# Banks turning the corner?



## Bill M (25 February 2008)

Today all the major banks bounced up. Have we turned the corner? I personally have been buying through these lows for the purposes of long term retirement funding. Anyone care to share their opinions? 

CBA up 4.8%

WBC up 4.6%

SGB up 4.4%

NAB up 1.8%

ANZ up 1%

MQG up 1%


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## Buster (25 February 2008)

Bill M said:


> Today all the major banks bounced up. Have we turned the corner? I personally have been buying through these lows for the purposes of long term retirement funding. Anyone care to share their opinions?




I'm with you on the buying front (and retirement funding plan) Bill, however I'm very wary about the banks in the current climate and have steered well clear of them, plenty of other Blue Chips at bargain prices as far as I'm concerned..  

Could be a mistake, but you live and learn..

Regards,

Buster


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## overule (25 February 2008)

Personally, 

I think banks are yet to fall further. Any word of recession is going to hurt the financial market especially with the crucial data from wall st. this week. I am looking at banks this week which will be interesting.


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## weird (25 February 2008)

I will avoid the word signals, as some Trade Guider guys hate the mere reference, and replace it with arrows.

A friend sent me some TG bullish arrows on bank stocks at a few points in the last few months, but all have quickly fell through.

Looking at horizontal support lines, again banks fell through recent previous ones.

This may be considered pretty extreme negative sector sentiment ... perhaps very oversold (and perhaps the latter sentiment is because people have always had love affairs with banks and why wouldn't you, considering the profit reporting each year)..

Banks again, are sitting and bouncing off the further out horizontal support lines ... pullback ? Could be. Certain ?  There are other opportunies, in different sectors with strong bounce atm ...


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## M34N (25 February 2008)

I personally bought a bunch of CBA @ $42.50 at the open on Friday (refer to the CBA thread on why I decided on that), mostly on the basis I'm going to hold for the long term.

BTW, CBA and WBC performed well today because of the brokerage upgrades from Citi, and SGB is always a moderately volatile stock (esp. for a bank) so no surprise there -- and it's interesting to note BNB again up 3%, its performance over the last few days has been nothing but short of amazing, up from around $15 a few days ago to $18.

I don't think this is the end of the volatility, but it's about time the carnage stopped for a while at least. I wouldn't put all my money on the banks, hence why I only bought some CBA stocks, because I'd rather have my money long on resources, I still think they have some distance to run. Look at BSL, RIO, WPL and BHP's performance for the past month, they're virtually holding the ASX/S&P200 up on their own.


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## AnDy62 (25 February 2008)

Me thinks banks are oversold. Also think that the next few months will see futher jitters and buying opps. Currently I have NAB - a (bad) long termer and SUN. I'm looking at adding either ANZ/CBA in the future as both have been smashed for what was, in the scale of things, not that bigger deal. But generally, most my portfolio is in gold / resources. But for the long term... these are juicy prices


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## reece55 (25 February 2008)

Bill M said:


> Today all the major banks bounced up. Have we turned the corner? I personally have been buying through these lows for the purposes of long term retirement funding. Anyone care to share their opinions?
> 
> CBA up 4.8%
> 
> ...




In the short term, yes.....

In the long term, no....

My strategy with the banks is trade them, don't invest in them in this environment. There will be bounces, but Banks and financials in general are in bear mode and need to be traded accordingly....... There may be worse to come in light of the bond insurers, spreads are wide as anything and provisions are still at all time lows.... What is cheap now could be expensive in 2 years time.....

Cheers


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## weird (25 February 2008)

Interesting point, Reece55.

I am not a fan of oversold trading , particular long term (although day trading may be different though in some certain circumstances) , because you may think you have bought oversold stocks, just to find many continue to go south (and with huge gaps) or even disappear (holding overnight would be very scary) ... however, concerning our big 4 or 5 I do wonder a little  if this to be the case  at our current levels , I fortunately have the benefit of seeing the previous falls to post this now (we are at an interesting and more significant juncture point ... at least to myself  ... concerning horizontal support) ... but I don't wish to be the guy in Princess Bride, thats says the famously, "inconceivable ... ".

However as I said previously, there are more interesting stocks atm.


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## AnDy62 (25 February 2008)

reece55 said:


> In the short term, yes.....
> 
> *In the long term, no....*
> My strategy with the banks is trade them, don't invest in them in this environment. There will be bounces, but Banks and financials in general are in bear mode and need to be traded accordingly....... There may be worse to come in light of the bond insurers, spreads are wide as anything and provisions are still at all time lows.... What is cheap now could be expensive in 2 years time.....
> ...




So you are saying banks won't bounce back in the long term? That in twenty years time they will be at current levels??? Big call...


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## reece55 (25 February 2008)

AnDy62 said:


> So you are saying banks won't bounce back in the long term? That in twenty years time they will be at current levels??? Big call...




Sorry, I should have said medium term..... I am thinking in two years time, you might get the dividend, but I wouldn't be surprised to see very little or no capital growth... The risk is skewed to the downside IMO in the next 1 - 2 years, better to invest capital in other areas that will experience growth rather than write downs and margin pressure....

20 years from now - well, there could be another subprime equivalent by then!!!!

Cheers


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## ShareIt (25 February 2008)

For CBA and WBC, the short term outlook shows all technical indicators are pointing to a buy, hopefully we can get a 50% retracement... NAB and ANZ seem still a little undecided...


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## wavepicker (25 February 2008)

ShareIt said:


> For CBA and WBC, the short term outlook shows all technical indicators are pointing to a buy, hopefully we can get a 50% retracement... NAB and ANZ seem still a little undecided...




Would be pushing it IMO. More like a 38% retrace would be realistic in the next  3-4 weeks before resuming southside.


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## Nicks (26 February 2008)

Ive been a holder of ANZ for about 4 years now. Apart from the divs the capital gains have been smashed in the last few weeks. Disappointing as I was always of the view that ANZ was the most promising of the big 4. 

Locally in retail they seem to have been very active, acquiring Etrade, marketing their products well. I guess being up front and diligent about allocating funds to cover subprime has hurt them short term. 

I have to wonder if they are just being prudent, upfront and diligent and perhaps the others are not?


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## TheAbyss (26 February 2008)

NAB have 5.01% and CBA 17.23% of ABC Learning.

MFS, CNP AFG now ABS. The banks incur many more hits to their investment base and they may have to start making a few disclosures re losses and then we will see if they have turned up or down. Buyer beware.


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## ShareIt (26 February 2008)

TheAbyss said:


> NAB have 5.01% and CBA 17.23% of ABC Learning.
> 
> MFS, CNP AFG now ABS. The banks incur many more hits to their investment base and they may have to start making a few disclosures re losses and then we will see if they have turned up or down. Buyer beware.




Actually, play what the price movement is telling you... not what you hear


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## TheAbyss (26 February 2008)

Good point ShareIt - Waiting until knowledge is in the public domain is far too late. Plan the trade and trade the plan.


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## Sean K (26 February 2008)

Some of the indicators are just starting to turn, but could just as easily fall over again at this stage. You could try and catch the knife if you had a very long term view but I personally wouldn't be touching them until some consistant higher highs and lows. Unless you're short term trading of course.


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## ROE (26 February 2008)

Bill M said:


> Today all the major banks bounced up. Have we turned the corner? I personally have been buying through these lows for the purposes of long term retirement funding. Anyone care to share their opinions?
> 
> CBA up 4.8%
> 
> ...




Subprime is no where near finish, it still has a fair way to play ... it's a 100 Billion dollars floating around with only about 10-15B reported lost so far so
lot more to come. 

As long as this subprime hang around liquidity is still a problem and banks dont make money when there is no capital to borrow


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## ShareIt (26 February 2008)

A lot of hesitation today in the four major banks... CBA with some resistance around $46, NAB at $30, WBC at $24 and ANZ at $23... they also seem to show small candles (possible reversals down)... probably best to wait if resistance is crossed and then consolidated at that level... if they close down tomorrow, then I think a trip back to support will be the go


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## Bill M (26 February 2008)

ROE said:


> Subprime is no where near finish, it still has a fair way to play ... it's a 100 Billion dollars floating around with only about 10-15B reported lost so far so
> lot more to come.
> 
> As long as this subprime hang around liquidity is still a problem and banks dont make money when there is no capital to borrow




The last I read anywhere is that there "could" be as much as $5.5 Billion of sub prime exposure between the 5 big banks in Australia. Could you please supply a news story or link as to where you are getting this $100 Billion from? Thank You.


