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TMFEditorsDesk (< 20)

I love this bank volatility!

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July 13, 2009 – Comments (2) | RELATED TICKERS: GS , C , WFC

As an investor looking for mispriced securities, I love this bank volatility!  So do most of my Foolish colleagues who follow the banking sector.

Banks were up an average of 6.5% today (using the KBW index)!  On quite minor news.

Nothing changed today except that bearish banking analyst Meredith Whitney (she of the famous Citigroup call) upgraded Goldman Sachs to a buy. Lost in the headlines is that she's bullish on Goldman partially becaues she believes it'll benefit from more debt issuances from troubled governments and corporations...not exactly a green shoot prediction.  Plus, she still has a sell order on Wells Fargo, Citigroup, and Capital One.

So why am I so happy? Not because banks are up today, but because their stock prices are volatile. When you're looking to buy, volatility is your friend...with prices all over the place from day to day and month to month, mispriced stocks abound. Your move, Mr. Market!

-Anand (owns shares of Citigroup)

2 Comments – Post Your Own

#1) On July 13, 2009 at 6:27 PM, toopersent (75.49) wrote:

I would hardly say that Meredith Whitney's upgrade of GS was lost in the headlines.  It's probably the single most reason the markets were up today.  She has been bearish on GS for a long time. 

Also, it seems this earning season is going to be interesting, as expectations are up.  I can't wait to see Intel's earnings report...it's supposed to be GOOD!

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#2) On July 13, 2009 at 9:25 PM, TMFEditorsDesk (< 20) wrote:

Thanks for the comment, toopersent.

To clarify, the upgrade wasn't lost in the headlines...the assumption of high debt issuances was.

-Anand

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