arbitragr

Me personally I don't think you're gonna see pre-2007 times for a while, maybe 3-5 years out. Which would make that about 2011 or 2012. Right now the banking system needs to be sorted out, housing has to get back on track, and after bubbles like that, it may take a while. When we start getting out of this mess, the next thing might be inflation. So maybe the 70s inflation style markets might come back again.

If you've been in the working world long enough, you'll find that compensation is pretty much rigged. You just have to know the right people and know how to work your way into it. Nobody talks about it, b/c it's taboo and nobody wants to let the secrets out. Those bonuses at ML, AIG, FNM FRE ... they're all standard procedure behind the scenes ... hush hush ... if the govt is going to bailout these companies I don't think they should be so naive as to think the money won't be misused ... moral hazard ... Hank was on to something when he refused to bailout Lehman. Execs will take their money and run in this environment, b/c they know the good times won't come again for a while ...

you can sort of check this out yourself ... from the annual reports ... rather than asking at the GM

I'd like to know what rationale he used, and valuation metrics when he invested in those two Irish Banks that went completely bust.

Yeah, you make a valid point. I could probably dig up just operational data, however it might take a bit of work ... too much unfortunately. :-\ I've a Busy weekend. But you can imagine what it would probably be like in any event, probably down to the 1990 mark. Still a big drop. S&P is currently at 768 ... so you can make your own conclusions about what sort of forward earnings yields the market is on. S&P Earnings of 20-45 wouldn't be too far off the mark.

It's no secret that it's bad out there. This week's chart helps provide some perspective as to the magnitude of the current economic decline. 12-month, as-reported S&P 500 earnings have declined over 80% over the past 18 months, making this by far the largest decline on record (the data goes back to 1936). In fact, real earnings have dropped to a level not seen since the 1930s and 40s � the back end of the Great Depression. While earnings have been struggling since Q3 2007, it was the latest quarter (Q4 2008 the first full quarter following the financial meltdown), where the real damage was done. During Q4 2008, the S&P 500 came in with its first negative earnings quarter ever and the amount lost during the quarter was more than the index has ever earned during a single quarter. http://i163.photobucket.com/albums/t314/ripleyx/Finance/chartoftheday-21mar2009.jpg

they get a large portion of their funding from short term commercial bills, so they've been totally screwed on that. Add to that commercial real estate, which is a large chunk ... and is falling in value. They're trying not to book the accounting values as written down values but rather longer term values, so that it looks better on the BS. CRE usually lags housing and the economy overall. Tough times.

Leveraged ETFs kill portfolios; http://news.morningstar.com/articlenet/article.aspx?id=271892

same here ... as I've stated on this board before, BRK-B is my most recent position with a buy in at approx. $2300 BRK-B = 40% roughly (although i wouldn't recommend at current prices (=~$2800 or so )...) and the rest is in junk bonds, short-treasury securities, and commodity related stuff ...

WEB was pretty much spot on re; returns for stocks in that Fortune article after the tech bubble ... 6-7 years after the fact.

keeping jobs and controlling unemployment is everything these days ... however

I wouldn't want his job, that's for sure.

didn't we have a similar argument last time about gold vs. oil vs. businesses??

My dumbest investment was ... blowing it all on my first relationship with my ex-gf. Moved out together, put a down payment for a house, bought a car, furniture ... the lot ... and then it didn't work out and we broke up. Could have bought stocks. Glad I didn't get married.

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/10/AR2009031000895.html .... The turning point came in December. That's when the government rescued Chrysler, General Motors and GMAC, all leading issuers of high-yield bonds. "That seemed to lift the animal spirits" of investors, says Sabur Moini, a 15-year junk-bond veteran who manages Payden High Income fund. Fresh money rediscovered junk funds, and low-quality bonds rallied. Between December 12 and January 28, SPDR Barclays Capital High Yield Bond (symbol JNK), an exchange-traded fund that tracks the junk-bond market, appreciated 22%.

I dunno ... it's hard to tell. If unemployment goes crazy then she might be ... it's all part of being a good analyst. And if she's right, then you should be shorting C, BAC, JPM and WFC, not going long. You definitely should not be holding onto the stock of the big banks at all.

I remember back in about August-December 2007 (that's right 2007!!) ... looking at all the research back then ... all the big brokers had either buy or hold recommendations on the big banks. She was the only one who went out and said doom is coming, banks need to raise capital and received much criticism for that.

Brunettes are my favorite. :-*

... truth be told ... Fitch probably has had more integrity than Moody's and S&P throughout this crisis ...

... Moody's wouldn't do it ... ;)

Well, she's been pretty on the ball throughout this whole crisis. If she gets this call wrong, it will be her first. She has a valid point though ... I mean it all depends where unemployment goes ... figure out the rate of unemployment, then add about 2-3% and voila ... you have your loan loss rates for credit card loans to consumers - that's the standard metric in the banking industry for consumer businesses. things get scary when a depression-like scenario eventuates. WFC included ...

... I don't ... I want to buy it when it falls 50%, and then see it go up 50% and then some. Ah ... the [glow=red,2,300]ELUSIVE[/glow] bottom ... :)

No, not the puts ... but maybe the losses on CDS that WEB has to fork up each time the market drops. Same things goes with the banks. Each time the market drops, the value of balance sheet mortgage assets (on or off Balance sheet) falls, and then the bank has to raise capital, thereby diluting shareholders. This is what has been happening to the banks the last 6-12 months, and WFC is not immune to this either. If consumer credit losses and CRE loan losses blow out, then they'll have to raise capital too. Who knows where unemployment is going. It's not the smartest thing in the world to think that leveraged institutions will never have to liquidate assets to meet funding requirements.

You could have said this last year and invested, not knowing where the bottom was, especially after Lehman. But then your portfolio would have dropped another 30% or so. There's no harm looking at the top down aspects. Nonetheless for me, buying BRK-B at 2280 was just pure faith a week ago, with the hope that the market wouldn't get too irrational, but it can go down further (or it may stay at these healthy levels). Margin of safety as a principle is fine and all, but it's much harder to implement and not as straightforward as it looks. Often the margin of safety will fluctuate, especially if the stock in question has assets that fluctuate in value with the market, like WEB's derivative contracts (especially the CDS ones).

puts should be good if markets stay at this level or up ... looks like volatility is back again ... seems like markets are responding to good news ... people want to pick the bottom again ...