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## Bill M (27 February 2008)

ShareIt said:


> A lot of hesitation today in the four major banks... CBA with some resistance around $46, NAB at $30, WBC at $24 and ANZ at $23... they also seem to show small candles (possible reversals down)... probably best to wait if resistance is crossed and then consolidated at that level... if they close down tomorrow, then I think a trip back to support will be the go



All up again, 3rd day in a row. My wife's already saying it's too expensive now, she wanted to buy SGB at $24 with her own money but they've bolted big time, ah well hindsight!


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## ROE (27 February 2008)

Bill M said:


> The last I read anywhere is that there "could" be as much as $5.5 Billion of sub prime exposure between the 5 big banks in Australia. Could you please supply a news story or link as to where you are getting this $100 Billion from? Thank You.




oops sorry didn't meant to ramp or scare mongering bank stocks just my view but here it is.

American subprime, not here, watch ABC lateline they interview a few commentators in the US a a month or 2 back. so far we know UBS and citi group write down easily 15B due to subprime..

Mr Bernanke himself
http://money.cnn.com/2007/07/19/news/economy/bernanke/index.htm


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## Bill M (27 February 2008)

ROE said:


> oops sorry didn't meant to ramp or scare mongering bank stocks just my view but here it is.
> 
> American subprime, not here, watch ABC lateline they interview a few commentators in the US a a month or 2 back. so far we know UBS and citi group write down easily 15B due to subprime..
> 
> ...




Nothing to do with the Australian big 5 banks I'm afraid, thanks.

Edit: That story is almost 8 Months old too.


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## Kauri (27 February 2008)

they may be turning the corner... but are they doing it on two wheels or four???   
Cheers
...........Kauri


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## osmosis (29 February 2008)

Bill M said:


> All up again, 3rd day in a row. My wife's already saying it's too expensive now, she wanted to buy SGB at $24 with her own money but they've bolted big time, ah well hindsight!




It looks like your wife can have a second dip at SGB after today's performance. I still think there's worse to come though.


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## numbercruncher (29 February 2008)

Dont read the following if you are easily scared 



> Bomb ticking for off-balance banks
> 
> A TICKING bomb for the banking sector is its off-balance sheet activities, which at last count stood at $12.9 trillion.
> 
> ...




http://www.theaustralian.news.com.au/story/0,,23229288-7583,00.html


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## numbercruncher (29 February 2008)

And another possible problem for specific banks.




> ST GEORGE Bank yesterday began to lift the lid on another time bomb ticking away in the Australian banking sector.
> 
> For the first time the Sydney-based regional revealed that its captive mortgage insurance business - a big contributor to bottomline profit in the last five years - had come under financial pressure.
> 
> ...




http://www.news.com.au/business/story/0,23636,23256934-462,00.html


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## Kauri (29 February 2008)

Kauri said:


> they may be turning the corner... but are they doing it on two wheels or four???
> Cheers
> ...........Kauri




 and I hear that those two tyres have punctures and may be deflating,,, ahh, ye gods and little fishes, I'm glad I'm opposed to shorting..   
Slainte
...........Karri


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## dhukka (29 February 2008)

Thanks for the links NC, sure the banks share prices have been hit hard and a lot has been discounted but we are only just getting started with the banks problems here in OZ. I just can't understand why people think now is a good time to invest in the banks.


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## Bill M (29 February 2008)

osmosis said:


> It looks like your wife can have a second dip at SGB after today's performance. I still think there's worse to come though.



Thanks mate, you're right it's back down to it's lows and it's not looking good. Now she wants em for $23.... I think she's smarter than me and she may just get them for $23! No doubt about it, it's a hard game, cheers.


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## Bill M (1 March 2008)

Kauri said:


> and I hear that those two tyres have punctures and may be deflating,,, ahh, ye gods and little fishes, I'm glad I'm opposed to shorting..
> Slainte
> ...........Karri




Yeah I liked your comment earlier and it ran true! Keep up the good work and your sense of humour


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## singlefished (1 March 2008)

dhukka said:


> I just can't understand why people think now is a good time to invest in the banks.




You're right mate... Best bank deals going at the moment are savings accounts and term deposits - best I've seen so far is 8.05% (Rabobank 1 year term) and ING with 8.10% (1 year also I think...)

Another interest rate rise next week could see some of the big 4 up over the 8% mark and indeed, some of the smaller players could be closer to the 8.25% mark.

ratecity.com is a good place to check out the current rates, they seem to keep it quite up-to-date for home loans, savings accounts and a whole host of other goodies!


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## ROE (1 March 2008)

singlefished said:


> You're right mate... Best bank deals going at the moment are savings accounts and term deposits - best I've seen so far is 8.05% (Rabobank 1 year term) and ING with 8.10% (1 year also I think...)
> 
> Another interest rate rise next week could see some of the big 4 up over the 8% mark and indeed, some of the smaller players could be closer to the 8.25% mark.
> 
> ratecity.com is a good place to check out the current rates, they seem to keep it quite up-to-date for home loans, savings accounts and a whole host of other goodies!




Funny how you want to put your money in the bank if you think they are in trouble because your bank deposit is not guarantee basically it's not risk free .. if bank goes belly up you could lose your deposit.

want to be sure to be sure, government bonds is the only safe haven
and they don't offer any where near that rate cos it's risk FREE so for you to get above government bond rate you are taking on some risk


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## numbercruncher (1 March 2008)

I think the safest bank is probably CBA (largest deposit base), but if all went to hell, I wonder if the Gov would nationalise them like NR in the UK?


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## Kauri (1 March 2008)

Despite support from high yields, rate hike expectations and firm commodities, there are concerns over the sustainability of the AUD gains. Talk of a *commodity bubble burst is growing*. In addition, fears over a rising credit crunch in Australia is growing as Libor continues to edge relatively higher in comparison to other currencies. Wholesale credit pressures have seen St*. George tap the international debt market last night, raising A$1.08 bln in short-term debt* due March 2009.

Yeehaaa... this is a knife I wanna catch...  
Cheers
......... Duke of Buckingham


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## singlefished (1 March 2008)

Yup... bit of an oxymoron!

You could always dig out and old shoe box and keep your ca$h under the bed... or an old oXo tin as my gran used to use 

Not good to keep it under the bed however if you're currently residing in the flood prone regions of qld ) and also assuming you're not worried about depreciation!

Seriously though, banks (and subsequently bank shareholders) should benefit if over the next few months people actually start saving (instead of spending) and their deposit bases start to significantly build up from current levels?


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## Kauri (1 March 2008)

everywhere I look there is chatttter about a comode-itiy bubble and what happens if it bursts..  :fan  lost me.. luckilyt..  
meantime back in the tother world...
 There has  been news that the *Ambac deal is in trouble* and MBIA just put out a troubling headline - "*MBIA says has no estimate of market losses as of Jan 31"* - aahhh I feel better now..   :bonk:  

Slainte..
............Slanted...  :fish:


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## dhukka (1 March 2008)

Kauri said:


> everywhere I look there is chatttter about a comode-itiy bubble and what happens if it bursts..  :fan  lost me.. luckilyt..
> meantime back in the tother world...
> There has  been news that the *Ambac deal is in trouble* and MBIA just put out a troubling headline - "*MBIA says has no estimate of market losses as of Jan 31"* - aahhh I feel better now..   :bonk:
> 
> ...




And looks like MBIA has another lawsuit coming their way for lying their assses off in the previous financial reports



> *MBIA expects loss payments of $700m-$800M for 2008*
> 
> Bond insurer MBIA Inc. (MBI) said it expects to make loss payments, before reinsurance, of $700 million to $800 million for 2008, mainly relating to insured credits in the residential mortgage-backed securities and home equity sectors.
> 
> ...


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## Aussiejeff (1 March 2008)

Banks turning the corner?

Given ...

(a) the miserable performance of the DOW last night (down 316 points) ...

(b) the miserable performance of the All Ords the previous day ...

(c) the miserable performance of the OZ banking sector in the two months since start of January (many SP's down 30%+)...

(d) the endless feed of BAD world financial data seemingly on an unstoppable? roll (eg: any US interest rate cuts are shrugged off within 24 hrs)...

(e) the prospect of a series of further rate rises here to poison the Oz share market ...

I'd personally tip the bank SP's might easily lose another 6-10% by the end of next week... with no end of down-side in sight.

