Bank stocks

[disneysteve]

How much did you pay for Wells Fargo, BA??

I bought in. WFC at $14 per share.

WFC closed today at $10.91. Intraday low was $8.81.

BAC closed today at $3.79. Intraday low was $2.53.

[Broken Arrow]

I know. I was watching. Very painful. Still going to stick with it.

[Bernz]

I'm sticking with my small holdings as well. Although it is very tempting to average down at this level. Wait and see game for me now. If it goes up soon, thanks if not, I'll keep my hopes. Besides, I really did not buy this stock to trade. I still see good signs in 3-5 years.
Good luck peeps.

[banditfist]

For those that bought recently, what you are holding are lottery tickets.

They are either going to be zeros, or you are going to be looking at a much greater than 100% return.

You have a senator saying they might need to nationalize some banks in which case, common stock in those banks is zero. Then you have Turbotax Timmy looking to do anything and everything to take the risks from the banks and putting it onto the taxpayers.

[sweeps]

Try this again? Citibank is $1.20.

[banditfist]

Try this again? Citibank is $1.20.

See my above post. It is either a lottery ticket or zero.

From a technical analysis standpoint, we need to hold 700 (S&P) in the WORST way. Tonight, look West to Asia. If the bloodbath is not too bad, we might be able to hold. If we break, we start heading down to the 400s. We get down there, then a whole bunch of companies implode due to pension obligations. The way out of the obligations is via bankruptcy. Common stock = 0.
We might get a bounce back up to 740, but it will not hold for long. Set your stops on this one.

IMO, from a fundamental analysis, $hitibank is insolvent and common stock is a zero. Their liabilities far exceed their assets.

Bet what you are willing to lose. It is a great gamble and the payoff beats anything you would get at the track.

[Broken Arrow]

Ah... alas I have to agree. Right now, with the exception of Wells Fargo, I simply wouldn't hold any bank stocks, no matter the price. Price itself is very deceiving....

I remember a thread here not too long ago that I warned against buying... Freddie Mac for $2/share? The other person asked, "Well, what if it was a $1/share?" My response was that it could always go lower, depending on the company. Freddie is currently going for about $0.40/share.

A similar story appears to be unfolding for AIG. For months, it's been slipping from $2 to about $0.40 right now. Of course, AIG hasn't made itself attractive considering how much bailout capital it has gobbled up (more than $150 billion now), and is one of the main catalysts for bombing the entire financial sector.

Citibank is in a similar predicament with up to $300 to $400 billion in toxic papers, and that's only what is written on the books. Off the books, I read that perhaps as much as close to a trillion dollars in debt could be crushing the company right now.

Of course, don't get me wrong. I've traded some of these stocks before. However, I did that back in 2008 knowing what we knew back then. Knowing what we do know now in 2009, I just wouldn't touch it with a 10 foot pole.

That's also not to say one can not "make" money with these stocks. For example, AIG has gone up $0.07 overnight, giving it a 16.7% gain within a day. However, all that is, as Bandit has mentioned, purely speculative and just playing the lottery....

I still love a good bank stock though, and I think there are banks out there being pummeled just for being in the sector, but are themselves well-run and well-capitalized. Wells Fargo so far is the only name that comes up for me. Currently, it's more than volatile enough trade with. That or I can buy, hold, and fuggeditabutit while collecting a handsome dividend. But the trick so far has been to find that one good stock or bond out there in an ocean full of bad ones....

[EEinNJ]

For small investors on the outside looking in, I have to agree the bank stocks mentioned are expensive lottery tickets. If you're going to buy individual stocks, due diligence means assigning some value to it based on assets, prospects, earnings, liabilities, etc. All that is impossible to know in this situation.

[Investing First Steps]

Here's a simple argument in my opinion against bank stocks:

If the government ever makes a morally correct decision, the value of the common shareholder should be wiped out. They invested in insolvent companies that had to be bailed out, why do the common shares still have value? Additionally, there is no reason in the world why they should be still paying dividends. Asking for bailouts and then paying dividends is simply insane. I understand the arguments for it, but morally it's repugnant. Because they're simply insolvent, those banks ARE overvalued and there's a decent chance that will eventually catch up with them.

[sweeps]

If the government ever makes a morally correct decision

Your argument has already failed.

[sweeps]

Citibank broke a buck today. Was at $0.98 at one point. Currently sitting at $1.03.

[Broken Arrow]

Today is bad for the whole market, but especially for those in financial sector (along with transportation and energy).

[disneysteve]

Is it time to buy these puppies?

Citigroup: $3.49

... or would I just be catching a falling knife.

Citibank broke a buck today. Was at $0.98 at one point. Currently sitting at $1.03.

Well that answers that question.