If everything was ok, then why the downgrade????
07:35 ET Capital One (COF) 51.50: Morgan Stanley downgrades to NEUTRAL from Outperform based on concern about industry fundamentals -- weak demand, intense competition, and rising risk
From Capital One's Profile on Yahoo
Capital One's business consists of both lending and non-lending activities. Its lending activities consist primarily of credit card products, but also include other consumer lending activities, such as unsecured installment lending and automobile financing. Its non-lending business activities consist primarily of its retail deposit-taking business and various non-lending new business initiatives.
Seems to me that they would benefit the most, and react the first to any consumer spending increases. Yet Based INDUSTRY fundamentals ?? Thats right, record Debt levels going forward will be a severe detriment after the Xmas season is over. The September attack made numbers so terrible that any rebound is seen as a rebound in the economy. But whenever you have an extreme jump out of the bell curve, it is normal for those numbers to slowly crawl back up into the bell curve line while still maintainings its downward trendline.
have a good look at the companies you invest in and look at what they earn and what they are worth . What percent increase would be required to make the valuation something that you look at as a real investment with proper risk reward. The selloff in Sept offered stock at a deep discount to August so in comparison , the deals looked attractive enough for a scalp, but that was all.
Look at CSCO , Yes they have $19 Bilion in Cash so thats $2.60 /share of value, but with a Market cap of $145 Billion and with Estimates at $0.22 in 2002 and $0.39 in 2003 that still gives them a PE of 90 and 50 respectfully.
I still have a hard time beliveing that CSCO will hit their $0.39 in 2003 without increased capital spending in the telecom industry which is still contracting. And when it does recover , it will not be at a pace fast enough to meet CSCO's numbers.
I look at many different companies and see the same thing. The markets are going up because the money has no where else to go , everyone says, but I can tell you that the spiggot will shut off quickly when spooked. We are witnessing the same kind of froth that was evident in 99 . Bonds have topped, and stocks are priced to extreme valuation and offer little risk reward.
I have never yet been in a market that has rebounded from high valuations , this WILL end badly.
I could just as easily be quiet about it and watch unfold, but hey its my thread . You can listen to my garbage , or ignore at your own peril <ggg>
Enron is only the beginning, Debt is now the biggest worry factor, for consumer, corporations and the almighty USA
This is like a game of musical chairs, will you be the last one without a chair? |
