Banks turning the corner?

[Struzball]

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.

 

[blehgg]

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

 

[Aussiejeff]

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

 

[numbercruncher]

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 (>:

 

[chilliaa]

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????:

 

[Bill M]

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 (>:

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.

 

[Bill M]

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

 

[AnDy62]

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?

 

[Kauri]

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

 

[johny6677]

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.

 

[Trembling Hand]

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.

 

[wayneL]

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.

 

[Kauri]

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

 

[numbercruncher]

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 !

 

[dhukka]

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?

 

[gfresh]

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' ?

 

[dhukka]

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.

 

[Aussiejeff]

.... 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

 

[nomore4s]

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.

 

[Trembling Hand]

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.