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inthemoneystock (< 20)

It Is Time To Bring Out Buffett

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September 29, 2011 – Comments (3) | RELATED TICKERS: XLF , BAC , JPM

This afternoon, the major stock indexes have once again rolled over reversing a 200.0 point rally on the Dow Jones Industrial Average (DJIA). The talking heads in the financial media continue to talk about the recovery from the 2008 financial crisis, meanwhile, we are still in that very same crisis. Stocks such as J.P. Morgan Chase & Co (NYSE:JPM), Bank of America Corp (NYSE:BAC), and other financial giants continue to look terrible on the charts. Investors are still waiting to hear and see the central banks inflate the markets higher again in that typical Keynesian fashion. So far, we can see how much that money creation approach has gotten us. The stock markets have not yet gone into panic mode, however, stock prices continue to decline and fear is beginning to creep in.

Tomorrow, the world's most famous investor, Warren Buffett, is going to appear on CNBC. You know things must be getting bad when everyone's favorite Keynesian is going to make a television appearance. Sure, he will tell everyone to buy stocks when people are fearful, however, he knows that he will be bailed out  by the government if his trade goes bad. He was bailed out in 2008 when he invested in Goldman Sachs. That was just about as a trade as I have ever seen. Now Mr. Buffet has invested in Bank of America, many investors jumped right on his band wagon when he bought those preferred shares. That stock is underwater from that time and a lot of investors are underwater with him. This guy has benefited from bailouts more than anyone on the planet. You know things are getting bad when Warren Buffet has to come out from Omaha and make his save the market TV appearance.

Nicholas Santiago
InTheMoneyStocks.com


3 Comments – Post Your Own

#1) On September 29, 2011 at 5:12 PM, rags2riches247 (78.64) wrote:

I am with Buffett. I could care less what happens in the next 2-3 years of the market- much less 2-3 weeks. I know that in 10-15 years my purchases will be more highly valued. 

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#2) On September 29, 2011 at 7:11 PM, Speculatormaster (< 20) wrote:

Hmm an interesting post, ideal for generate speculation.

So I will give my perspective also to try create a more confidence ambient rather than induce pure fears.

in my case I prefer give the reason to Buffet, the experience is much more important. Years and years of experience more their fortune are enought proof for anyone; like it or not that is the reality. (But I respect your personal perspective)

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In my personal opinion: 

Corporate earnings will beat this temporary fears, that something sure for the long term, and  is better use the short seller at your favor, or at least much more wise, and get good discounted stocks. (And it doesn't matter if are short seller if are the panicked investor the effect is the same in the stocks and are created good discounts prices.

Of course in the case of BAC is very very risky, I prefer other alternative of course, much more less troubled and with dividends, like (STD) is very similar in size, busines, and pay good dividends better than Buffet compensation is BAC

But at least buffet has a good divedend to compensate risks in BAC, and him deserve it anyone who risk so much big amount of money merits some kind of compensation, just 12 years and all the investment will be compensated by the dividends. So remember look BAC in 10 years (2021), and if BAC is over $7  he will have made a fortune. That sure, and risk are very well calculated. I bet it easily. (So beware that rich now how to make more rich, I don't try to fight the rich, I try use it at my favor, or at least learn something from them.)

A good strategy and based on my theory is that for the followers of Buffet that I doubt have the compensation of 6% dividends yield the best entry point is at least 15% to 20% discount over Buffet prices entry point and then start to use covered calls (options ) at buffet prices to generate the same 6% yield using options (around  6 or 7 zone)

But I believe that oportunity only will arise and work if there are enought short seller to bring down the stock in the short term, or if customers of the bank get mad, by the actual mess, and go to another banks.  (The competency, but that is not my expertise, I leave that work to others my expertise is only speculate about possible scenarios.) (And how generate a fast strategies to benefit from it.)

 For me this is only a matter of time to see how corporate profits beats this fears, and the trend revert, with high yield and buyback and short seller will not have a minimal chance in the long term

Disclosure:

I was bear with Dow in 12,500 not now in almost 11,000.

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#3) On September 29, 2011 at 7:28 PM, cycorp89 (< 20) wrote:

Guys, 

It may go lower from here, but for sure judging from all the negative comments, this is one 'ugly', 'unloved' and 'under bought' stock I'm (along with the Worlds Greatest Investor) is buying...

The name itself is very important. Bank of AMERICA. The Government wont allow this Bank to collapse. Ever. And this coming from a non-American. 

 

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