Does this create an opportunity?
Early contrarian investors in 08 such as Bill Miller were trampled by the herd and in retrospect buying way too high. Paulson/BAC and Ackman/C have been similarly hurt trying to time to bottom and inevitably sells at the bottom:
Paulson in BAC 2011
Ackman with Citi in 2012:
So, what is different now that could make banks a buy? I actually won't go into the fundamental reasons because they are common place. At a high level, bac/c are trading at slightly less than 1x tangible book and all are trading ~10x or less "normalized" earnings.
I don't believe fundamentals can be an effective timing tool alone here, so let's look at market psychology. Are flows finally moving into financials?
As such, is now a good time to buy and hold for the next 3-5 yrs (until normalization?)
Disclosure: no position, but may change at any time
i bought about6 months ago so hopefully yes
I would be interesting to hear more perspectives. I don't have enough background or knowledge to make an informed decision.
I'm actually too heavy in cash right now (bad time, I know). I actually meant to spend some time looking at the big banks today, but got too busy.
The main problem for me is that even though I understand the businesses from a high-level, I never feel comfortable bc I feel like their earnings are so succeptable to accounting shenanigans that I don't follow/understand closely enough.
Overall, I feel like with the run up we've seen it's hard to justify buying equities now, but I'm sure I'll just miss out on more $ if I don't.
JPM & WFC are definite buys.
Other than that, no big banks are worth buying right now. They are overheated.
Mid-sized banks to buy:
Bank of New York Mellon BB&T Corp PNC Financial State Street
Overall, the following stocks are my most bullish bets for the year:
Talisman Energy BP PLC Valero Seagate Morgan Stanley Daimler Nucor Corp BNY Mellon Arcelor Mittal Conoco Phillips Fifth Third Bancopr and Metlife Inc.
Really?
Yeah.
I bought JPM and WFC recently. I would not buy BAC.
bac just got upgraded by fitch...good call /sarcasm. of course i'm biased b/c i got in at december
I have some long positions in KEY, MS, C, BAC and XLF since early 2012. Not touching energy stocks for a while.
Fannie Mae is all I am considering now. Return to profit again with potentially amazing up side
Advice from a pro:
Buy the TARP warrants
indeed! dividend protection + implied leverage. They do seem pretty expensive now vs: stock though.
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