The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: bentway who wrote (135121)	7/19/2008 7:32:39 PM
From: RockyBalboa	of 306849

The best means to improve the valuations of banks is and will always be: A) Sustained and growing profits B) A clean balance sheet without hidden or delayed losses C) Sound lending and suitable refinancing activities As long as nearly no bank can claim A) and ensure B) and enfore C), banks should trade lower, in general. The stock price of a company with continued operating losses is ultimately zero. For most banks, nothing of A) to C) is true as of today. If and as large investment banks report 3 or 4 quarters of continued losses I see no reason to be invested into their stocks. The lack of acquisitions in the financial sector (other than those ones ordered by the Feds) is a clear signal that banks are still overvalued and must improve their income situation. Besides short selling there are a lot of outright sellers which simply gave up their positions. Short selling may quicken the pace a stock is falling and by doing that short sellers facilitate price discovery and in that regard, market efficiency. If no short selling occurs, banks could place stock at prices which are given their negative business prospects, too high.

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