The Street Runs Red With The Blood Of Banks
Since first posting on here in late April and May that we were going to start another leg down, many banks are down nearly 50%. In a month or so. Today we see major banks from across the country typically down 3-17% at their lows for the day. Fifth Third Bank, a super regional, takes the top spot down 17% - another dividend paying stock cutting its dividend. The bulls have tried to rally the market intraday but that failed. Most likely an attempted rally is because we gapped down at the open and because it's witching week as opposed to any revelation that the world economy is improving.
Back in May of 2007 when Professor Jeremy Siegel was espousing a position of how great a value stocks were in some of his writings, we used him as an example of someone likely top ticking the market. Someone in whom society had misplaced trust and expertise. And, what investing theme does Siegel espouse as an equity strategy? Dividend paying stocks. What is getting killed in this market? Dividend paying stocks. What did we write in that post?
--Earnings are the most cyclical in fifty years
--Earnings at risk and not current or expected PE more appropriately defines this market
--This market is very expensive and by implication...........
--The Fed valuation model is worthless in this cycle
--The bulls looking for their PE expansion have already gotten it in small caps, commodities,
commodity related stocks, transports, utilities, financials, consumer stocks, etc.
--The financial industry is peaking over a very long cycle
--Bubbles usually come in pairs
We wrote of earnings at risk in a more detailed post well before this mess developed. So, how much of the banking sector's earnings were and are at risk? At permanent risk? Gone forever. It's not just banks in this situation either.
Finally, it appears many professionals are realizing the credit crunch was not an exogenous event. Talk of housing or banking problems spilling into the economy were and are completely erroneous. The appropriate reality is the economy is spilling into housing and banking. Amongst other factors, it is the fact that my quantitative models actually work that has allowed me to accurately anticipate these outcomes while Wall Street's quantitative models costing billions and billions of dollars are imploding. It's not that securitization or derivatives caused this implosion as some would espouse. Or that real estate is the cause as is most often blamed by the media and industry pundits. Neither are true. This means what? It means all of the media and industry experts paraded on television and in the press are all wrong. And, that they have all been wrong for years. And, that much of what society was led to believe over the last five, ten or twenty years was also wrong.
This leaves an interesting topic for another post.
Back in May of 2007 when Professor Jeremy Siegel was espousing a position of how great a value stocks were in some of his writings, we used him as an example of someone likely top ticking the market. Someone in whom society had misplaced trust and expertise. And, what investing theme does Siegel espouse as an equity strategy? Dividend paying stocks. What is getting killed in this market? Dividend paying stocks. What did we write in that post?
--Earnings are the most cyclical in fifty years
--Earnings at risk and not current or expected PE more appropriately defines this market
--This market is very expensive and by implication...........
--The Fed valuation model is worthless in this cycle
--The bulls looking for their PE expansion have already gotten it in small caps, commodities,
commodity related stocks, transports, utilities, financials, consumer stocks, etc.
--The financial industry is peaking over a very long cycle
--Bubbles usually come in pairs
We wrote of earnings at risk in a more detailed post well before this mess developed. So, how much of the banking sector's earnings were and are at risk? At permanent risk? Gone forever. It's not just banks in this situation either.
Finally, it appears many professionals are realizing the credit crunch was not an exogenous event. Talk of housing or banking problems spilling into the economy were and are completely erroneous. The appropriate reality is the economy is spilling into housing and banking. Amongst other factors, it is the fact that my quantitative models actually work that has allowed me to accurately anticipate these outcomes while Wall Street's quantitative models costing billions and billions of dollars are imploding. It's not that securitization or derivatives caused this implosion as some would espouse. Or that real estate is the cause as is most often blamed by the media and industry pundits. Neither are true. This means what? It means all of the media and industry experts paraded on television and in the press are all wrong. And, that they have all been wrong for years. And, that much of what society was led to believe over the last five, ten or twenty years was also wrong.
This leaves an interesting topic for another post.
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