National City Update & The Financial Sector Crash

Today National City, one of the nation's largest banks, has fallen to $3 and change. Its lowest level in decades. From 2007's peak to 2008's trough, National City has fallen 92%. It's down approximately 70% since we criticized Morgan Stanley for upgrading the stock. If anyone bought National City in 2007, they would need an approximately 1,000% return to get back to break-even. Using a strategy of buy & hold, which is really a hapless approach that benefits the wallet of generally underperforming money managers, and using the S&P 500 as an investment, it could take fifty years or longer to get their investment back. Taking into account the time value of money, one would likely never get their money back.

Before this most recent correction started I wrote that we could see another mini-crash develop and that is indeed what has happened. Many financials are down 50+% since this correction started. Most banking and finance-related stocks are down 60-95% since last year. The crash in financial stocks has been substantially worse than the 1987 market crash and worse than anything seen since the Great Depression.