Bank Stocks

clifp said:
In the deep Kimchee category a year+ ago, I place Citi, Wachovia, and NCC.

In the good bank category I said USB, BBT, and WFC.
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And how do you feel about WFC today, since they (and you) now own Wachovia?
 
I do not hold anyone's wrong call on banking stocks against himself.

I have lost plenty of money on bottom fishing (not banking stocks but others), and probably will continue to do so. It's an unavoidable part of investing. However, I try to keep "plenty of money" from becoming "all of it".
 
Gpond, this could be considered bad form, especially for someone with 8 posts.
 
I do think this is an informative thread and a good part of what made it good was the absolute polar opposite opinion's on the stocks most clearly stated by Brewer's belief but held by many others that banking stocks were cheap cheap cheap offset by the stark contrast from my posts but believed by others as well that they were the absolute worst investments out there, with all the other less opinionated posts from more reasonable minds followed by what we all now happened. What can be learned is the ability to determine am I wrong and to keep an open mind that you easily can be wrong. It doesn't matter a whit if you were right yesterday if you lose it tomorrow.

For instance if I was thinking BAC was now a good buy and unlikely to be nationalized I would expect the stock to stay above $5 now that the CEO has spent so much of his own money buying the stock. I would be listening to every conference call to see what the plan of the business was and how clear their outlook is and if that plan was adhered to. I would ask others if you think the stock is going to drop below $5 why do you think so and what is going to happen to make that so?

Of the banking stocks their internal figures mostly are continuing to decline with writeoffs, with the Fed being their best friend but the best of the lot I have seen is HCBK, which originally came on to my radar screen via Brewer's love for the stock in 2007. Despite the need to increase their loan loss provisions and their non-performing assets increasing I am watching this stock as a possible future addition to my portfolio, unlike so many of it's peers it has increased it's dividend this year and can actually afford to do so. This is a bank stock that was actually up most of 2008 until September's carnage cut it to size. It is a bank that does not take big risks, sticks to what it knows meaning it should be able to endure better than most and continue to increase it's dividend in excess of inflation. I do wish they would refrain from buying back their own shares.
 
Running_Man said:
I do think this is an informative thread and a good part of what made it good was the absolute polar opposite opinion's on the stocks most clearly stated by Brewer's belief but held by many others that banking stocks were cheap cheap cheap offset by the stark contrast from my posts but believed by others as well that they were the absolute worst investments out there, with all the other less opinionated posts from more reasonable minds followed by what we all now happened. What can be learned is the ability to determine am I wrong and to keep an open mind that you easily can be wrong. It doesn't matter a whit if you were right yesterday if you lose it tomorrow.

For instance if I was thinking BAC was now a good buy and unlikely to be nationalized I would expect the stock to stay above $5 now that the CEO has spent so much of his own money buying the stock. I would be listening to every conference call to see what the plan of the business was and how clear their outlook is and if that plan was adhered to. I would ask others if you think the stock is going to drop below $5 why do you think so and what is going to happen to make that so?

Of the banking stocks their internal figures mostly are continuing to decline with writeoffs, with the Fed being their best friend but the best of the lot I have seen is HCBK, which originally came on to my radar screen via Brewer's love for the stock in 2007. Despite the need to increase their loan loss provisions and their non-performing assets increasing I am watching this stock as a possible future addition to my portfolio, unlike so many of it's peers it has increased it's dividend this year and can actually afford to do so. This is a bank stock that was actually up most of 2008 until September's carnage cut it to size. It is a bank that does not take big risks, sticks to what it knows meaning it should be able to endure better than most and continue to increase it's dividend in excess of inflation. I do wish they would refrain from buying back their own shares.
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Tsk, tsk, tsk -- don't second guess you're initial judgment, which appeared to be quite sound for someone reading the tea leaves without the benefit (or perhaps handicap) of the rigor(mortis) of investment analysis. No doubt, there are diamonds to be found in the salt mines, but on the whole, you'll primarily find bitter salt. In my view, trying to discern the bank stock to invest these days, is like trying to figure out what is the best slot machine to put your money in for a pull!

Yeah, bank stocks are cheap, cheap, cheap these days, just like the penny slot machines.

You're right to keep an open mind and not become intractable in your views and judgment.
 
FIRE'd@51 said:
And how do you feel about WFC today, since they (and you) now own Wachovia?
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I think Wells Fargo will be ultimately one of the survivors in the banking industry. How common shareholders will fair, I think is virtually unknowable at this point. I.e. The company may well be alive but it may end up being nationalized by the government and shareholder horribly diluted.

I will note that my favorite BBT reported earning today and once again earned (.51) more than its dividend of (.47).

ChrisC Yeah, bank stocks are cheap, cheap, cheap these days, just like the penny slot machines.
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Although, it is exceedingly rare progressively slots can have a positive expected value when the jackpot is sufficiently large. I know a professor of gambling who calculated the odds of various video poker machines and when he found one that paid $1.01 on the dollar he played it extensively.

The moral being lots of things that normally are bad investments can good investments at the right price. If that is true of banks right now only time will tell.
 
clifp said:
Although, it is exceedingly rare progressively slots can have a positive expected value when the jackpot is sufficiently large. I know a professor of gambling who calculated the odds of various video poker machines and when he found one that paid $1.01 on the dollar he played it extensively.

