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

To: Paul Senior who wrote (37978)	5/21/2010 5:38:35 PM
From: Madharry	Respond to of 78462

OT- but maybe apropo for the times: youtube.com

To: Paul Senior who wrote (37978)	5/22/2010 12:17:11 AM
From: Spekulatius	Respond to of 78462

re GS - I agree that book value should be a good point to start a position in GS. I expect more bad new and potentially a criminal suit. I also expect the reform package to have a significant impact on how entities like GS will operate in the future. I am sort of betting that bread and butter small banks will not only be unscathed but profit from the large players being ham-stringed by legislation. In addition they are cheap. I have sold some marginal bank stocks but added a little here and there to higher quality names. I am surprised that those have barely been affected at all during the recent selloff, I hoped for some firesales but those did not happen. I think it's a great time to be in the banking business when your house is in order. Lot's of opportunities to take over weak competitors and/or expand while competition is retreating. I think we may see a total of 1000 failed banks (or forced mergers, recapitalizations) out of the almost 8000 banks in the US before the current crisis is over.

To: Paul Senior who wrote (37978)	5/22/2010 12:20:13 AM
From: Madharry	Read Replies (2) \| Respond to of 78462

GS is absurdly cheap when you consider that they have billions under management which at the time i think i calculated to be worth $16 a share easily. They have demonstrated earnings power of $20 a year and probably will make at least $5 for the qtr ending 6/30/10. Assuming the US govt doesnt cut off its nose to spite its face, it will come to the realization that at this point in time the last thing they need to do is pass regulations that will curtail lending and stop the formation of new domestic businesses. I think there is a high probability that within a year GS sells for close to $200. that would make it around 10x earnings and 1.5 times adjusted capital. Alternatively we just slide into a deep recession as credit markets seize, stock markets decline, and real estate prices drop sharply as more and more banks get taken over by the fed. while Obama and the incumbents go around pointing fingers at the financiers, especially the successful ones who reduced risk and stayed liquid.