|
TranceAddict Investors Club @ Marketocracy (pg. 123)
|
View this Thread in Original format
| Joss Weatherby |
| quote: | Originally posted by jerZ07002
While i agree that these companies will eventually have to lend again, i don't know how much these companies have to reduce their book value to be in line with realistic valuations. |
Thats why I am liking smaller regional banks right now. A lot are still lending, and if they aren't they will be a lot sooner than the big banks.
Of course stay out of trouble spots like Florida, Nevada, Southern California, etc. |
|
|
| jerZ07002 |
| quote: | Originally posted by Joss Weatherby
Thats why I am liking smaller regional banks right now. A lot are still lending, and if they aren't they will be a lot sooner than the big banks.
Of course stay out of trouble spots like Florida, Nevada, Southern California, etc. |
if you want to dabble in finance stocks, your best bet is probably community banks that do not lend with the intent to sell securitized packages of loans. Those banks had, and still have, proper quality control in place and likely aren't holding onto many bad loans. Since these smaller community banks intend to hold onto loans until maturity, they certainly did significantly more due diligence to ensure the loans could be repaid than the large financial institutions that never intended to hold onto the loans longer than it took to package them.
one example in my community is PBCI (pamrapo bancorp). It's dividend yield is over 7%. You won't see any large movement in value because the market cap is low, but during this period its all about capital preservation, and this stock will surely preserve your capital and provide a modest dividend return. |
|
|
| Shakka |
| quote: | Originally posted by jerZ07002
one example in my community is PBCI (pamrapo bancorp). It's dividend yield is over 7%. You won't see any large movement in value because the market cap is low, but during this period its all about capital preservation, and this stock will surely preserve your capital and provide a modest dividend return. |
...and trades by appointment only! |
|
|
| Krypton |
| quote: | Originally posted by Joss Weatherby
Are you sure about Wamu? Washington Mutual Inc. still exists as a company, and that is the entity in chapter 11 right now. Its banking division, assests, liabilities, etc were sold to JP Morgan Chase.
I still think Citigroup can fail, they said Wamu Bank was too big to fail too, and there it went. Like you said above, it might be split into a whole slew of things as well and not even come out of this as Citigroup anymore.
Also at somepoint I am pretty sure the Americans wont want anymore of this bailout stuff. :p |
I am sure about WAMU. Their stock has been delisted. It now trades on a pink sheet exchange. The Pink Sheets is not a stock exchange. My advice to you is just forget about WAMU...here, read this about pink sheets, which are HORRIBLE investments, if an investment at all...
| quote: | | To be quoted in the Pink Sheets, companies do not need to fulfill any requirements (e.g. filing financial statements with the SEC). With the exception of foreign issuers, mostly represented by ADRs, the companies quoted in the Pink Sheets tend to be closely held, extremely small, or thinly traded. Most do not meet the minimum U.S. listing requirements for trading on a stock exchange such as the New York Stock Exchange. Many of these companies do not file periodic reports or audited financial statements with the SEC, making it very difficult for investors to find reliable, unbiased information about those companies. For these reasons the SEC views companies listed on Pink Sheets as "among the most risky investments" and advises potential investors to heavily research the companies in which they plan to invest. -wikipedia |
WAMU compared to Citigroup is miniscule. Whoever told you WAMU was too big to fail was an idiot because WAMU did fail and nobody did anything about it. When Citigroup announced that it might fail, the Fed's stepped in to guarantee their assets and liabilities. Citigroup really is too big to fail because the Fed's stepped in solely on that belief. |
|
|
| Krypton |
I did an analysis on Real Goods Solar, Inc. (RSOL) which sells alternative energy services and products. Here goes...
-------------------------------------------------------------->
I'll start off with saying this is a very young company (less than 5 year track record) which is in an unproven industry. The youngness of the company increases risk because it has such a small track record, and when I do an analysis on such companies, it's harder to gauge their finances because my model wants 5 years of data, while RSOL only has 4 years to give me. The industry itself is still unproven because few are turning a profit, RSOL, included. Look at these two statements in the link below...
http://moneycentral.msn.com/investo...Q=1&Type=Equity
The top income statement shows you they don't make a profit. This is bad for any investor. But I know you were speculating, but speculating is a very short term thing. The below cash flow statement shows you the company has not made any money from the business of selling its products, but, it has made money from financing. Whether this is good or bad, I don't know, because I don't know the nature of the 'Financing Cash Flow Items' in which they got $48.15 million, perhaps as a loan...I just don't know because it doesn't tell me. The crux of my argument is, it's a bad investment because they don't make any money from selling their products. Now if you believe alternative energy is here to stay and is going to completely change the world and all that, then that might be enough to make it a good investment, but you'd need a loooooooong time horizon. Like decades. Alternative energy will need that much time to say...take over fossil fuels. Think about it, they'r still not making much of a profit. Based on the financials, they are a bad investment.
Now, since I have time to write all this out, I also had time to use my model to an analysis on it. Both a quality and valuation analysis. But keep in mind I only have a short 4 year track record (some things only 2 year track record) to go on which makes analyzing them harder because I don't have all the data I want. I also noticed the company has only been public traded for less than a year. Yikes.