Mebbe there is no driver currently at the wheels capable of turning these behemoths round the bend...



AJ


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## gfresh (2 March 2008)

A couple of years old (waiting on latest edition), however worth a read.. 

http://www.apra.gov.au/Insight/upload/Banks-2.pdf

Most specifically, what's off the banks balance sheets.. Yes, that's $5.8 trillion dollars.


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## Struzball (3 March 2008)

I just dumped a quarter of my portfolio (Why on earth was I so over exposed to banks???:bonk at a 30% loss.  That was hard to do, but the whole financial sector seems so depressing.

It's probably much easier to take a loss than the thought of doubling the losses.


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## blehgg (3 March 2008)

Yea looks like the banks turned a corner.... driving the opposite way into a one way street.


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## Aussiejeff (3 March 2008)

blehgg said:


> Yea looks like the banks turned a corner.... driving the opposite way into a one way street.




The way I see it, the Big Bank Convoy has mistakenly turned off the brightly lit Funding Freeway into an unlit, dangerous, one-way ghetto back lane .....


AJ


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## numbercruncher (3 March 2008)

Just wait till the mortgage belt start defaulting, game on then !

Just for comparitive measure, if you bought a kilo of Gold 4 months ago it would of cost 26k, alternatively 26k got you 433 CBA shares.

The Gold is now worth 34k, the CBA shares are now 17k.

Just a piece of useless information for folks to ponder (>:


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## chilliaa (3 March 2008)

Bill M said:


> Thanks mate, you're right it's back down to it's lows and it's not looking good. Now she wants em for $23.... I think she's smarter than me and she may just get them for $23! No doubt about it, it's a hard game, cheers.




Yeah and you might get them today for $22.  I dont understand how someone could be dispointed cause they wanted the stock at $24 missed out, got a second chance, then changed their mind to $23 and now its under $23 have they been purchased????:


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## Bill M (3 March 2008)

numbercruncher said:


> Just wait till the mortgage belt start defaulting, game on then !
> 
> Just for comparitive measure, if you bought a kilo of Gold 4 months ago it would of cost 26k, alternatively 26k got you 433 CBA shares.
> 
> ...




Just for a comparative measure we bought CBA at $10.30 in 1996, today it's $40, just a tad under a 400% increase in 12 years. 

Gold was $401 US in 1996 and now it's about $960 US, that's an increase of 240%. I think I'll stick with my CBA shares thanks.


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## Bill M (3 March 2008)

chilliaa said:


> Yeah and you might get them today for $22.  I dont understand how someone could be dispointed cause they wanted the stock at $24 missed out, got a second chance, then changed their mind to $23 and now its under $23 have they been purchased????:




Bought today thanks, she is like me a long term share investor. 

SGB: 7.5% FF DIVS

PE 10.59


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## AnDy62 (3 March 2008)

It seems that from reports the US economy will be battling at least for the next six months. That makes me wonder with bank directors buying up their shares, is this just a ploy to try and revive sentiment or an actual belief they will turn the corner soon? Any thoughts?


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## Kauri (3 March 2008)

AnDy62 said:


> It seems that from reports the US economy will be battling at least for the next six months. That makes me wonder with bank directors buying up their shares, is this just a ploy to try and revive sentiment or an actual belief they will turn the corner soon? Any thoughts?




I hope they are not buying on margin..  :  
Cheers
..........Kauri


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## johny6677 (3 March 2008)

I believe that if you wish to make money you should not follow the crowd. The banks have been oversold and now are at bargain prices. The earnings are more stable than most other resource stocks (that seem to be now in favor) and they also pay a handsome dividend. Of course they will write off some stuff, but then again, who does not...? Armageddon is not coming. (yet )
As for the debate "Gold vs bank stocks?" I only have one question: what dividend do you get if you own 1k of gold for 10 years? Zilch... Actually owning gold would cost you money.


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## Trembling Hand (3 March 2008)

johny6677 said:


> I believe that if you wish to make money you should not follow the crowd. The banks have been oversold and now are at bargain prices.




Many a punter have said the same since November and as yet they have been wrong and getting into more and more trouble by the day as their Banks become more oversold!!

For most the smarter thing would be capital preservation rather than bottom picking. If they start a new uptrend there will be plenty of time to jump on. The statement "I believe that if you wish to make money you should not follow the crowd" has simply been wrong for some time. You may get it right tomorrow or soon but its hardly something that people should always be doing.


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## wayneL (3 March 2008)

johny6677 said:


> I believe that if you wish to make money you should not follow the crowd. The banks have been oversold and now are at bargain prices. The earnings are more stable than most other resource stocks (that seem to be now in favor) and they also pay a handsome dividend. Of course they will write off some stuff, but then again, who does not...? Armageddon is not coming. (yet )
> As for the debate "Gold vs bank stocks?" I only have one question: what dividend do you get if you own 1k of gold for 10 years? Zilch... Actually owning gold would cost you money.



apples and oranges.

Gold is a spec hedge against inflation and general doom. Banks & Gold are invested in for entirely different purposes.

Banks at bargain prices? That is a very subjective assessment. I think they are conceptually more expensive now, than a year ago.


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## Kauri (3 March 2008)

what worries me about possibly looking to invest in Banks is their exposure to writedowns... they have mostly come out and said that exposure ti sub-prime is minimal... but what about the credit card debt bundled up and sold.. and the commercial property vehicles that are tipped to tip, et al???
  In the US mortgage co's (fanny and freddy), hedge funds, councils, banks,  monoline insurers (ambac..mbia) and insurance co's( E.G AIG).. are fessing up.. are our banks really all that squeky clean??
Cheers
...........Kauri


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## numbercruncher (3 March 2008)

Very first shares I owned were a Gift when I was 13, in 12 months they went up 100pc, 12 months later they went into receivership.

Its all about timing the market rather than time in the market in this little black ducks opinion 

I have no issue with people's buy and hold forever philosophy, but ive seen people in the various bank threads catching this knife all the way down, and I could bet my last cent there are many whom wish they hadnt.

If all these banks are such good value, why is there so many selling at these " rock bottom " prices ?




This isnt a graph, its literally a vote of no confidence !


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## dhukka (3 March 2008)

Kauri said:


> what worries me about possibly looking to invest in Banks is their exposure to writedowns... they have mostly come out and said that exposure ti sub-prime is minimal... but what about the credit card debt bundled up and sold.. and the commercial property vehicles that are tipped to tip, et al???
> In the US mortgage co's (fanny and freddy), hedge funds, councils, banks,  monoline insurers (ambac..mbia) and insurance co's( E.G AIG).. are fessing up.. are our banks really all that squeky clean??
> Cheers
> ...........Kauri




Obviously not with ANZ's admission last week about CDS exposure to a US bond insurer that had been downgraded. Banks won't admit anything until they absolutely have to which just creates more uncertainty in the current climate.

How about just more mundane stuff such as securitization? In 2006 Aussie banks securitized *$62.7* billion into Residential Mortgage Backed Securities (RMBS). Through the end of July 2007 they were well on their way to a record year having securitized *$53* billion of RMBS. From August - December they securitized just *$3.8* billion. There goes a bunch of fees and if they can't securitze mortgages they have to keep them on balance sheet. Not a problem if defaults are low but what's the trend for defaults likely to be with a couple more interest rate rises?


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## gfresh (3 March 2008)

Numberchruncher's post #27 in here is worth noting carefully, however I'll repeat it here. ANZ, Westpac, St George, and Bendigo have their own mortage insurance business.. That is they back their own mortgages for that that have less than 20% deposit. And I assume somebody (worldwide?) backs these against risk. 

It is quite complicated (and I'll admit no matter how much I read I cannot fully understand it myself), but I assume these mortgages are packaged into RMBS and traded on the world market. There they are probably ranked, leveraged, traded, and mixed with other mortgages from right across the world. Even this prospect is a little worrying right now with everything so fragile. Obviously, there are also ramifications to these institions in particular if there is any sort of trouble in our own realestate market. Maybe that's rubbish, who knows.

CBA, NAB, and others back their mortgages through PMI (NYSEMI) or Genworth (NYSE:GNW). Curious myself, pulling up a chart - PMI has gone from a SP of $50 to a price close to $7.00 in 8 months (-86%). Genworth is a little better, but still has lost 33%. What happens if PMI were to get into serious trouble? I do not even know if this is possible, likely or plain silly, but to be 14% of it's previous value has to make you wonder - and the likely consquences if it were to happen. I still can't see how this can't be exposure. 

