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HistoricalPEGuy (63.11)

LBOs and Banks

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February 15, 2008 – Comments (4)

In response to dwot's blog ( http://caps.fool.com/Blogs/ViewPost.aspx?bpid=34751&t=01004034443672390362)

LBOs are, by definition, risky -- they tried to take advantage of an obvious arbitrage game.  Now they are threatened by the simple fact that it was too good to be true.

Let's rejoice in the fact that Banks are actually waking up and realizing that its better to walk away.  Let's embrace the fact that walking away from bad deals is a good thing, and not simply following through for the sake of following through!  Reality is here!  Yeee-haaaw! (I'm from Texas).  This is a huge sea-change from what we've seen before.  I see this as a great sign - Banks are actually taking a hard look at profitability and what it really takes to make the right decision. 

THIS IS A GOOD THING, NOT A BAD THING!

We are in for a bear market, no doubt.  If you hold an LBO stock, get out.  But let's remember that the first step to curing additction is admitting you have a problem and taking a cold hard look at the situation.  This is a wonderful sign of things getting better - which will take months to years to see the benefit.

Value investors take hold!  We are getting a unique opportunity to witness a complete change in thinking by the banking community.  It may be time to start going long on the financials.

-- HPEGuy

4 Comments – Post Your Own

#1) On February 15, 2008 at 2:37 AM, LordZ wrote:

ITs not a change in thinking, its simply bad business catching up and killing to such an extreme that we may actually have banks going out of business, where once there was opportunity now there is only fear and loathing.

If your going to kill the beast, you had better swing and chop off its head, simply cutting off its fingers will get you no where, sure the beast may recoil, but it will strike until you kill it.

Its so messed up that its not even safe to put your hard earned money in the bank, how sad.

 

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#2) On February 15, 2008 at 9:35 AM, CycleFreak7 (< 20) wrote:

LBO's? OK, let them fail.

What about underwriting? Previously agreed upon contracts broken.  This is bad

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#3) On February 15, 2008 at 11:12 AM, ctojeira (41.24) wrote:

You're a transplanted Jersey boy.  Don't claim to be from Texas!

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#4) On February 16, 2008 at 12:54 AM, HistoricalPEGuy (63.11) wrote:

Thanks CycleFreak!  That's great stuff.  The banks are holding on tight to their cash, that's for sure.  I wouldn't want to be Solutia right now, the banks would rather pay huge penalties than take on bad loans.  Not good for the short term economy - but great for the long term. 

"the first step is admitting you have a problem"

 ctojeira - Jersey?  Why don't you go tell "Vito" to come down here to Texas and do something about it. 

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