6 replies to this topic

[greenie]

I have seen many comments about banks. Be very careful about picking LT bottom in that sector. Banks are in the same place as the homebuilders in May 2006. Their exposure to the housing mess is being discovered, but analysts are arguing (based on book value, etc.) that all problems are discounted. That is far from true. I expect a large majority of banks to default, or taken over/bailed out by the government. This cycle is in very early stage now. What is going to happen? (a) More foreclosures --> more losses for homeowners/banks --> more foreclosures-->more losses. California, the epicenter of this bubble is just in its early stage of correction. So, this process has a long way to go. This will bottom, only when houses become affordable with median income, so that banks feel safe to lend without exotic loans. We have a long way to go. ( Most of the publicly traded homebuilders will go bankrupt ---> banks will get hit with losses on the bonds they are holding. © Commercial REITs have not even started their correction. Cap rate was insanely low, when some of the well-publicized mergers took place in Feb. CRE has a long way to go, again leading to losses for lenders such as banks. (d) On the international arena, housing correction has just started...and many of the multinational banks are exposed there too. Citibank is huge in India for example. I agree with OGM that BKX can drop another 95 points, although it will not happen in a straight line. Fit your ewave curves, trendlines etc accordingly. If you do not remember, I warned you here about a protracted and ugly housing correction from Sept 2005-to Jan 2006. I also warned you about civil war in California around 2014-16, which is still as likely as when I suggested it. Good luck, G.

[underabigw]

Greenie, What happened to Mr. Bull ??? Just kidding. Thanks for the post. UBW

[arbman]

I also expect the housing mess and the related banking to stuggle for another 3-4 yrs until about 2012. These injections and rate cuts can buy some time to the sector for a while. By the time it is over, there will be a lot of pain probably...

[Trend-Signals]

I have seen many comments about banks. Be very careful about picking LT bottom in that sector.


Good luck,
G.

Just noticed your post as TT will know when I read your post which is now.

I posted $BKX analysis at the above.


$BKX targeting 83 +/-, 1998 scenario 11/2/07
http://www.traders-t...showtopic=78592


Have a good weekend

[pdx5]

I also expect the housing mess and the related banking to stuggle for another 3-4 yrs until about 2012. These injections and rate cuts can buy some time to the sector for a while. By the time it is over, there will be a lot of pain probably...

Well deserved, I might add (the pain).

[dcengr]

I'm not calling for a LT bottom on banks. But there are so many shorts clogging banks that it will only take a minor spark to cause a very vicious short rally. And vice versa for techs. The fact is, bankers like their money. They'll buy their own stock at the expense of other stocks when they need to. The entire capitalization of Nasdaq is NOTHING compared to whats in banks. In a recession (ie no growth or negative growth), bank stocks will go down slowly. Tech stocks will just plummet. Everyone knows this.

[johngeorge]

Thanks greenie, that's more like it. Trying to throw a scare into the board and all........ Best to you.