Tanking Bank Stocks
 

Didn't we just inject over a half trillion dollars into these Banks?


http://finance.google.com/finance?client=ob&q=NYSE:BAC

http://finance.google.com/finance?q=NYSE:C

http://finance.google.com/finance?q=NYSE:WFC


Why the big drop off?? :Oh crap

Yes the banks are in bad shape but DAMN that should be already factored in.. they are going to get the rest of the $350 billion TARP funds from Obama. I just don't get it..

They are leveraged full tilt.

Yes, but isn't this old news?

Sure, but the situation hasn't really changed. They are hording the money to stay solvent and they need more. Propping up the banks like this is absurd. This is what they should have done: http://www.someonetellobama.com/

This didn't help Wells.

Wells Fargo & Co., the biggest U.S. bank by stock-market value, may need to raise $10 billion and cut its dividend after the acquisition of Wachovia Corp., wrote Atlantic Equities analyst Richard Staite. Staite, based in London, downgraded Wells Fargo to "underweight" from "neutral" Wednesday and said the bank may announce disappointing earnings this year because of the deteriorating economy. Wells Fargo reports fourth-quarter earnings on Jan. 28.
"With the accelerating decline in house prices in California and surge in unemployment we expect them to suffer significant losses in 2009," Staite wrote. "Given the weak economic outlook, there is a chance the dividend could be cut as a way to conserve capital."
Wells Fargo's shares have outperformed those of its top competitors, including J.P. Morgan Chase & Co., Citigroup Inc. and Bank of America Corp., in the past year because the company avoided most of the riskiest loans during the credit bubble.

Just bought some WFC. @ $20.73/share

What's your strategy with this? Buy and hold or buy and sell into a rally?

I think most of these are on the low.

GS, MS, C, BOA, WFC, etc.

Bow them low and sell them high.

The same ones over and over again.

Done it like three times with MS already

Buy and hold. I find this to be quite cheap using a DCF analysis. Of course it depends on what you think future earnings will look like but I try to be conservative there. Then again you can always trust Uncle Warren.

Back in October Buffett bought some stock in his personal account for the first time in decades. It was Wells Fargo and he bought in the low 20's.

Here was his comment then.

BUFFETT: Yeah, I bought -- The first domestic stock that I can remember buying, I don't know, in a decade or two. But there was a time that Wells got down into the low 20s and so I couldn't resist. I bought some myself. I keep most of my money in Treasury bonds, except for Berkshire Hathaway, but I did buy some Wells.

WFC is his second largest holding.

I'm not so sure. We have not hit bottom yet. If you get the timing right you can do well right now with trades like you describe, but you are playing with fire. Good luck though.

I'm getting murdered on BAC this year. Fortunately I don't have much. Plus I sold some, bought some Merrill with it and then it changed back into more shares of BAC. That helped some.

I don't try and time anything. Just look for stuff that is cheap. Hell, WFC is trading at a cheap multiple even against the possibility of an awful 2009. Citi analyst downgraded it and went with $1.50 instead of $2.00. $21/1.50 is cheap enough but when you consider a return to normal earnings in 2010-11 and then discount the future earnings to the present you are looking at a real cheap stock.

They'll get proped up again and should be alright

Don't listen tome of course I'm wrong half the time.

Somebody told be to short GS a few days back.. wish I had listened!

If you have money to speculate with go for it. I am personally out of the market entirely now. I just do not trust it.

I just ride the mob mentality.

Yes, fire I know. I've been burnt more than once but I'm doing ok overall

So you look for good long-term positions to hold. Where do you see Ford, GM, in 2-5 years?

I know they are in grave danger but the shares are at historic lows (with good reason)


http://finance.google.com/finance?client=ob&q=NYSE:F

http://finance.google.com/finance?q=NYSE:gm

They should simply nullify those credit default swap contracts! That will fix the balance sheets too!

The lending practices and the lack of funds on hand have caused these baks to have these problems. They should not get bail out money. they should go out of business.

WFC has been under $20 today at times

i don't have a clue/ I wouldn't touch them. Just because of the question you asked. Where will they be in 2-5 years? Or 10? There's just no way to tell.

But for WFC, well, can I quote Warren again?

"I predict Wells will be earning a lot more money 10 years from now" -Warren Buffett (5/2008)

All around money on GFY. :(

The Bank of America/Merrill deal closed on January 1st. the WSJ is reporting that the deal only closed because the Treasury gave a verbal commitment to supply bailout funds

"Discussions over these funds began in mid-December when Bank of America approached the Treasury Department. The bank, already the recipient of $25 billion in committed federal rescue funds, said that it was unlikely to complete its Jan. 1 purchase of the ailing Wall Street securities firm because of Merrill's larger-than-expected losses in the fourth quarter, according to a person"

Interesting that back in October CEO Ken Lewis said they didn't need the money but only took it as show of solidarity and for the public good.

Wonder how the Countrywide and Merrill deals will look in the long-run. Seems that the Merrill deal put the bank at risk - and for that reason - it is not a good deal. Seems hard to believe that it won't be a kick-ass acquisition in the long-run though. Maybe Lewis acted knowing that bailout money would always be available. Risky, risky.