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Are there any banks you WOULD bet on now?
Answers
676 points
RobSmith answered one year ago …
The only bank I'm looking at right now is HSBC. They have a lot of international exposure, especially in Asia, the stock's trading at a 4 year low and the company might be pulling its bid for a Korea bank which is a conservative (and probably the right move) for now.
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4085 points
EthanR answered one year ago …
CUWu, I wrote in the Tycoon Report last week that I bought BAC, but that was at 21.56. I would probably buy more on a pull back off the recent run up, but I wouldn't buy it at current level of 27.49 as it is now quite overextended. But I do like it for the long term, and the $2.56 annual dividend is really excellent. One caveat: They report earnings for the 2nd Q on Monday, and with it being as overextended as it is now, unless they stomp the expectations, we could see a pull back. Then after the selling calms down, I would be a buyer again.
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411 points
jester112358 answered one year ago …
Let me answer your question with a question. How do banks make profits? They borrow at low rates and lend at higher rates pocketing the difference. Since they're not lending much anymore (too busy writing off bad debts, CDOs, SIVs etc), how will they make money in the future? If you can't answer this question (about any company or sector) don't invest your money in it.
Don' be fooled by the current profit taking from short covering on banking stocks. This is the only reason these stock prices are rising. The credit crisis is far from over, merely being covered up to prevent panic.
127 points
kingfisher209 answered one year ago …
JPM and WFC are well positioned and I am sure they would be looking for a cheap buyout, but I do beleive all the top banks C, BAC, WB will perform better than the overall market in the next twelve months.
With every crisis there are couple which fall down, and the rest of the croud gain market share.
With Bear Stern and Indymac already down, there could be one or two more down but then the rest of the herd will be gaining market share and would return back even stronger.
The conservative bank like VLY should also come very strong who did not participate in all those exotic mortgage lending
180 points
kobla answered one year ago …
Washington Mutual is a STEAL at $4,, in couple of years when this stock hits $20 you will have made 500% at $40 it will be 1000%. In 1994 after the last Real Estate bust WM was at $8 and it went to $40, In 10 years this will be a $60 stock. Don't follow the herd,,, go opposite the bubble to make money!
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3963 points
MNSL answered one year ago …
Selecting stocks in the financial sector is not as easy as we think now due to following reasons:
Their balance sheets of some banks and financial institutions may be good for the last 50 years. However, they can collapse at any time surprise to many now. It is happening in some parts of the world now. Investors as well as depositors must be very careful in putting money in these institutions with higher risk. We must completely avoid banks more exposure to property and commodities now.
Businesses are falling due to higher interest rate and inflation except some sectors and companies with positive cash flow and less debt or no debt.
Credit card holders are not using their credit much now and consumer spending is coming down.
We do not see any expansion of credit portfolios in banks now.
Banks are practicing different types of high-risk investment derivatives than before.
Some banks have invested in the wrong sectors and have deworsified. Some investments are non-productive
They do not concentrate on core businesses now.
However, there will be outstanding opportunities in this sector if you can select correct banks in market weakness. Definitely, some banks and financial institutions will give you above average returns in the long run. We will have to do lot of research on banks now.
Outstanding banks will have less debt. They will have loyal, reliable customers. They will not defaults their debts. Their businesses are steady in any market situation. They have given priority for their core businesses.
Still there are plenty of good banks through out the world. World can not run without financial sector and recovery in this sector is very important for world growth. I think it will happen once markets players sort out their credit mess and once world economy started to develop fast. Then we will have outstanding opportunities in the financial sector through out the world.
