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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (75773)2/13/2000 12:05:00 PM
From: Freedom Fighter  Read Replies (1) of 132070
 
Les,

I agree with Mike. The money center banks are not undervalued. If you take their current earnings streams and returns on capital at face value you can make the case that the prices make sense.

But to do that you would also have to believe that the enormous credit expansion that has been going on won't end like all the others. (With a lot of stupid excesses and losses) You also have to believe that we live in a world of continued 20% capital gains, zillions of mergers, and other fee based activities that are 100% tied to the greatest stock boom ever.

To me, when this period ends, there's going to be a lot of banks and brokers forced into each others arms and the rest will be lined up for taxpayer bailouts.

I think investors are paying top multiples for top returns. In my book that's about the dumbest thing you can do. Only the lucky ones will escape.

Wayne
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