Now the banks say they have very little 'direct exposure' to subprime, but conversely are they saying they have a s.load of 'indirect exposure' ?


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## dhukka (3 March 2008)

gfresh said:


> Now the banks say they have very little 'direct exposure' to subprime, but conversely are they saying they have a s.load of 'indirect exposure' ?




I think you hit the nail on the head there. Read between the lines, no 'direct' exposure doesn't mean no indirect exposure.


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## Aussiejeff (4 March 2008)

wayneL said:


> .... Banks at bargain prices? That is a very subjective assessment. *I think they are conceptually more expensive now, than a year ago.*




Totally agree. Regardless of what SP or P/E they have plummeted to of late, today's perceived "cheap value" of bank stocks has GOT to factor in a significant degree of forward looking potential downside risk, given the on-going sub (and of late) not-so-sub-prime loan fallout.

I'm not so sure anymore that you can simply refer to the last 10-15 years of a stocks SP chart any more and say "sure it will rebound - history shows it will". IMO it seems we are in somewhat "uncharted" waters now, with regard to the health (or otherwise) of the world's major banks and other financial institutions....


AJ


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## nomore4s (4 March 2008)

Eventually when this whole sub prime issue and the USA economy decides what it wants to do, the banks will be a good buy. When that will be and a what price that will be is anyones guess at the moment.


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## Trembling Hand (4 March 2008)

Just shows how despite peoples talk most have no ability to change their behaviour when a situation changes. If the Banks are going to take off back to their highs or beyond they aren't going to do it in a week. There will be plenty of time to get in. No matter what your analysis technique you will have a chance of getting back in. For Tech/a traders at least a higher low or higher high would be a start. But nothing since November.


----------



## Ken (6 March 2008)

*Why should we believe them now?*

Just a question.

Why should we believe the brokers who say the banks are going lower?

Any idiot on the planet could see from a chart that the banks have fallen a lot and its very easy to say there is more downside!

Where were these brokers when NAB was $44 and MQG was $88?

They were telling the public that the good times were rolling on and evrything was heading higher and higher.

I have only seen one sell recommendation on a bank and that was on ANZ when it was $26 with a price target of $24.20. That was from fn arena.



As I said its very easy to say a stock is going up when its heading north.

Very easy to say a stock is going down when its going down.

Do your own research. If your holding long and accumulating along a time line I think thats investing.


----------



## tex.willer (6 March 2008)

*Re: Why should we believe them now?*

The broker is a sales person!!! As long as you trade, they make the transactions money!!!

Follow your own judgement.


----------



## doctorj (6 March 2008)

*Re: Why should we believe them now?*

I think context and comparative analyis is important when it comes to using/interpreting broker analysis.

Equity analysts don't have a crystal ball that can predict what the future is, so all analysis is virtually conducted on a 'ceteris paribus' basis.  No one could predict both the nature of the current FS crisis and it's timing and no one can predict the broad market influences that are to come.  
These large multiple deviation events are by definition unexpected and no analyst would take pot stabs at what they might be and incorporate it in their analysis.

What I think might be of some use is to compare the reports for multiple banks from the same analysis - ie which bank do they think will best deal with current conditions.

Then make sure you read sector-based analysis and listen to economists (Bloomberg is great - I'm a big fan of Tom Keane *sp) where you can to get a feel for what they see coming.  They won't be right, but atleast it'll help you be aware of what's out there.


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## Bill M (6 March 2008)

*Re: Why should we believe them now?*



Ken said:


> Just a question.
> 
> Why should we believe the brokers who say the banks are going lower?
> 
> ...



Ken I wouldn't believe any of them. I just read those reports and then make my owns decisions. The so called smarties at Fat Profits had IAG as a buy at around 18 or 24 Months ago, yep all that knowledge and so called expertise and IAG is down 50%. Read em and then make your own decisions is best mate.


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## osmosis (6 March 2008)

"Banking heavies make dash for sliding scrip"

http://business.theage.com.au/banking-heavies-make-dash-for-sliding-scrip/20080301-1w4n.html

Interesting article from The Age.


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## Aussiejeff (7 March 2008)

osmosis said:


> "Banking heavies make dash for sliding scrip"
> 
> http://business.theage.com.au/banking-heavies-make-dash-for-sliding-scrip/20080301-1w4n.html
> 
> Interesting article from The Age.




The most interesting thing about the article was that the reporter actually stated at the end of his blurb that he held shares in ANZ too. Far too honest to succeed in the dog-eat-dog world of media madness IMO....


AJ


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## AnDy62 (7 March 2008)

Aussiejeff said:


> The most interesting thing about the article was that the reporter actually stated at the end of his blurb that he held shares in ANZ too. Far too honest to succeed in the dog-eat-dog world of media madness IMO....
> 
> 
> AJ




AJ- that struck me as odd too. It's not like he's an expert or anything. Maybe he just wanted people to think ANZ was a good buy... lol. Anyway, there will be more pain in store for the banks today I should think. When will this end


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## TheRage (7 March 2008)

AnDy62 said:


> AJ- that struck me as odd too. It's not like he's an expert or anything. Maybe he just wanted people to think ANZ was a good buy... lol. Anyway, there will be more pain in store for the banks today I should think. When will this end




Anything to do with finance, whether it be reporting, fund managing, financial planning must disclose interests. The reporter by rights should disclose his interest in ANZ becasue regardless of whether he puts a positive or negative spin on the article the consumer must know whether he has a conflict of interest in what he/ she is reporting.


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## Struzball (7 March 2008)

Ironically, has anybody see this?

https://invest.etrade.com.au/cms/viewcmsarea.aspx?key=Bulletin+-++101

It apparently lists the top 10 buys/sells by etrade customers.

6 out of the top 10 buys in Feb were for banks.

7 out of the top 10 sells in Feb were for mining companies which, in these markets, seem to be doing relatively well.

Does this surprise anybody?


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## Aussiejeff (7 March 2008)

TheRage said:


> Anything to do with finance, whether it be reporting, fund managing, financial planning must disclose interests. The reporter by rights should disclose his interest in ANZ becasue regardless of whether he puts a positive or negative spin on the article the consumer must know whether he has a conflict of interest in what he/ she is reporting.





Ideally, yes.

So, do you know what shares Alan Kohler holds? The same disclosure rules you talk about "by rights" should apply for every media "financial commentator" who "advises" the public about what shares or sectors "look to be a good investment" or "look to be a bad investment". How many commentators do you know who regularly declare ALL their holdings?

Really, the whole "rules of disclosure" thing for these "experts" in the media is just a wishy-washy mess IMO. Seems to be more of a voluntary thing on a person to person basis, rather than cast-iron rules that can be strictly enforcable by law.... hence my surprise that this reporter actually did so.    


AJ


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## osmosis (7 March 2008)

Struzball said:


> Ironically, has anybody see this?
> 
> https://invest.etrade.com.au/cms/viewcmsarea.aspx?key=Bulletin+-++101
> 
> ...




That is strange.

Does Etrade mainly cater to "Mums and Dads", rather than institutions? If so, then can one assume that ordinary investors are buying what they think is cheap currently (banks) and selling what they assume is doing well (miners) and institutions are doing the opposite or is this assertion completely false?


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## Aussiejeff (7 March 2008)

Struzball said:


> Ironically, has anybody see this?
> 
> https://invest.etrade.com.au/cms/viewcmsarea.aspx?key=Bulletin+-++101
> 
> ...




Hmmmm.... nothing surprises me anymore in this chaotic period for the world's financial markets.... every day we see shares that are expected to go UP plummet, or shares that are expected to plummet, SOAR - and much of it based on a fleeting moment of positive sentiment or irrational fear. Oh wait! The one thing that DOES surprise me is that the bottom hasn't yet _completely fallen_ out of the world's stock markets....

Of course, time will reveal all.


AJ

(PS: Are those lists showing the *smart money* action???) LOL


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## Trembling Hand (7 March 2008)

osmosis said:


> That is strange.
> 
> Does Etrade mainly cater to "Mums and Dads", rather than institutions?




Yes.


osmosis said:


> If so, then can one assume that ordinary investors are buying what they think is cheap currently (banks) and selling what they assume is doing well (miners) and institutions are doing the opposite or is this assertion completely false?




Very interesting.


