment, there's not gonna be a lot of companies vying for even the top guys and definitely not offering big bonuses to leave. Not to mention when you move, your clients have to sign off on it, and they may not be that happy with Merrill brokers right now.
Believe me, there are a box full of snakes out there for the Merrill brokers today, and none are seeing the blue skies of the future.
Then of course there are the injunctions Merrill will file against the brokers making the move extra tough.
BTW, as in most businesses, the rule is 80/20.
On the other hand, Merrill pays brokers $100k after 10 years of service. I wonder if that'll go away?
anyone still believe in the efficient market hypothesis? the way the financials have traded in the last year?
The last year heck the last week.
Pre market most financial stocks are up 15-20%, on top of the equally large rise yesterday. Some nice sucker sold me USB shares on July 18 (the bottom for the financials) for 27.50, currently trading 2 months later for 41.25 almost a 50% gain in two months. Pretty crazy for company that has been regularly paying dividends since 1865...
I know it is be a tough few months for 50+ year old firms but they aren't all going to disappear.
Of course another idiot (that would be me) sold BAC for 27.50 last month, it traded at 38.50 pre market.
state street lost 50% of it's value yesterday and then gained it all back
i bought some goldman sachs for $102 a few days ago. not the bottom but pretty cheap. missed out on BAC in July and you don't get a better company than Goldman Sachs
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