January - Bank Equities Largest Crash In History
"In our view, bank stocks in late 1990 reflected a real risk of bankruptcy and the easing of that risk partly drove big returns. Most bank stocks today reflect uncertainty about earnings and dividends, not viability." --KBW Bank Analysts, March 2008
"Standard & Poor's Equity Strategy Group upgraded its recommended weighting of the Financials sector to market weight, from underweight, based on what we view as an improving technical and fundamental outlook. Year to date through Apr. 3, the S&P Financials index, which represented 17.4% of the S&P 500-stock index, was down 7.7%, compared with a 6.5% decline for the S&P 500." --BusinessWeek, April 2008
I saved these quotes because I new there would be a time I wanted to use them. Even with the large rally at the end of the month, the Banking Index finished down 36% in January in what is the largest banking collapse ever in terms of price and time. You are living through history.
This highlights a key point we have made repeatedly - just because a stock drops 90% doesn't mean it can't fall another 90%. Indeed, that is effectively what has been happening with banks.
Crony capitalism, also known as the good ole boy's club, breeds systemic incompetence. In other words, when economic opportunity is granted based on who-you-know instead of competence, we see systemic crises. The who-you-know not only applies in a micro level of individual employment but it also applies on a macro level that Wall Street has monopoly access to capital. Cronyism extends from Wall Street throughout the financial community to include extensional institutions such as in private equity, hedge funds and investment banks. And, Wall Street lobbyists rewrote the rules of commerce in the who-you-know dynamics of corporate lobbying.
What would the American economy look like without these restrictions? Incredibly different.
"Standard & Poor's Equity Strategy Group upgraded its recommended weighting of the Financials sector to market weight, from underweight, based on what we view as an improving technical and fundamental outlook. Year to date through Apr. 3, the S&P Financials index, which represented 17.4% of the S&P 500-stock index, was down 7.7%, compared with a 6.5% decline for the S&P 500." --BusinessWeek, April 2008
I saved these quotes because I new there would be a time I wanted to use them. Even with the large rally at the end of the month, the Banking Index finished down 36% in January in what is the largest banking collapse ever in terms of price and time. You are living through history.
This highlights a key point we have made repeatedly - just because a stock drops 90% doesn't mean it can't fall another 90%. Indeed, that is effectively what has been happening with banks.
Crony capitalism, also known as the good ole boy's club, breeds systemic incompetence. In other words, when economic opportunity is granted based on who-you-know instead of competence, we see systemic crises. The who-you-know not only applies in a micro level of individual employment but it also applies on a macro level that Wall Street has monopoly access to capital. Cronyism extends from Wall Street throughout the financial community to include extensional institutions such as in private equity, hedge funds and investment banks. And, Wall Street lobbyists rewrote the rules of commerce in the who-you-know dynamics of corporate lobbying.
What would the American economy look like without these restrictions? Incredibly different.
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