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## TheRage (7 March 2008)

Aussiejeff said:


> Ideally, yes.
> 
> So, do you know what shares Alan Kohler holds? The same disclosure rules you talk about "by rights" should apply for every media "financial commentator" who "advises" the public about what shares or sectors "look to be a good investment" or "look to be a bad investment". How many commentators do you know who regularly declare ALL their holdings?
> 
> ...





I agree with you and I beleive that disclosure should be greater across a broader range of areas. To be honest I work day in day out disclosing my interests to others and if I did not do so I could face very hefty penalties. Other in my industry are still adapt at confusing the disclosure to clients but I take an open honest approach and it works. 

Personally I can name two other industries which I beleive equally should have the same requirements that I face on a daily basis. I think realestate agents should put in writing any interests that they have, including commissions, related parties etc which could impact upon the sale of a home. 

I also think that Employment agencies should disclose to potential employees the fees and retainers that they make from selling the employee so to speak to an employer. I was shocked to find out that it is not unusual for an employer to pay $15,000 to an employee earning $100,000 to a recruitment firm for this service which is apportioned over 1 year. Personally I can't see the value in such a service but it exists. Although the employee is not a consumer in this situation I think I would view the realtionship with the recruitment consultant a little differently knowing this. I knew that they were paid for the service but I assumed that it was a one off flat fee not based on a particular salary range for an employee. The conflict that I see existing in this industry is that the employer will deliberately pay the employee less in this instance to account for the lost 15%. Personally I think it doesn't matter what the employee earns the amount should be based on a flat rate not a sliding scale just because I earn more. That said any work that I do in my chosen field I will charge according to the complexity of the situaiton not on a % amount.


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## Aussiejeff (7 March 2008)

Interesting comparison. Looks like the CBA took a wrong turn and CSL fitted a super-charger to catch up. Won't be long at this rate before CSL value outpaces CBA for the first time....

If it hadn't been for the terrible beating CSL took between 02-04, it would likely be at $50+ by now.

(I hold neither stock ATM - thankfully it would seem in the case of CBA but most unfortunately not for CSL!)  


AJ


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## blehgg (11 March 2008)

Banks did well today, probably all the traders bottom picking.

SUN up on the speculations of a takeover by Buffet.... 

even MQG pick up a little rise right before close.


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## josjes (11 March 2008)

blehgg said:


> Banks did well today, probably all the traders bottom picking.
> 
> SUN up on the speculations of a takeover by Buffet....
> 
> even MQG pick up a little rise right before close.



Can you provide news link to this buffett takeover rumour ??


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## ROE (11 March 2008)

blehgg said:


> Banks did well today, probably all the traders bottom picking.
> 
> SUN up on the speculations of a takeover by Buffet....
> 
> even MQG pick up a little rise right before close.




I think this is the case of Chinese whisper. There are a few articles around telling the story Warren Buffett is out hunting for insurance business and I think people twist and turn and some how QBE and SUN comes into the picture. 

I'm a big SUN holder with recent low price and I didnt act on that speculation
just trying to buy good stock for cheap.


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## Kauri (11 March 2008)

I don't know about Buffett... but *Fairfax* have put out a rumour that WestPac is eyeing off SUN..
Cheers
..........Kauri


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## Bill M (11 March 2008)

Some traders said Suncorp's shares were driven up by market talk that Westpac Banking Corp (ASX: WBC.ax) , Australia's fourth-biggest lender, could possibly make a takeover bid for Suncorp to expand its business into Australia's eastern state of Queensland.

Westpac and Suncorp declined to comment on the speculation but sources in both companies downplayed the talk.

Full Story Here


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## Aussiejeff (17 March 2008)

Most major Oz banks down 5-6% so far today.  Must be on the nose or sumfink....


AJ


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## Kauri (17 March 2008)

mmmmmmmmm...  

- Fitch is saying that Asia Banks fundamentals are at risk due to the on-going problems with credit.....

http://en.wikipedia.org/wiki/Asia_Bank


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## Awesomandy (17 March 2008)

Aussiejeff said:


> Must be on the nose or sumfink....




Ok.. probably not the most productive post, but I couldn't resist.


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## Dezza (17 March 2008)

Is MQG hiding something that we don't know?  Let's hope they're not the next Bears!


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## Kauri (17 March 2008)

European banks are in the chicanes...

European shares are taking a hit with financial sectors braced to take the biggest fall. UBS shares are already pricing in a 10% fall while UK Clearers Barclays & HBOS are down around 6% with Germany"s Deutsche Bank pricing in a fall of just below 5%.
Cheeeeers
.............KKKKKKK


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## josjes (21 March 2008)

An interesting view. Did a quick search of this guy credential on Google.

The analyst advised clients to sell shares of the biggest U.S. investment banks firms in July 2007 the like of Goldman, Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns. He also downgraded Citigroup, Bank of America and JPMorgan Chase & Co. The Amex Securities Broker/Dealer Index declined 19 percent in the next four months, and 40-50% to March 2008.. 

But his recommendation to buy Citigroup Inc. in November 2007 preceded a 29 percent plunge in shares of the biggest U.S. bank by assets.

Punk “Once in a Generation Opportunity to Buy Bank Stocks” - Punk Ziegel

Despair not. It’s the Easter weekend. Salvation may be upon us. The financial crisis is over, says Richard Bove of US brokerage Punk Ziegel & Co.

This comment sounds ridiculous given the conviction on the part of most commentators that the worst is yet to come; the extent of the decline is unknown; and that the length of the decline is similarly unclear. However, I do, in fact, believe that the crisis is over. There will be more negative developments but they will be meaningless. Further, let me be clear even though the financial crisis is over the problems facing the economy are not.

Bove’s broad thesis:

A crisis builds up over an extended period of time. It ultimately reaches a crescendo when an event occurs that is so devastating that even the staunchest skeptics become fearful. At this point, the government and participants in the impacted sector get together and start to take actions that will ameliorate the crisis. At this point, the only question is whether the solutions being offered have any chance of working. However, if the solutions are powerful enough, the crisis ends.

In the current crisis, the triggering event was clearly the insolvency of Bear Stearns (BSC/$5.26/Market Perform). This event sent so much fear through the markets that action was taken. The President of the United States was involved, as was the Treasury Secretary, the Chairman of the Federal Reserve, the President of the Federal Reserve of New York, and key industry executives.

The actions taken by the Federal Reserve were innovative, dramatic, and, in my view, brilliant because they went right to the problem.

Bove accepts that hurdles remain.

The first doubt is whether it has the money to succeed in this effort. The Federal Reserve only has $921 billion in assets… In my view, the Fed needs support from foreign central banks to achieve its goals. This help is quite likely because the dollar is plunging in value…

A second fear is that the Federal Reserve will take in so many bad securities through swaps and as loan collateral that bad debts will rise costing the taxpayer money. This is doubtful and is simply fear overwhelming logic…

The Federal Reserve has actually created a template that will increase liquidity in the banking system and, just as importantly, bank profits.

But understand this:

Every study I have read is convinced that housing prices will continue to drop for an extended period. This is as dead wrong as the reports that argued some years ago that housing prices would keep rising for an extended period. Think of this:

• Money supply is growing rapidly;

• Commodity prices are soaring;

• The dollar is falling sharply; and

• Real estate prices are falling.

Does this last line make sense? When was the last time real estate prices fell in a general period of commodity inflation? I cannot think of such a time. I live in Florida where foreigners can and are buying prime real estate at deeply depressed prices with very, very cheap dollars. This may turn out to be the bargain of the century and I mean century.

So, to recap, with the help of President Bush, brilliant Ben Bernanke has created a situation that will pump profits into the US banking system. Foreigners will cheer this on so as to halt the dollar rot. “This is a once in a generationopportunity.”


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## dhukka (21 March 2008)

I suspect Bove is trying to redeem his reputation by making a big call. To his credit he was negative on financials this time last year, however as the above indicates he was too early to put a buy on Citigroup. Also he repeated for at least a month that there was no way Citigroup needed to cut it's dividend. 

Meredith Whitney on the other hand has absolutely nailed it with US financials. Do a search on her name on CNBC video. At this point she has more credibility than Bove. Although in that game you're only as good as your last call.


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## josjes (21 March 2008)

I've heard Meredith, a very smart and gorgeous lady, the lady that moves Wall Street hey 

The guy may be right and may be wrong on the timing but timing is the most difficult beast to nail. 

Also individual banks are too hard for us average investor to pick but as a sector this might just be very true. JP Morgan, HSBC , Barclays are starting to trade better. And look at the recent outperformance of banks vs the recent commodities pullback as 'just the tentative' sign of a clue.


