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virginCFAhooker Wrote: ------------------------------------------------------- > No, book value is very important with financials > because they’re supposed to mark everything to > market and most of their assets are financial. Right, I understand the mark to market stuff, but how do you mark the collateralized-super-smelly-obligations to market? And don’t we get book values at best once a quarter, so that in a fast changing marketplace, whatever data we have is hopelessly out of date?
exactly… how deep does this rabbit hole go? They use their own models to value these complicated debt pieces because the actual market has seized up. Look at some clues: When the fed steps in cuz nobody else will, (I hate to mention this again) you can buy AAA rated municipal bonds yielding 10%, and borrowers can walk away from their house scottfree … how they value those exotic debt pieces has to scare you a little bit?! Statistics baby. 1/30000000 chance.
That is percisely why C has fallen like it has. Fear regarding future writedowns and unexposed investment risks. The only way Citi prices below book is that the market beleives future balance sheet hits will prevent it from being profitable correct? I.E. will not be able to bring in an above market rate ROE… So, clearly citi has some still has skeletons in the closet but to what extent. When Pandit took over he had every reason in the world to expose the debt as quickly as possible(as long as he could maintain the integrity of the company) so that as much of the loss as possible he could pass of onto the shoulders of the departed Chuck Prince. …and now with Bernanke shouldering another 200 billion, phew I mean as much as i think this is terrible in terms of long term economic effects ya gotta like C… i hope. Not trying to claim a sure bet here but it just seems like a great value. Im not bettin the farm but i think it could turn out to be a lucractive position. I am NOT an investment professional (yet), im a ops nerd trying to feel his way into investments so criticism (which I am sure will follow on this board) will be taken with a grin cheers GenY
OK, so it sounds like its straddle or strangle time for C.
virginCFAhooker Wrote: ------------------------------------------------------- > …Our leaders are SPINELESS! Spitzer > should get up and say, “I like sex. Forgive me. > My wife ain’t doin’ it for me. I’m still a good > Governor and I ain’t quitting. Business as usual. > If you don’t like it then seeya.” Only one problem with that, I am not a legal whiz but I think prostitution is illegal, soliciting a prostitute is illegal, and transporting people across state lines for the purposes of prostitution is illegal. So Mr. Spitzer could say that if he wanted too but, he could then potentially wind up doing time. I’m not sure you can be a good governor from jail. That aside, I suppose if a governor wanted to divorce his wife and leave his kids a year into office for some 20 something babe he met at hooters and say, “Hey, you voted for me. I like sex a lot and mostly freaky sex, so bite me. Now I got work to do on this driver’s license thing…” I guess his constituents then might be forced to say… “oops, my bad.”
slouiscar Wrote: ------------------------------------------------------- > That aside, I suppose if a governor wanted to > divorce his wife and leave his kids a year into > office for some 20 something babe he met at > hooters and say, “Hey, you voted for me. I like > sex a lot and mostly freaky sex, so bite me. Now > I got work to do on this driver’s license > thing…” I guess his constituents then might be > forced to say… “oops, my bad.” LOL I love the illegal immigranst driver’s license reference. Lou Dobbs was absolutely chomping at the bit on CNN (no I didn’t watch his show, just when they brought him on after Carville). It’s funny because besides the whole driver’s license thing I would have though he’d like a Spitzer esque “people vs powerful” thing! I didn’t see Kudlow, I’m sure he talked about it for a good deal of his show, regardless of what is going in the markets and the economy right now!!!
He shouldnt worry, Bernanke will bail him out…
Bernanke’s going to bail out Spitzer? Actually, if Spitzer is “client #9” who are clients #1 - #8? If the governor of NY is #9, that means #1-#8 need to be some pretty important people, like, I dunno, the Fed Chairman?
#8 Bill Clinton
Bill Clinton was #1-8
looking like you are going to get another shot at it, Joey…
JoeyDVivre Wrote: ------------------------------------------------------- > Bernanke’s going to bail out Spitzer? Actually, if > Spitzer is “client #9” who are clients #1 - #8? If > the governor of NY is #9, that means #1-#8 need to > be some pretty important people, like, I dunno, > the Fed Chairman? I doubt Bernanke makes enough to blow $5,500… Higher profile job, but Bernanke isn’t a bratty rich kid…
But that would just deepen the villainy. I think Bernanke could get someone get someone to pick up the tab.
The Bernanke reference was meant to be a joke about his willingness to bail those out who dug thier own graves, literal interpretations raises questions
Bernanke has a different kidn of currency. He doesn’t need $. I’m sure most of the people here would sleep with Bernanke if he would tell us what the next Fed move was…
I can’t believe how debt values have plummeted so much. Especially on debt products whose default risk is so low. What exactly were the mechanics behind the liquidity injection by the Fed? Were they lending cash and collateralizing their position with gov’t agencey/sponsored MBS debt? I’d find it crazy if there is no rational demand level on this type of debt considering it’s gov’t backed. If that’s the case, it sounds like we’d need to restore confidence, because there is a definite disconnect. I can tell you the loan market is very dislocated, with unsecured high yield bonds trading closer to par than senior secured corporate paper. I think it has alot to do with loan funds vanishing from the market, so it’s really a dislocation in liquidity, though you’d think someone would step in and start buying this corporate paper at bargain prices.
Sorry to bump up this thread again but I’ve been thinking about the banks alot recently (as investments). I confess that I work at one of the big banks in/with the areas that have been hit hard by all of this mess in the debt markets, and things really are as bad as people are saying…and I think people are coming to realize that it’s not just a “crisis of confidence”, because if it was then all of these fed actions would be having at least some effect; instead things have gotten progressively worse. At the same time, recent actions have convinced me that the fed, and more importantly, the tresury/congress, are firmly on the side of the big banks. There is simply no way that they will let any of the medium/big banks fail…period. They will absolutely do whatever it takes to ensure that the banks remain solvent. So, as a result, there are two scenarios IMO: a: one or more of the big banks goes under in spite of anything the fed or government does, and there is a global depression (I think this is very improbable but can’t rule it out) b: The banks suffer losses but after the downturn (which may last a year, two years, maybe even more…I don’t think anyone can really predict this with any certainty right now) return to profitability. And in this case today’s prices are screaming buys, regardless of what this year’s writedowns will be. Look at a bank like C or BofA: even if you take the worst case scenario and totally remove future income from securitizations, they have so many other revenue streams that at $20 a share (for C) it has to be worth at least twice that in an “average” economic environment. But securitization is not going away, and will come back at some point. I can’t imagine any scenario other than the worst-case outlined above where C is not at $50 a share, at least, in the next 3-4 years. Plus it pays a nice dividend, although it certainly may be cut this year - it will come back though. It seems like even the C bears are saying that it may hit $17-18 - even if they are right that’s not much further from here. Anyone have any other thoughts - I’d love to have someone poke holes here… Edited to add…I had exactly the same thoughts when C was at 25 though, so I’m certainly not an expert on ST moves in C stock…
Can C be the next BSC?
The highest BSC market cap ever was < $ 50 B. C despite all its troubles has a market cap > $100B now. C going down like BSC (which ought to be totally gone in less than a week) would be very bad.