Well its Sunday April 13, 2:44 am in the morning and I could not sleep. Went out the other night and drank to much, Hah. Didn't want it to end. I am becoming a lush. lol.
Thought, I would do a little update as I couldn't stop thinking about an article I had read in Reuters on Friday April 11, 2008- "Bank rally is a bit premature: James Saft". He makes the case that the recent rally in the banking/financial sector is very premature, because many banks have not cleaned up their balance sheets yet, and that the downward trend in financial stocks since last year may still have a ways to go before investing in the financial sector becomes a good idea again.
Well, I thought that article made a bit of sense. I for one was thinking that the banking and financial sector may have been beaten down a bit too much and there may be an opportunity to make some money, 'moulah', 'dinero', somewhere in there- but I was also thinking if its worth the risk? How would you identify which banks stocks or funds etc.. to buy? How long would you hold on to them- 6, 12, 24 months? Would I just be chasing bank stocks because I had read somewhere in the news or on the Internet that they might be a good play.
Well lets think about it; the credit economy- the lifeblood of financial system is broken in certain areas. A prescription for curing the system has not been proscribed as yet because the doctors-- the Feds, have only treated certain symptoms of our credit system, not the main problems. Considering, one of the main problem is that banks and other major financial institutions still have mountains of financial assets on and off their books that cannot be valued correctly, which in turn is causing their other bank buddies that they normally lend or borrow to or from 'pause in lending'. No one is lending- money freeze. Major panic here--recently Bear Sterns---old news, but I loved the Bear, did business with them as a stock broker a long time ago. OK, I don't want to get to preachy on this matter.
I don't believe that buying bank stocks is a good idea right now! We may still have a ways to go before this sector looks healthy enough to do so, but if you have deep pockets, enjoy high risks, and Mylanta drinking volatility, banks stocks may be ideal for you right now.
You may want to start with the major money center banks, some regionals and then a few savings and loans banks; look for market capitalization of more than $250 million, current stock price in the $30-$50 range, pays a quarterly dividend average of 2% and a P/E ratio of less than 20, there- that should get you started.
Banks stocks that will pop-up in your initial search are US Bancorp (USB), City Holding Bank (CHCO), Bank of America (BAC), Comerica (CMA) and so forth. Reuters, WSJ and Market Watch all have good stock screeners-- **Warning, you will be bombarded by ads, pop-ups, spy-ware and other programs tyring to get information on who you are from your computer. Make sure you have your antivirus and ad-ware programs running before you go to these sites.
Here is a thought- I am going to build and start tracking a bank portfolio starting with 1 bank ETF, and 1 regional bank stock. I have selected randomly: BB&T Corporation (BBT: $31.93), and a ETF Fund: iShares Trust Dow Jones US Financial Sector (IYF:$82.51). My tracking started 4/10/2008. We will track these for the next six months and see whats up. I will add and subtract other stocks from this portfolio over the next 5 months. OK. I am feeling better now-hah! I think I can go back to sleep now!
Thought, I would do a little update as I couldn't stop thinking about an article I had read in Reuters on Friday April 11, 2008- "Bank rally is a bit premature: James Saft". He makes the case that the recent rally in the banking/financial sector is very premature, because many banks have not cleaned up their balance sheets yet, and that the downward trend in financial stocks since last year may still have a ways to go before investing in the financial sector becomes a good idea again.
Well, I thought that article made a bit of sense. I for one was thinking that the banking and financial sector may have been beaten down a bit too much and there may be an opportunity to make some money, 'moulah', 'dinero', somewhere in there- but I was also thinking if its worth the risk? How would you identify which banks stocks or funds etc.. to buy? How long would you hold on to them- 6, 12, 24 months? Would I just be chasing bank stocks because I had read somewhere in the news or on the Internet that they might be a good play.
Well lets think about it; the credit economy- the lifeblood of financial system is broken in certain areas. A prescription for curing the system has not been proscribed as yet because the doctors-- the Feds, have only treated certain symptoms of our credit system, not the main problems. Considering, one of the main problem is that banks and other major financial institutions still have mountains of financial assets on and off their books that cannot be valued correctly, which in turn is causing their other bank buddies that they normally lend or borrow to or from 'pause in lending'. No one is lending- money freeze. Major panic here--recently Bear Sterns---old news, but I loved the Bear, did business with them as a stock broker a long time ago. OK, I don't want to get to preachy on this matter.
I don't believe that buying bank stocks is a good idea right now! We may still have a ways to go before this sector looks healthy enough to do so, but if you have deep pockets, enjoy high risks, and Mylanta drinking volatility, banks stocks may be ideal for you right now.
You may want to start with the major money center banks, some regionals and then a few savings and loans banks; look for market capitalization of more than $250 million, current stock price in the $30-$50 range, pays a quarterly dividend average of 2% and a P/E ratio of less than 20, there- that should get you started.
Banks stocks that will pop-up in your initial search are US Bancorp (USB), City Holding Bank (CHCO), Bank of America (BAC), Comerica (CMA) and so forth. Reuters, WSJ and Market Watch all have good stock screeners-- **Warning, you will be bombarded by ads, pop-ups, spy-ware and other programs tyring to get information on who you are from your computer. Make sure you have your antivirus and ad-ware programs running before you go to these sites.
Here is a thought- I am going to build and start tracking a bank portfolio starting with 1 bank ETF, and 1 regional bank stock. I have selected randomly: BB&T Corporation (BBT: $31.93), and a ETF Fund: iShares Trust Dow Jones US Financial Sector (IYF:$82.51). My tracking started 4/10/2008. We will track these for the next six months and see whats up. I will add and subtract other stocks from this portfolio over the next 5 months. OK. I am feeling better now-hah! I think I can go back to sleep now!
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