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## josjes (25 March 2008)

I reckon our Banks have found a bottom last week. Not saying that they will shoot up from here and never look back, but at least the support level we've seen last week is a strong one. 

On a TA level, please have a look at Motorway's Market Indicator thread. NAB, ANZ, SGB, BOQ, WBC all score on three level, 2%, 1%, 0.5% BullishPercent indicators. If you pick up these banks last week, and plan to hold them long term, you found an excellent bargain I reckon.


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## sassa (25 March 2008)

josjes said:


> I reckon our Banks have found a bottom last week.




A bottom and not the bottom???


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## wildmanchris (25 March 2008)

Got this from Gold World this morning, some newsletter I signed up for and usually ignore.  Take from it what you will, they are probably trying to sell me gold but the last three para's are exactly what I was expecting in the next few months.

J.P. Morgan's Dirty Little Secret
By Greg McCoach | Monday, March 24th, 2008

Events last week have prompted me to send out this communication regarding the sudden collapse of the precious metals market. Let's take a look at what caused the collapse and why junior mining companies are the one glimmer of hope amid the chaos. 

Bear Stearns, J.P. Morgan, and the Precious Metals Market 

The demise of Bear Stearns, which was reported to the public last Sunday evening and Monday, has in turn caused their assets to be sold off in masse this week. 

On their book of liquid assets was a rather large, long gold position. It is being sold off in order to raise cash to offset their massive losses. The spot prices have been hammered because of this activity, but it will be short-term in nature. If you're looking to buy physical precious metals to diversify your portfolio at this point, you are being given an unexpected gift to do so. It won't last long.

Another item in Bear Stearns closet was a massive short-position in the ten year treasury. This of course is being unwound this week, which is making the dollar look a bit stronger than it really is. However, don't be confused by this nonsense, the dollar will soon resume its downward trend.

The fact that Bear Stearns was shorting the dollar to such a degree shows that they were not playing along with the the Federal Reserve banking crowd. And they have been severely punished by the powers that be.

What brought Bear Stearns to its knees was their own riverboat gambling mentality that not only jeopardized them, but the financial system as a whole. This story is just the beginning of what will be a long list of companies that meet a similar fate. Will the Fed and the citizens of the United States be able to bail out all the financial sewage that is about to be uncovered?

What the Fed is doing is nothing more than sleight of hand trickery to gain the assets of Bear Stearns. As I have said before, the Federal Reserve is no more "Federal" than Federal Express. It is a private organization owned and controlled by shareholders, the largest of which is J.P. Morgan Chase.

J.P. Morgan Chase, in other words, is the Federal Reserve... so don't be surprised that they end up with the assets while you and I pay for the debts from the whole mess. 

When are people in the United States going to wake up to the ugly realities that are now upon us? This ongoing calamity of financial chaos is going to cause extremely serious consequences to each and every American. Your wealth, security and lifestyle are all at stake as the coming months and years unfold.


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## josjes (25 March 2008)

sassa said:


> A bottom and not the bottom???



Correction then, 'the bottom'. My own reasoning is that even if the ASX tanked to 4800 ( a figure widely predicted by many TA here), which is 12% downside from today's figure, the banks would still hold that bottom from last week. 
As there is distinct rotation of sector from commodity to banks/financial already underway, I would say commodities shares have more of risk of going down than the financials. i.e. the financial sector particularly in Australia (which are not as bad as in the US)  looks to have found the bottom but not the economic crisis/recession in the US. 
Open for discussion for anyone to challenge this reasoning of course.


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## gfresh (25 March 2008)

The charts are definitely showing a move back into financials/banking in the short term, and away from commodities. Of course, this may only be a short-term trend, but give the XFJ another 100 points and you'd have to say on a trend-line basis, it may have broken the down-trend. Personally, I remain bearish (based on many fundamental factors), but a technical rally may be a good ride short-term.


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## Trembling Hand (25 March 2008)

I would be looking for a Higher high and then a higher low before I got to excited about the Fins. But no doubt they are looking stronger after such a crappy 4 months.


----------



## IFocus (25 March 2008)

josjes said:


> Correction then, 'the bottom'. My own reasoning is that even if the ASX tanked to 4800 ( a figure widely predicted by many TA here), which is 12% downside from today's figure, the banks would still hold that bottom from last week.
> As there is distinct rotation of sector from commodity to banks/financial already underway, I would say commodities shares have more of risk of going down than the financials. i.e. the financial sector particularly in Australia (which are not as bad as in the US)  looks to have found the bottom but not the economic crisis/recession in the US.
> Open for discussion for anyone to challenge this reasoning of course.




I have been waiting to buy into one of the big 4 during this run down for my SMSF which is currently in cash. From my own view the banks are well over due for a bounce as the trend is almost straight down since Dec.

As for *The Bottom* hard to say as I really wanted a shock event like one of the big four being forced to admit major exposure to some dodgey credit and some panic selling.

This may or may not happen but I think there is still risk that it may and will wait. 

josjes I can see your point being up there also and it could be resources that take us down if we are to go lower aaah a cheap WPL would be nice......


----------



## sassa (25 March 2008)

josjes said:


> Not saying that they will shoot up from here and never look back



Very succinct and with much veracity josjes.This article from Fortune backs up your statement.

"But even once the current crisis is past, there's another issue facing the financial sector: Will it look like it used to? "I think it is important to step back and ask some broader questions about our financial system," wrote Ben Inker, the chief investment officer for quantitative equities in global developed markets at money management firm GMO, in a recent paper. "What it does, how big it should be; and what its sustainable level of profitability might be."

These questions are obviously important for financial services firms. At its recent peak stock price in December 2006, Citigroup (C, Fortune 500), for instance, sold for $53.34, or over 2 times its reported book value (and over 4 times if you exclude goodwill and intangibles) and almost 13 times its reported 2006 earnings. Do those numbers represent a baseline to which we'll return when this crisis has passed, or are they anomalies? 

And the size of the financial sector may also matter for the rest of the market. In a piece last summer, credit rating agency Moody's opined that the market was safe from systemic risk in part because the $45 billion in profits reported by a group of financial firms including Citi and Merrill Lynch (MER, Fortune 500) were "considerable and significantly larger than in 1998," when those same firms reported profits of $12 billion. As the events surrounding Bear Stearns show all too clearly, the market isn't safe from systemic risk. Was Moody's wrong partly because that $45 billion isn't sustainable - or wasn't real in the first place?"
http://money.cnn.com/2008/03/24/new...llst.fortune/index.htm?postversion=2008032416


----------



## wayneL (25 March 2008)

sassa said:


> "But even once the current crisis is past, there's another issue facing the financial sector: Will it look like it used to? "I think it is important to step back and ask some broader questions about our financial system," wrote Ben Inker, the chief investment officer for quantitative equities in global developed markets at money management firm GMO, in a recent paper. "What it does, how big it should be; and what its sustainable level of profitability might be."
> 
> These questions are obviously important for financial services firms. At its recent peak stock price in December 2006, Citigroup (C, Fortune 500), for instance, sold for $53.34, or over 2 times its reported book value (and over 4 times if you exclude goodwill and intangibles) and almost 13 times its reported 2006 earnings. Do those numbers represent a baseline to which we'll return when this crisis has passed, or are they anomalies?
> 
> ...




Exactly the questions going through my mind; not just the financial sector, but a host of other sectors as well.

Turnover and hence profit margins have been ramped by the ludicrous excess supply of credit and I can't see consumer credit being as loose as it has been over the last few years. 

Result - pressure on earnings.


----------



## chops_a_must (25 March 2008)

Trembling Hand said:


> I would be looking for a Higher high and then a higher low before I got to excited about the Fins. But no doubt they are looking stronger after such a crappy 4 months.




You can see it on some individual stocks. BOQ especially - break through highs/ resistance off a double bottom.

Not saying the financials are done with yet... but with the XFJ going close to support, means to me that the short term play is north. 

Hardly betting the house though...


----------



## vishalt (25 March 2008)

I agree. 

Even if the All Ords heads down to 4800 or 4000, its BHP, Rio and Woodside who are going to tank it most, the banks may slip further but not as badly as they have been treated. 

And I hope to god Woolworths falls to $20 so I have a lifetime chance to buy it D:.