So to summarize. RSOL looks like a company with a product with some potential. That potential has not been realized yet and so they turn little no profit. My rating is a SELL. My valuation is $3.83 which is about where it currently trades at so it's not under valued. Notice my target price estimates for RSOL are pretty wild with high valuations and very low ones. That is an indication of the diffulty of valueing this company because of the extremely short track record to go, as evidenced by the lack of data on the left side of the spreadsheet. My opinion is I would not buy RSOL, and if I owned RSOL, I'd sell it right now. |
|
|
| Joss Weatherby |
| quote: | Originally posted by Krypton
WAMU compared to Citigroup is miniscule. Whoever told you WAMU was too big to fail was an idiot because WAMU did fail and nobody did anything about it. When Citigroup announced that it might fail, the Fed's stepped in to guarantee their assets and liabilities. Citigroup really is too big to fail because the Fed's stepped in solely on that belief. |
WaMu was the largest S&L in the US and its failure constituted the largest bank failure in US history... I don't think anyone was sitting there going "yea WaMu, thats going to fail."
Besides the take over was more than likely a scam.
But still its risky, and I don't care if I lose it all. :p |
|
|
| Krypton |
| quote: | Originally posted by Joss Weatherby
WaMu was the largest S&L in the US and its failure constituted the largest bank failure in US history... I don't think anyone was sitting there going "yea WaMu, thats going to fail."
Besides the take over was more than likely a scam.
But still its risky, and I don't care if I lose it all. :p |
I don't think you understand what I mean by "too big to fail". By saying a company is too big to fail, that means the government is not going to let that company fail. It's a classification. AIG was bailed out because the government thought they were "too big to fail", meaning, if AIG were allowed to fail the damage caused to the overall economy by such a collapse would be too much to handle, so the government feels obliged to not let them fail.
Saying citigroup is too big to fail is not saying, they'r so big they can't fail. It's saying, their piece of the economy is so large, they can't be allowed to fail. So, 'too big to fail', does not mean a company is too big to fail. It means the company is too big to let fail.
If you'r willing to lose all of your money invested into a bankrupted WAMU, be my guest, it's your money. I would just tell you don't put your retirement savings into it. Think of it as a roll of the dice at the casino. The house is most likely going to win...;) |
|
|
| Capitalizt |
Too big to fail is a socialist's phrase. Nobody and nothing is too big to fail. A true free market would allow insolvent companies to go bankrupt..allow a little pain to seep through the system so things can correct naturally.
This isn't a popular idea among politicians and it obviously isn't happening today..but the thought that anything is really "too big to fail" is nonsense. Citigroup can (and should) be allowed to fail. If the government steps in to prevent it by printing more money and propping them up, they are only shifting the burden from shareholders to taxpayers and people who hold devalued dollars. |
|
|
| Krypton |
| quote: | Originally posted by Capitalizt
Too big to fail is a socialist's phrase. Nobody and nothing is too big to fail. A true free market would allow insolvent companies to go bankrupt..allow a little pain to seep through the system so things can correct naturally.
This isn't a popular idea among politicians and it obviously isn't happening today..but the thought that anything is really "too big to fail" is nonsense. Citigroup can (and should) be allowed to fail. If the government steps in to prevent it by printing more money and propping them up, they are only shifting the burden from shareholders to taxpayers and people who hold devalued dollars. |
I don't think you understand either. Citigroup can fail no matter how big it is. Any company can fail. But the Fed's decided letting Citigroup fail would be catastrophic to the liquidity of the system. What's your solution to a liquidity freeze of the markets? Because all you'r saying is, "Just let it happen." Right, let another Great Depression happen...just as long as we convert to radical libertarian ideology, everything should be great! |
|
|
| Joss Weatherby |
| quote: | Originally posted by Krypton
I don't think you understand either. Citigroup can fail no matter how big it is. Any company can fail. But the Fed's decided letting Citigroup fail would be catastrophic to the liquidity of the system. What's your solution to a liquidity freeze of the markets? Because all you'r saying is, "Just let it happen." Right, let another Great Depression happen...just as long as we convert to radical libertarian ideology, everything should be great! |
Wamu was sound when it was taken over. It was not bailed out for other reason than a run on it by its customers.
| quote: | Originally posted by Krypton
If you'r willing to lose all of your money invested into a bankrupted WAMU, be my guest, it's your money. I would just tell you don't put your retirement savings into it. Think of it as a roll of the dice at the casino. The house is most likely going to win...;) |
I have a fair amount of disposable income, and I put in as much as I can to a fairly stable (though down badly) retirement fund. I'm also young, and have many many years before I need to worry about retirement. |
|
|
| Capitalizt |
| quote: | Originally posted by Krypton
Because all you'r saying is, "Just let it happen." Right, let another Great Depression happen...just as long as we convert to radical libertarian ideology, everything should be great! |
This isn't about radical libertarianism...It's about common sense.
If Citi fails, we won't face another great depression and it won't be catastrophic krypt...It will be very painful recession, yes..but it desperately needs to happen. Prices NEED to fall..unemployment in the financial sector NEEDS to rise...and the bubble that popped NEEDS to DEFLATE completely so all the malinvestment can be cleansed from the system. It will be very ugly but it will also be TEMPORARY.
The economy is diseased and a painful recession is the only cure for it. All of these bailouts and interventions are like giving aspirin to a suffering cancer patient. Sure it might make him feel better for a while but it really isn't addressing the underlying problem, and the longer we refuse the much needed (and unpleasant) treatment, the worse the patient will be. |
|
|
| Krypton |
| quote: | Originally posted by Joss Weatherby
Wamu was sound when it was taken over. It was not bailed out for other reason than a run on it by its customers. |
WAMU wasn't bailed out. It was forced to sell everything at fire sale prices. It's a worthless company.
If billions in sub-prime losses, an FDIC seizure, and bankruptcy is sound to you, then I must not know about this new investment scheme to buy bankrupted companies and expect anything in return. WAMU has HUGE problems before they had the bank run. But, it's your money. But frankly, if you invest in WAMU pink sheet, you might as well go to the local dump and ask to buy their garbage. |
|
|
|
|
