Bank Stocks

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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banks aren't the only ones that are hurting, a lot of tech as well. start of the year, new budget and i've been busy bargaining with vendors to get their ridiculous prices to something normal. no time to check the market since i have have sales people calling me asking for business

I think Sun Micro is either toast or will have to radically reorganize past what it already has done. Sparc and Solaris are as good as dead when compared to Linux and x86/x64.

IBM and HP are OK, but they are willing to drop prices on some of the higher margin items 20% or more.

EMC should also come out OK

Microsoft is OK in their server offerings, but on the consumer side it's a lost cause.

cloud computing is a joke. hardware is so dirt cheap it's not even worth it to virtualize. we are looking to buy servers with 32GB of RAM just because memory is so cheap. and since they scale to 64GB RAM, in 2 years we'll upgrade the RAM for today's 32GB prices. and we've been a VMWare customer for a few years.

speaking of banks, i just refi'd with countrywide. interest rates are as cheap as IT equipment
 
When stock like Citigroup is trading at less than @1.50 a share, I wonder whether it could be a long long long term buy? The most one can lose is $1.50 per share, if one plans to hold it for 15 -20 years, there may be enough potential upside to justify taking a flyer?
 
atlas888 said:
The most one can lose is $1.50 per share, if one plans to hold it for 15 -20 years, there may be enough potential upside to justify taking a flyer?
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How much were you thinking of investing? $15,000 maybe?

Well, you can lose that $15,000 on 10,000 shares of a $1.50 stock, or on 100 shares of a $150 stock. So no, I would not buy it because "The most one can lose is $1.50 per share", because that is totally irrelevant. $1.50 is still 100% of the investment.

It's pretty much a gamble. If this stock was likely to provide a better long term return than other investments, it probably wouldn't be trading at $1.50.

-ERD50
 
While it is a gamble, I do not think Citigroup will go to zero. It would not be allowed to fail because of the national and international implications. The US government had said that in so many words, and now owns 36% of C common shares.

Citigroup is also crawling with FOO ( friends of Obama), an example is Richard Parson, the new Chairman.

If a number of big money center banks fails, nothing will be safe anywhere in the economy because there will be a major credit freeze up. There is a herd mentality and there is a heavy oversold situation in bank stocks. Remember the speculative rush that drove the price of a barrel of crude oil to $150, and all the talk about that being justified for fundamental reasons. The same thing may be happening to bank stocks because of the negative feed back pressure , often driven by hedge funds and short sellers. Yes,the bank's finance is a mess and they are losing money hand over fists, but they are still fundamental institutions that the government will prop up.

I am toying with the idea of buying and holding for long long term, because the risk/reward ratio will be tempting. I will just have to give up eating a cheeseburger for every C share I buy. ( how sad is it all these major US institutions are selling like penny stocks ? )
 
The common share holders for C are now pretty much all wiped out. But because pension plans, mutual funds held 60% of C common stocks issued ( before the US government took a new 36% to dilute the total shares outstanding ) , it is another reason why I think the risk/reward ratio may justify a gamble. C going to zero will place such a major stress on many ordinary people's 401k and retirement plans, the power-to-be simply cannot afford to let it happen. By hooks and by crooks, the authorities will ensure C will survive with some values left, albeit that may take a very long time.
 
atlas888 said:
C going to zero will place such a major stress on many ordinary people's 401k and retirement plans, the power-to-be simply cannot afford to let it happen.
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Wait a minute.

First you say that you are thinking of investing in C, because "all you can lose is $1.50".

But them you say that C going to zero has a major impact on ordinary 401Ks.

Which is it? $1.50 to zero isn't a big deal, or $1.50 to zero *is* a big deal?

-ERD50

PS - C isn't even in the top ten holding of the S&P500. It is probably less than 1% of any "ordinary" 401K that is reasonably diversified.
 
Losing 1.50 a share for an individual who chose to take a flyer on a small stake is not a big deal, especially if you are using money you would not mind losing.

But a systemic loss of of every last cent for a major financial institution whose shares are owned by pension plans, index and managed mutual funds where a lot of 401k money had been invested would be disastrous. Like the failure of Lehman Bros set up a run on money market fund, failure of major money center banks would trigger meltdown for practically all kind of stocks, because banks are fundamental parts of a financial system, The resulting loss would be so overwhelming and no government would allow that to happen. You have to separate an individual from the system as a whole.
 
If it goes to zero, and is 1% of a 401k, that is not a catastrophe.
 
My point is that the impacts of failure of major money center banks would not be confined to just the actual number of their shares owned by pension plan, index and mutual funds, but on everything in the stock market, so the government would not let that happen. Look at what are being done by every government around the world for their banks.

We can disagree, that what makes a market. I subscribe to Baron Rothschild's advise that the time to buy is when blood is running on the street.
 
