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Would like some opinions on banking stocks

Anything related to investing, including crypto

bflash98

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It is about expectations and what has already been priced into the stock.

Im lost as well... seems like the market acts in opposites...maybe someone can elaborate on this? is there some technical explanation for this activity?

BAC reports higher then expected earnings... drops $3-4

People were expecting BAC to report higher earnings but then in their guidance they said that defaults on credit cards was higher than expected. People had already priced in the higher earnings what they didn't price in was such a bad report on credit card debts.
[Qoute]

C reports higher then expected earnings... drops $1-2
[/Quote]

I can't remember when that one happend

Microsoft reports first drop ever... stock goes up $1-2
People were expecting the drop and revenue and feared it was going to be even worse than it was

GM cuts pontiac... stock goes up $0.40

What gives???

I don't think the stock going up $.40 had anything to do with the cut of pontiac. People were expecting Pontiac to be dropped for a while

I'm not really that knowledgable about the stock market so take my thoughts with a grain of salt.

I think you have to figure out what people have already priced into a stock to figure out how it will react to news.

Just my .02 cents...
 
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Rawr

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OK. Today we had a very good day, and I finally closed out the long position.

Here is one prediction:

we open up tomorrow - then it is all downhill. Bull trap is set and people fell.


We open down tomorrow - and then keep climbing. If this is the case I will buy.


In any case, we are looking at a start of the very deep and fast pullback WITHIN a week IMO. I will start to be heavy on the short side come Thursday.
 

randallg99

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BAC needs $34bil. (per WSJ & NYTimes)

stress tests are going to add a lot of pressure to the financial sector.... but it could be viewed as water under the bridge and the "worst of the crisis is behind us"

despite some positive spin from the stress tests, the problem continues to nag the financial sector: 27mil homes are underwater on their mortgage which then begs the question how many are going to walk away from them. It's your roll of the dice because hard data is hard to find on this.

I suspect that the financial sector will have a lot more stress to deal with, along with the CRE fall out.

we're still a ways away from the clear and those calls about "seeing the light at the end of the tunnel" are premature.

House-Price Drops Leave More Underwater - WSJ.com#
 

randallg99

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BAC needs $34bil. (per WSJ & NYTimes)
#

just wanted to point out that there was some seriously flawed reporting out there that led me to believe that BAC was in immediate need of funds which is not the case.

it turns out that the preferred stock created from the TARP funds qualify as equity which contradicted many peoples' thoughts (including mine)

BAC went up 17% today which leads me to assume that a lot of other people caught on to the irresponsible reporting before me....

at the end, the fundamentals have been thrown out the window. A schmuck today came out with a target price for BAC at $40. (remember Henry Blodget with his $1000 target for AMZN?)

I think we've entered a new bubble. Some here (I recall Andviv) wondered where the next bubble is.... EQUITIES.
 
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Rawr

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Oh my lawd.

Apparently if you short banking stocks since THEY SUCK AND ARE FULL OF CROOKS you apparently: (direct quotes)

you want "America to died"
you want "Communism!"
you are "BAD PERSON"


so much comedy I can't help but laugh.


In other news, I hear SPX 875 is the breaking point. WE might rally now for the later fall or go to 804.
 

phlgirl

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This is WILD. So what will be the main down-stream effect here? Just more bamboozling of share holders (or shareholders to-be)?

Will they break the income out over the term of the loans or do they take credit for it all at once?

Amazing.
 

randallg99

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Will they break the income out over the term of the loans or do they take credit for it all at once?

Amazing.

good question- it all depends on how much value the CPAs are going to "write up"

but this tactic begs the question how the loan portfolios are really performing. we all know "shitty" is the answer. but that's todays answer.

It's an abstract answer because the life of the loan portfolio is still very young and the large bulk of it has another decade before maturity.... nobody really knows how those loans are going to perform, although we have a good idea. What we do know is that default rate is high today and that banks inability to work out is lagging thus affecting their loan performance. If every bank was able to work out every loan and change it to interest only at market rate (4%, for example, and the bank will still make a killing since the LIBOR and govt money is dirt dirt cheap) for 5 years.... then we may have averted this crisis from the beginning.... it's a theory, but in hindsight it looks like this was a very viable solution without killing banks

part of the original problem banks faced was the write downs they were "forced" to take by industry and gov't standards. The MTM (mark to market) theoretically placed a value at TODAYs rate and entirely disregarded the time to allow the loan portfolio to recover.

this is an important concept to understand because when a loan portfolio's value is changed, the tier reserves maintained by the banks must coincide, thus if loan is marked down, the bank is forced to hold more cash (from deposits or borrow from govt) to offset shortages in operational expenses (or whatever.)

but it's opportunity costs that banks look at if they can't lend out the money (and keep more cash to offset possible defaults)... the leveraged cash brings in a lot of cash flow for the bank.... especially upfront and first several years of the loan where it is interest laden and this is where most profits are made.

So anyway, today, the value of the loan might have been X-25%, but in 3 years after work out, that loan might be worth X-10% .... who really knows the value of the loan port. all in all, the CPAs are going to get creative.

but in a short answer to your question even though it's probably already answered in one of the articles and I haven't seen it yet, I believe they will take credit for it in one or two quarters because all that's happening is that the loans are going to be revalued at the X-10% value instead of -25% only to offset the write downs from a few quarters ago. And all those banks and IBs who went bust are wretching out their windows in light of this news wondering why oh why it took so long for this change....

more importantly than whether we agree with the gov't or the system is how we will make money from it.

as a trader, I am loving it- the gyrations in stock markets are going to be immense.

And as a RE investor, this is encouraging to me because this accounting change can become very lucrative in loosening the credit markets.

as an American taxpayer, I am very concerned how much more money is needed to keep the markets liquid because delinquencies and foreclosures are still going through the roof.
 

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