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Bear Sterns getting clobbered - buy of the century?
I feel like I'm looking at American Express back in Oct of 2001 again...I'm personally in favor of going long both Bear Sterns and Citigroup at these prices and continuing to buy more on weakness.
Any thoughts?
Best Answer
2183 points
ChaosNantuko answered one year ago …
there was a big gap today. why not wait a week and see what happens? Its doubtful that the opportunity won't exist a week from now, and at that time, we should have more information. Ideally, I'd wait to see a higher low and a higher high before buying, because its unlikely that waiting would stop me from getting in at a favorable price, but it would substantially increase the chance of profits, and allow me to park my money elsewhere while i wait. It may also get me in at a much better price.
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3943 points
MNSL answered one year ago …
Hi DaveDiggz
It looks like that you are not afraid to invest in struggling sectors today. Today’s underperformers are tomorrow’s stars. I think this investment approach will give us greater return in the future if we can identify correct stocks.
If above two co operations can go through this difficult period there will be excellent returns in the long run. At the moment stock prices of some of good financial institutions through out the world have come down very badly. We must not forget City Group has some long term good investments through out the world.
It is good to keep in your radar companies like above in a market environment like today. This is a great opportunity to buy quality stocks with long term potential on weakness.
We must not forget without financial sector no body can run their businesses. Businesses need support of financial institutions regularly. No sooner current credit bubble is solve there will be interest on financial stocks. This is a temporary situation.
My current opinion is it is better to wait till fourth quarter of this year then accumulate gradually whenever there is a weakness. But one thing I want to tell you that Picking of market bottom is impossible and we will miss out the next recovery
Therefore if we follow value approach we are always safe.
4075 points
EthanR answered one year ago …
Dave, typically what happens is they fill in part of the gap, and then turn around and go lower, often breaking below the low set by the gap. So maybe you trade it for now, make a little money, then wait for the subsequent pull back to invest long term?
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508 points
John answered one year ago …
If this housing bubble has taught us one thing its, you can not count on these financial institutions to give you any credible information. Just this week Bear Sterns said everything is fine, so fine they needed to borrow money to operate.
We do not know the extent of the financial troubles for the financial companies. These foreclosures and write-offs may continue longer then expected. Every time one of these banks crumbles everyone rushes in for the buy (ie. Citigroup) and then the stock trades lower. These stocks maybe buys at these low prices but the volatility and uncertainty in the sector is keeping me in the sidelines. If you believe these companies are buys here wait for the stock to reverse trend and then buy in, to buy while the stocks and sector are still falling is a mistake. The tech sector took almost two years to come back, the financials will be on there way back for awhile, just relax and wait for the right buy signal. There is no such thing as a missed opportunity!
379 points
dustbusterz answered one year ago …
i think everyone is too concerned about when to get back into the financial sector and not concerned enough about what companies will even survive. certainly, i would expect some companies to go belly up or at least be acquired in order to save them from bankruptcy. so , i would be looking deeply into the financials to see where they stand , and certainly, this is not yet the time to jump into financials since the housing sector has to improve before they (the banks ) will see any substancial improvements themselves.
so with this sector, its more important than at any other time, to be sure they are solvent before buying.
989 points
rvilmur answered one year ago …
BSC just had a bank run so bad that they had negative capital and had to be taken over by JPM with the backing of the Federal Reserve. Don't expect the shareholders to come out of this feeling good about their almost total loss. Don't join them, BSC is at the mercy of JPM who will have no qualms about giving BSC shareholders the shaft.
Citigroup is having a relief bounce, but they are not owning up to all their losses. They will still have a lot of paper that is essentially worthless because nobody wants to buy it. Ultimately C will be at the mercy of the Federal Reverve and a solvent bank like BSC is.
I would rather buy into some of the smaller financials that have suffered from the sins of the big boys, but have not actually gone carzy with bad paper. Do you due diligence on NLY, NCT, and MMAB.