Everything I needed to know about holding bank stocks I learned from cartoons:

coyote_boom.jpg
 
atlas888 said:
My point is that the impacts of failure of major money center banks would not be confined to just the actual number of their shares owned by pension plan, index and mutual funds,....
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OK. I don't know if I agree or disagree, but it's a different question. I thought you were just talking about the impact of the stock price itself.

-ERD50
 
Grep said:
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!
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That is now Chase and that is what Chase is paying...
 
atlas888 said:
Losing 1.50 a share for an individual who chose to take a flyer on a small stake is not a big deal, especially if you are using money you would not mind losing.

But a systemic loss of of every last cent for a major financial institution whose shares are owned by pension plans, index and managed mutual funds where a lot of 401k money had been invested would be disastrous. Like the failure of Lehman Bros set up a run on money market fund, failure of major money center banks would trigger meltdown for practically all kind of stocks, because banks are fundamental parts of a financial system, The resulting loss would be so overwhelming and no government would allow that to happen. You have to separate an individual from the system as a whole.
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The damage has been done... it was over $50 IIRC and is now say $2.... losing the last $2 will not make much difference to a 401(k) account..

The common shareholder can be effectively wiped out like it is happening now... convert all preferred to common, convert all bonds to common... a defacto bankruptcy without going through the courts... but the common will still own a few % instead of zero...
 
even if I buy a tall starbucks coffee tomorrow, it will still cost me more than a share of C
 
al_bundy said:
even if I buy a tall starbucks coffee tomorrow, it will still cost me more than a share of C
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Great new Promotion: Buy 2 of any item at Starbucks, get one share of Citigroup. With the volume at Starbucks, C will have a lot of new owners soon.
 
now that uncle sam owns most of C i wouldn't be surprised if they force a sale of the whole entity or in pieces

expect the new name to be the US division of Lucky Dragon Bank of SHanghai or something like that
 
I hope someone gets a laugh out of this. I just put a decent sized chunk of change into FAS at $3.50/sh. FAS is the Direxion 3x leveraged Bull Financial Fund. Complete gambling and hoping here. We'll see if this is just more money down the financial stock drain...
 
ziggy29 said:
"Let's make it double or nothing!"
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I'm in for triple or nothing. So far it is up 15% from where I bought it. Er, make that 14%, er 13%. To show you what kind of optimist I am, I set a limit order to sell it all at $15/sh (with a $3.50 basis).
 
FUEGO said:
I'm in for triple or nothing. So far it is up 15% from where I bought it. Er, make that 14%, er 13%. To show you what kind of optimist I am, I set a limit order to sell it all at $15/sh (with a $3.50 basis).
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These things are tricky. You can be dead right on the markets, but lose anyway. The criticisms that have appeared on this forum about 2x bear funds also apply to leveraged bull funds.

I think the takehome is these are basically very short term trading vehicles. No problem if the markets go straight up from where you buy, it's the backing and filling that can get costly.

Ha
 
haha said:
I think the takehome is these are basically very short term trading vehicles. No problem if the markets go straight up from where you buy, it's the backing and filling that can get costly.
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That's what my research has indicated too. Not a buy and hold investment for sure. Just a relatively easy way for me to get leverage action without involving real options (the latter is very difficult to implement in personal accounts due to my SEC regulation).
 
atlas888 said:
My point is that the impacts of failure of major money center banks would not be confined to just the actual number of their shares owned by pension plan, index and mutual funds, but on everything in the stock market, so the government would not let that happen. Look at what are being done by every government around the world for their banks.

We can disagree, that what makes a market. I subscribe to Baron Rothschild's advise that the time to buy is when blood is running on the street.
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Agreed, but one can make a killing right now if they investigate whatever they are buying very carefully.

I believe the main factors would be a major force in an industry going forward with a solid balance sheet devoid of much debt. Hmm, how to find one, easy to find, hard to verify. One would have to do a targeted forensic audit of books and records, and look under all rocks. Isn't this is what a hedge fund guy does? Reminds me of a fellow I knew who ran one of these overrated schemes and bragged about meeting Mr. Schrusi of Health South, and said it is solid like a rock.

Guess Scrusi gave him nice and boozed up, as the rest is history.

In any case, if one were able to locate 5-10 companies with such criteria, upon the eventual uptick, the booby price would be great.

Right now, trust is at an all time low, like a bunch of wolves all eyeballing each other with fork and knives in hand waiting to eat a nice plumb lamb.

Jug
bahhhhhhh went the american "sheeple"
 
C is about to go into .99 cents store territory and i'm looking to maybe buy BAC in the next 7-21 days. i'll trust Ken Lewis over Citi anyday
 
While I agree BAC has a brighter (or less dim) future than CIti, I wouldn't attribute any of that to Lewis.

Ken Lewis is the one who destroyed BAC. He's the individual who made the decisions that have rendered it nearly(?) insolvent. None other.

You cannot say that about Pandit. For all his faults, he's cleaning up the mess of others.
 
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