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## AnDy62 (25 March 2008)

100th post is mine  I think the banks have the worst behind them, but I think non-bank financial stocks are the best value- things like insurers and wealth management companies as they have still been hammered but aren't as exposed credit issues . Still, I so nearly bought ANZ under $20, ah well


----------



## vishalt (25 March 2008)

AnDy62 said:


> 100th post is mine  I think the banks have the worst behind them, but I think non-bank financial stocks are the best value- things like insurers and wealth management companies as they have still been hammered but aren't as exposed credit issues . Still, I so nearly bought ANZ under $20, ah well



Lol same, ANZ really is looking like the cheapest. 

I wanted to buy BoQ too buy it surged too much today and it hasn't suffered as much as the other banks or Bendigo.


----------



## chops_a_must (25 March 2008)

vishalt said:


> Lol same, ANZ really is looking like the cheapest.
> 
> I wanted to buy BoQ too buy it surged too much today and it hasn't suffered as much as the other banks or Bendigo.




But that's precisely a reason for buying... relative strength is a fantastic sentiment indicator...

BEN has a lot of crap to deal with.


----------



## vishalt (25 March 2008)

ANZ has almost surged 20% in the last 4 sessions, I'll keep my cool, if there's one lesson I've learnt is keep your cool! 

Hopefully ANZ retests that level or near abouts. 

You know what, have we been at a bottom for months?

Look @ The Dow, it has held that 11,700+ level since January..


----------



## chops_a_must (25 March 2008)

vishalt said:


> ANZ has almost surged 20% in the last 4 sessions, I'll keep my cool, if there's one lesson I've learnt is keep your cool!
> 
> Hopefully ANZ retests that level or near abouts.
> 
> ...




The S&P went through the Jan lows though. It's why wayne calls the Dow the muppet index.

Another up night on the S&P tonight, and it would be an upside break out of a descending triangle. Quite possibly good for a continuation given the feds action to stop armageddon for another month...


----------



## wayneL (25 March 2008)

vishalt said:


> Look @ The Dow, it has held that 11,700+ level since January..




And due to the most frantic Fed manipulation and intervention for decades. Can they keep the fantasy alive for a few more years?

The American people have the capacity to engineer a remarkable recovery, but what I see is all that intellectual capital being used to prop up a diseased and morally bankrupt smoke and mirrors show. Meanwhile The Chinese are taking the running. Very bad move strategically.

For a bit of short term pain, the US could clear up all the malinvestment, cut out the disease and addiction to toxicity in their economy, and snatch back economic inspiration from China.

The banks could then truly turn the corner and become virtually impregnably sound investments. Until then, they remain vulnerable.

Good for trading at the moment. But nuttin' going in my bottom drawer yet.


----------



## GreatPig (25 March 2008)

wayneL said:


> For a bit of short term pain, the US could clear up all the malinvestment, cut out the disease and addiction to toxicity in their economy



What do you think they should do to achieve that, and how much of a "bit" do you think that pain would actually be - to both the US and the rest of the world?

Cheers,
GP


----------



## wayneL (25 March 2008)

GreatPig said:


> What do you think they should do to achieve that, and how much of a "bit" do you think that pain would actually be - to both the US and the rest of the world?
> 
> Cheers,
> GP



Just let capitalism work as intended instead of turning into rabid Keynesian hybrid socialists when the poo hits the propeller. Had the Fed taken the Austrian course in 2001-2004, the "bit" of pain would be all over and there would be an entirely different economic landscape with regards to China.

Unfortunately now, at some stage (whether this is imminent or now delayed) the "bit" of pain will be quite a "bit" more. It doesn't have to be a 1930s-esque depression, but it could be. As it was, we were a donkey's eyelash away from cascading cross-default; a situation that never needed to be.

It's short-termism versus long-termism and this is where China will eventually kick the US's azz.


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## GreatPig (25 March 2008)

wayneL said:


> It's short-termism versus long-termism and this is where China will eventually kick the US's azz.



China probably has an advantage there though, as their government doesn't have to worry about losing office every few years so can afford to be more forward-looking.

GP


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## wayneL (25 March 2008)

GreatPig said:


> China probably has an advantage there though, as their government doesn't have to worry about losing office every few years so can afford to be more forward-looking.
> 
> GP



Very very true... an unfortunate aspect of our political system. Nobody wants a recession on their watch, hence the lure of manipulation and pump priming.


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## reece55 (25 March 2008)

wayneL said:


> Very very true... an unfortunate aspect of our political system. Nobody wants a recession on their watch, hence the lure of manipulation and pump priming.




Geez, I never actually thought of that Gents, that is a very interesting aspect that I had never considered. Perhaps a pro for communism?????????

The problem is not necessarily with Governments holding office for a short period, but rather the general belief by the public that Governments can actually  manufacture interest rates and prosperity - they can certainly provide stimulus, but are impacted by external factors (i.e. the world economy)..... Me thinks that Rudd and Labour will only get one term in office in Australia....

Cheers


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## Kauri (26 March 2008)

NAB lifted its main home loan interest rate for the 3rd time in just over six weeks, as the cost of credit to Australian banks continues to rise. Australian banks are passing on the costs of offshore funding spreads and this is being passed on to consumers. This higher cost is seen weighing on consumption and is a factor why analysts are now lower expectations for further RBA rate hikes. 
* Melbourne Age* ..reports that property portfolios "worth *$4 bln plus* are being prepared for sale to anyone who has the cash to buy." There are concerns over higher geared property trusts, many said to be geared at over 50%.

Cheers
..........Kauri


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## agro (26 March 2008)

financial sector recovering too - BNB, CGF, MQG all half price to all time highs


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## dhukka (26 March 2008)

dhukka said:


> I suspect Bove is trying to redeem his reputation by making a big call. To his credit he was negative on financials this time last year, however as the above indicates he was too early to put a buy on Citigroup. Also he repeated for at least a month that there was no way Citigroup needed to cut it's dividend.
> 
> Meredith Whitney on the other hand has absolutely nailed it with US financials. Do a search on her name on CNBC video. At this point she has more credibility than Bove. Although in that game you're only as good as your last call.





Meredith is at it again. Still plenty of fun left for the banks.



> *Oppenheimer again cuts estimates on Citigroup, banks*
> 
> Oppenheimer & Co. analysts led by Meredith Whitney cut their first-quarter profit forecasts for U.S. banks on average by 84%, led by Citigroup Inc. (C) . Whitney increased her first-quarter loss estimate for Citigroup by four times, and expects the company to post a full-year loss of 15 cents a share. She also slashed her outlooks on Bank of America Corp. (BAC) , J.P. Morgan Chase & Co. (JPM) and Wachovia Corp. (WB) to reflect expected write-downs related to mortgages and collateralized debt obligations. "Despite cutting estimates for financials by over 30 times since November, we are confident this will not be our last reduction in 2008," Whitney wrote in a research note. "Rather as key mark-to-market indices trend lower, the housing market worsens, and the U.S. consumer comes under increasing pressure, we anticipate further downside to both estimates and stock prices."


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## Aussiejeff (27 March 2008)

Kauri said:


> NAB lifted its main home loan interest rate for the 3rd time in just over six weeks, as the cost of credit to Australian banks continues to rise. Australian banks are passing on the costs of offshore funding spreads and this is being passed on to consumers. This higher cost is seen weighing on consumption and is a factor why analysts are now lower expectations for further RBA rate hikes...




Expectations for RBA to lower the rate of hikes?

On the other hand....

_"NAB's Australian head Ahmed Fahour said the rate hike reflected sustained increases to short and long term wholesale funding costs. He said NAB had been absorbing much of the higher borrowing costs on behalf of customers since August 2007.

"*The true cost of funding a home loan is no longer reflected by the RBA cash rate*," Mr Fahour said. NAB's new rate takes effect from Wednesday, March 26."_

Hmmm . NAB boss cocky Ahmed's comments seems to indicate that if the RBA doesn't hike enough in the next round, then NAB will "go it alone" again... and probably again ... and even again.... if they deem it so. 

If anyone (like Wayne Swan) thinks the other banks won't follow with their own *independent* rate rises (eventually, if not at the same time - or earlier), they are bound to be surprised...... Swannie has rocks in his head if he thinks the populace are going to go *bank shopping* just to save his (probable) short-lived political seat at the next election. Methinks he's drinking from the same poisoned chalice as Gough's Gang....



AJ


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## juiceman (27 March 2008)

Aussiejeff said:


> Expectations for RBA to lower the rate of hikes?
> 
> On the other hand....
> 
> ...



