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buffalonate (94.07)

Great Time to Buy Banks!

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April 19, 2011 – Comments (7) | RELATED TICKERS: FNFG , STI , FITB

The banking stocks have made a significant pullback in the last week.  Many are trading at 3 month lows.  I think investing in banks is safe now because their tier 1 credit ratings have been improving and foreclosures have been going down for several months.  I prefer investing in the regional banks because they have higher volatility. If you think investing in individual banks is too risky you should consider a bank etf.  Proshares Regional Bank ETF(kre) or the leveraged Proshares Ultra Regional Bank(kru) is worth a look for the brave.    

7 Comments – Post Your Own

#1) On April 19, 2011 at 4:56 PM, alstry (35.02) wrote:

That is what they said about Madoff in 2004, 2005, 2006, and 2007.....

Watch INSIDE JOB....so you don't have to live through 2008 again.

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#2) On April 19, 2011 at 5:19 PM, buffalonate (94.07) wrote:

Anyone who invested with Madoff was a moron who knows nothing about the stock market.  The guy had the same % return every year and always beat the market.  A 6 year old should be able to sniff that fraud out. 

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#3) On April 19, 2011 at 5:39 PM, alstry (35.02) wrote:

And you think you have to wait to 6 to see the banks?

 

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#4) On April 19, 2011 at 6:41 PM, davejh23 (< 20) wrote:

Foreclosures declined for several months because many banks halted foreclosures entirely in the midst of the "fraudclosure" debacle.  Many analysts have pointed out the banks are just now resuming foreclosure proceedings at full bore.  According to some, foreclosures won't even peak until next year...we could have 1 million+ foreclosure again this year and next.  The earnings reports we've seen so far have looked pretty terrible.  It's just my opinion, but I'd be more worried about financials dragging the broader market down (they tend to do that) than I would be concerned about missing any upside in financials.  As for KRE, it closed at the day's low today...I'd wait to see if it finds any support around $25.50 like last month.  If it doesn't and the decline accelerates, it could race right back down to ~$21 like last year.  The 50 day average is going to turn sharply lower in the next couple weeks if we don't get a rally here...this typically leads to much more significant declines than we've seen so far.  So, you may be right, but I'm waiting this out and watching what happens. 

You mentioned that you prefered the regional banks because of the volatility.  Are you just talking about short term trades?  How does the volatility help you if these are long term trades based on your belief in the health of the sector?

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#5) On April 19, 2011 at 6:46 PM, buffalonate (94.07) wrote:

If the banks were going to go bankrupt they would have done it already.  Tier 1 credit ratio is the standard used to judge the health of banks and they have been going up for months.  Foreclosures have also been going down for months.  The worst is over it is time to buy. 

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#6) On April 19, 2011 at 8:50 PM, buffalonate (94.07) wrote:

Loan defaults have been decreasing across all 8 categories.  http://www.bloomberg.com/news/2011-04-05/u-s-loan-delinquencies-fall-as-consumers-manage-debt-aba-says.html?cmpid=yhoo  The struggling big regional banks, Huntington Bank, Fifth Third Bank, Sun Trust Bank, Regions Financial, and Key Bank have all become profitable and repaid their Tarp loans.  I don't know what more evidence you need to be convinced that banks are quickly becoming healthy. 

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#7) On April 19, 2011 at 9:08 PM, TheDumbMoney (37.82) wrote:

Wells Fargo's CFO resigned in February.   Bank of America's CFO resigned for "personal reasons" last week.

Together, that is not confidence-inspiring!  For example, read this

More broadly, as far as I am concerned these banks are black boxes and anyone who hasn't spent a week or two going over every arcane footnote in their absurd financial statements and understanding it all is basically 100% speculating, not investing, when purchasing shares in these companies. 

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