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

To: E_K_S who wrote (48874)	7/23/2012 11:05:34 PM
From: Sergio H	Respond to of 78702

Due to the limitations of this thread I can't post technical information or other supporting evindence as to my conclusions, but in my estimation this is a very good time to invest in value and ignore the general market gyrations. I don't see a sell off but a rally forming. Up, I say! If you find value based on metrics and find specifics about the company's prospects to support your conclusion, go for it. Fear not. I pass on stocks hitting new bottoms. No rush to get in when everyone is selling, specially if you are looking for a long term hold.

To: E_K_S who wrote (48874)	7/23/2012 11:51:12 PM
From: Spekulatius	1 Recommendation Read Replies (3) \| Respond to of 78702

I don't think the European banks are all bankrupt, but many have liquidity problems, especially those in PIG countries. Since the PIG banks have the same currency, interest rates but less security than let's say German banks, there is no reason to keep deposits there. Also, many European banks are low on capital and maybe even more importantly, starved for deposits. Their outstanding loans exceed their deposits by a considerable amount. This is true not just for PIG banks, but also for many French and British banks. They need to shrink, since it is unlikely that they can build up their deposits to match the loan volume, much less all that trading liquidity. So I agree with you to avoid European banks (at least most of them). US banks are in a much better situation. The FED has them in their crosshairs since 2008, so I don't think that there is too much funky stuff going on in their balance sheets. The FED published a stress test published this year, that generally had favorable results, even for Citigroup. That stress test assumed a 2008/2009 style recession starting in 2012 and looked at how the bank woud perform. All banks would have survived this, even BAC, with a sufficent capital buffer. C is very cheap if you assume that assets are marked correctly. C has ~5b$in annual expenses from the bad bank (Citiholding) that is in runoff mode. Once it is gone, the expenses are gone too and capital trapped there can be used, hopefully for more productive uses. The international focus on emerging consumer market banking is another plus for C (while not without risks). They do need a stronger management team to take advantage of their assets,the current management does a decent job fixing issues, but I don't think that they are really bankers. In any case, growth is not build in C's valuation. Might be just a trade after all, a little bit of a better mood in the financial markets should easily bring this to 30$+.