Just had to comment on the above.
I could not agree more.
Because the Labor Gov do not understand buisiness the bank's will have a field day with them.
They obviosley do not respect Kevin and wayne and will run their own race.
The flood gate's have been opened, God help us.
You cannot run a country on piss and wind for very long


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## The Mint Man (27 March 2008)

Just posted a thread titled 'RBA's Financial Stability Review' in general chat. It contains some info about our banking sector that is relevant to this thread.
heres a link for the lazy ones - https://www.aussiestockforums.com/forums/showthread.php?t=10387

Cheers


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## nomore4s (27 March 2008)

juiceman said:


> Just had to comment on the above.
> I could not agree more.
> Because the Labor Gov do not understand buisiness the bank's will have a field day with them.
> They obviosley do not respect Kevin and wayne and will run their own race.
> ...





So if John Howard & co were still running the country the banks would be acting any different? 
I don't think so, they'll still be raising rates due to the extra costs.


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## juiceman (27 March 2008)

nomore4s said:


> So if John Howard & co were still running the country the banks would be acting any different?
> I don't think so, they'll still be raising rates due to the extra costs.




When John Howard & Co were running the country, the bank's were not doing what they are doing now, nor had they ever to my knowledge.
Last year when rates moved up slowly Kev said it was Howards fault, now all Swan can say is move Banks? 
Costello may have surgested that we may need a few more International Bank's in our system, and add a little competition


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## IFocus (27 March 2008)

juiceman said:


> When John Howard & Co were running the country, the bank's were not doing what they are doing now, nor had they ever to my knowledge.
> Last year when rates moved up slowly Kev said it was Howards fault, now all Swan can say is move Banks?
> Costello may have surgested that we may need a few more International Bank's in our system, and add a little competition




Cost of borrowing has changed dramatically for the banks nothing to do with government surprised at the association.

And yes it has happened before.....plenty of history of credit bubbles / failures and increased borrowing costs associated with this again nothing to do with governments. 

However government spending can impact on interest rates through helping to drive inflation.


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## wayneL (27 March 2008)

IFocus said:


> Cost of borrowing has changed dramatically for the banks nothing to do with government surprised at the association.
> 
> And yes it has happened before.....plenty of history of credit bubbles / failures and increased borrowing costs associated with this again nothing to do with governments.
> 
> However government spending can impact on interest rates through helping to drive inflation.



Exactly! When will people learn this and realize the gu'mint has very little actual control.

Like a couple of us said last year, the best thing for the Libs was to lose the election, because Labour will cop the blame for the "recession we're going to have to have".


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## Kauri (25 April 2008)

UBS has just downgraded Australian banks to underweight from neutral today.. that will add to the negative pressure on the AUD/USD.  
      UBS has also raised US banks to neutral from underweight and upgraded global emerging market banks to overweight from neutral....

   Cheers
.............Kauri


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## Aussiejeff (25 July 2008)

Looks like the banks (who had been blithely following the NAB Pied Piper down the Yellow Brick Road) turned the corner alright.... and to the shock, horror and surprise of the media commentators, fell off a cliff!

The banks might now take a good while to scramble back onto a temporarily safe ledge, much lower down the SP cliff face, after NAB's Mr Big intoned ominously today _"The worst of sub-prime is still to come"_ and that the new debt write-downs by NAB were so big because in NAB's estimation, the credit crisis is closer to being a _"worst case scenario"_ than their analysts had first thought.

Ho-hum.... back to the Dark Ages again 

PS: As a result of this "new development", would NAB be tempted to raise rates again in the short term?


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## GreatPig (25 July 2008)

Not sure where all this falling off a cliff comes from. Even with NAB being down more than 12%, it's only back to where it was a few days ago (for today at least). Same with the other main banks.

GP


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## gfresh (25 July 2008)

NAB down nearly 14% right now.. hmm, looks like a cliff to me..

Even if they're back to where they were, it doesn't really give any confidence, nor any encouragement for anybody to take a bit of a risk and invest now. 

I'm not sure NAB's little graph did much to re-assure.. The CDO component may be effectively written off now, however the question is, in their nice little graph of "conduit" assets, those other components are going take some sort of impact eventually as well? No bad loans to occur in Australia, none to occur in "Primarily Northern Hemisphere" assets in future?? I don't think so


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## GreatPig (25 July 2008)

I find the perception rather interesting though. Being up around 20% in 7 or 8 days barely rates a mention - no Hallalujah's or the future's so bright, etc. Yet down 12% or 13% again and suddenly it's falling off a cliff and into the abyss.

And the others have supposedly fallen off a cliff along with it, while CBA for example is only down 6.2% after being up nearly 20% in the last 7 or 8 days as well.

GP


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## So_Cynical (25 July 2008)

I agree pig...its a total beat up.

On Wed and Thur the Banks were all ok and running hot, today's all doom 
and gloom again  and yet the NAB SP is above the 10 day low.

NAB Ten day chart below.


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## IFocus (25 July 2008)

Sorry guys but it looks like cliff to me maybe you will get a gap fill, one positive about today for holders is at least it may have washed out a heap of sellers.

Test of support 1st I think 

Sucks when there is no market guidance before hand that they are holding that many CDO's


.


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## kenny (27 July 2008)

It does make me wonder who's going to be next to show their "skeletons in the closet" trick. Has CBA come out with anything yet? I recall WBC bravely saying they had little exposure.

Anyone still/now comfortable with the banks on a three year investment time frame?

regards,

Kenny


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## CAB SAV (27 July 2008)

Recommend viewing transcript of ABC's Inside Business programme this morning of John Stewart's interview. He believes US writedowns to reach at least 1 trill plus. only $450 mill so far. Have to be other OZ banks to suffer?I'm picking ANZ to have furthur writedowns and even though WBC deny exposure, will join the downward trend as the banks seem to mirror each other on graphs.


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## ROE (27 July 2008)

Banks are not what it used to be it has evolve into a massive credit beast
and the risk are unknown.

Old day: you deposit the cash into the banks...they lend out to someone else
and they take a cut.

but now it's not enough, they need to go to the market for funding as well
then hang on that isnt enough so let comes up with something else called CDO, oh no this this has failed over let move to SIV that will save the day, oops doesnt look like SIV will save the day, let's go chuck in ABS as well.

what's next  they delay the invitable one day some of these banks will blow up and SIV and ABS is the next tool to destroy the bank.

I'm stayed the hell out for now  only banks I got is suncorp because I like their insurance arms
and other ventures apart from banking operation.


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## gfresh (28 July 2008)

cab sav said:
			
		

> I'm picking ANZ to have furthur writedowns and even though WBC deny exposure, will join the downward trend as the banks seem to mirror each other on graphs.




Correct, update out this morning, EPS expected to be down 20-25%

Personally, I'd be knocking another 20% off that too for 08/09, as things may well deteriorate here in the property and consumer markets. But that is just theorising. 



> In a shareholder update today ANZ said its underlying business was continuing to deliver solid results however the continuing eterioration in global credit markets, a weak New Zealand economy and softening Australian economy would continue to give rise to further provisions and valuation adjustments in the second half of 2008.
> 
> Key Points
> 
> ...


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## Aussiejeff (28 July 2008)

gfresh said:


> Correct, update out this morning, EPS expected to be down 20-25%
> 
> Personally, I'd be knocking another 20% off that too for 08/09, as things may well deteriorate here in the property and consumer markets. But that is just theorising.






> Bad debt provisions in the second half are "likely" to be "around" $1.2 billion ($980 million for the first half 2008)



. 

So, these are their best "guess-timates". I'll bet 50c that it is once again a low-side guess - trying to limit potential SP fallout and all that...

Well, we now know how unaccurate the banks are in forecasting what difficulties they may find themsleves in. So far, it appears most of our banks have *grossly* _underestimated_ the depth of poop they might find themsleves in as a result of the world-wide credit crisis. 

So, can we trust their soothing words any more?
Can we trust a used car salesman??
Can we trust Robots??? :hide:


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## GreatPig (28 July 2008)

But what has really been the alternative for them? Admit right at the beginning that they're so deep in the doo that it could wipe them out? Imagine the carnage then: share prices down 60% in a day and half the country queuing at the doors to get their money out. It's one thing for a whole pile of "experts" to speculate that they're insolvent or close to it, but a completely different thing for the CEO to actually come out and say it.

So it may not be a case of under-estimation, but rather a case of self-preservation (ie. they might have estimated reasonably well, but preferred not to make those estimates known).

GP


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