The moral being lots of things that normally are bad investments can good investments at the right price. If that is true of banks right now only time will tell.
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Yep - progressive penny slot - Fitzsgerald's - Reno. Made about $3/hr after 12 hrs and sore fingers.

I understand they closed.

heh heh heh - so I will continue to hurry up and wait and watch before placing further bets - bank stock wise.
 
haha said:
Gpond, this could be considered bad form, especially for someone with 8 posts.
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I'm not sure how Gpond intended it, but one could look at it as an observation that even someone as obviously bright, and connected to the financial world as the poster in question, can still misread the tea leaves.

And where does that leave most of us?

But even if that was the intent (tough to say), some people will (reasonably) see it as 'bad form'. I kinda thought it was bad form myself ( I ought know!), but I was much more interested in the message within. It does say something, no?

-ERD50
 
Also, not sure Brewer is a buy-and-holder--he could easily have bought on August 31 and sold in September (the high) and made himself a few bucks. I know someone who did that with AIG's last little bounce.
 
Taleb (author of the "Black Swan" book) told this story about Soros, the well-known hedge fund manager and currency trader.

Soros and another trader disagreed on a particular derivative trade. In the weeks that followed, it turned out that the other trader was right. The next chance they met againt, he asked Soros about that trade, expecting Soros to concede losing much money.

To his surprise, Soros said he did OK. Soros then explained that subsequent to the discussion, he realized his error and took the other side of the trade to make good money.

As a trader himself, Taleb admired Soros for his ability to abandon his position and to quickly concede when new info was available.
 
It's sort of funny. I've owned US Bank and Wells Fargo (as well as a Minneapolis bank TCF) through most of this downturn, and up until the last 2 weeks, they weren't doing any worse than the market as a whole.

A couple weeks ago, every bank stock in the world fell of a cliff, and it feels a little overdone. US Bank and TCF have reported earnings. There weren't any big surprises in them. They are both expanding their deposit bases and their lending. Their loan losses have been manageable. Granted, their dividends are above their current earnings, and if things stay bad into next year they will probably have to trim them, but the market is treating them like they are insolvent.

Wells Fargo may have challenges with the Wachovia aquisition, but I don't think their basic solvency is threatened.

At the beginning of the year, Wells Fargo traded at $30/share, less than a month later they are at less than $16/share.

Has there been any real news in the last month that really gives anyone any better insight into the value of Wells Fargo than they had on Jan 2nd?
 
OK, I was one of those who thought Running Man was a complete loon with his target price for BAC of $12. Well, turns out he wasn't a complete loon, he was a pollyanna. I mean, his target price wasn't even close. ;)
Where's Al Bundy when you need him?:D

Running_Man said:
I would hope you refrain yourself from buying on margin. My price target on BAC is 12, if it never gets there and the entire subprime mess reverses and banks make a dramatic reversal then perhaps I will reevaluate my outlook and price, but nothing that has happened from February on has changed my opinion that banks are a total catastrophic investment. Right now I am keeping on eye on that by watching HBAN and seeing if it drops to 10 and if BAC drops below it's multiyear low of 40.
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Did Running Man make his prediction before or after the Countrywide aquisition?

I suspect his $12/share would be dead on right now if BAC had not made the Countrywide and the Merryl aquisitions. The management of that bank seems to be working dilligently to destroy it.


redduck said:
OK, I was one of those who thought Running Man was a complete loon with his target price for BAC of $12. Well, turns out he wasn't a complete loon, he was a pollyanna. I mean, his target price wasn't even close. ;)
Where's Al Bundy when you need him?:D
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Running_Man said:
Cramer: Shorts Can't Break the Big Banks | Investing | Financial Articles & Investing News | TheStreet.com

Really a quite humorous take on the banks, claims they have such severe problems it insures their success! As he has done from the beginning he is blaming all of the banking problems on people who short.
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In this situation, Cramer is more like a mad chicken running around in the aftermath of a tornado checking for life in the dead and telling everyone to wake up. At present, he is simply entertainment.

It is obvious that the situation is systematic in banking and consuming, where both have just bitten off way more than they can chew or rather pay back based on asset values that were imaginary.

jug:nonono:
 
jug said:
In this situation, Cramer is more like a mad chicken running around in the aftermath of a tornado checking for life in the dead and telling everyone to wake up. At present, he is simply entertainment.
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And what was he before? Certainly not a financial resource.Maybe chopped liver. :D
 
I have a small business. My bank fees were running around $125 per month. Last month due to lack of business my fees dropped to $14.45. I think there are a ton of small companys that are not using the banks services and that besides bad loans the banks are seeing a big reduction in small fees (that add up to big profits). Anyone looking at Harlesyville Bank of Pa.
 
nellieb said:
... the banks are seeing a big reduction in small fees...
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Seems Washington Mutual has lowered all interest-bearing checking and savings accounts to 0.01% interest. Yes, that's 1/100 of one percent. Nice!
 
Last month is the first month I had a service fee on my business account in four years. Seems that my credit for onhand balance dropped from "earning" credit at 1.8% to less than .5%. Balance pretty static but credits earned two thirds less! Translation, we get to charge hard cash now for the privelege of holding your cash
:-(
nwsteve
 
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