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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (36233)	12/18/2009 2:33:07 AM
From: Paul Senior	Respond to of 78768

I keep reading that the next shoe to drop is commercial real estate. (-g- How many shoes does this country still have that can drop?) If commercial is in trouble, the small banks may have further difficulty. If the business of the banks is also to make mortgage loans and they are okay for the bank because they are sold off, then that's okay for me by my reckoning, because someone is buying those mortgages. Which means houses can and are being bought. I'm looking now for the safest and cheapest homebuilder stock I can find. That's unlike the last cycle where I started with several, and eventually came to have shares in about nine or more. For the small banks, their balance sheets are difficult for me to understand, and their lending issues may be specific to their region - which I would have no clue about. I suppose a package of these would see a couple of decent gainers, and that might make the basket of buys worthwhile. If someone posts their package of actual buys, I'll consider. Doubtful I'll act though, given other opportunities I see. Jmo, I could be very wrong.

To: Spekulatius who wrote (36233)	12/18/2009 6:48:00 AM
From: Madharry	Respond to of 78768

The impression that I have gotten from banks in my neighborhood that i have talked too over the last couple of years is that hey are poorly equipped to make credit decisions regarding loans. this is what I did and trained others to do for many years. Now at the small loan level everything seems to revolve around collateral valuation and credit scoring. I realize now that over 20 years ago the mid size bank that i worked for in new york decided that it would no longer make loans under $100,000 on a note basis, they would be handled as consumer installment notes. The local banks here seem unable to make loans unless they fit into some well defined categories. mortgage, auto, credit card, home equity.

To: Spekulatius who wrote (36233)	12/18/2009 11:44:55 PM
From: Spekulatius	2 Recommendations Respond to of 78768

Banks - i use the Bankrate safe and sound rating as a first gage. they also have a breakdown of the safety factors available when you click at the * rating. bankrate.com This is from a depositors point of view but it still is a good indication of an institution's health. There are about 8200 institutions in this list (82 pages/approx 100 each). I found this number when looking for 1+ rated institutions , which are all of them. Anything rated 1 only is deathwatch (IMO) and 2* is pretty bad too. I would not touch any stock rated less than 3. There are 12 pages of institutions rated 1 only or roughly 1200 of them. I think the Fed guys closing down banks are going to have some work cut out for them. Anyways, looking at the Bankrate safe and sound rating is the first thing I do when looking at a bank stock. Quick and dirty, I admit but with so many to choose from why bother with questionable cases? There is also a Bauer financial rating but it does not provide any details (unless you pay for a report), so I think it's less useful.