Are you buying into financials?

[Lloyd Bonafide]

Watch our for Goldman and their trick accounting practices:

http://norris.blogs.nytimes.com/2009/04/14/the-case-of-the-missing-month/

Where’s December?: Goldman Sachs reported a profit of $1.8 billion in the first quarter, and plans to sell $5 billion in stock and get out of the government’s clutches, if it can.

How did it do that? One way was to hide a lot of losses in not-so-plain sight.

Goldman’s 2008 fiscal year ended Nov. 30. This year the company is switching to a calendar year. The leaves December as an orphan month, one that will be largely ignored. In Goldman’s earnings statement, and in most of the news reports, the quarter ended March 31 is compared to the quarter last year that ended in February.

The orphan month featured — surprise — lots of write-offs. The pretax loss was $1.3 billion, and the after-tax loss was $780 million.

Would the firm have had a profit if it had stuck to its old calendar, and had to include December and exclude March?

 

[Lloyd Bonafide]

I am not convinced that the future stock price of some of the largest and most well known lenders won't be $0.

Probably true. There are always short-term profits that are possible, but long term, for the largest banks? A huge gamble.

 

[Lloyd Bonafide]

Bank of America May Need $70 Billion

http://www.bloomberg.com/apps/news?pid=20601087&sid=atBCPJLgcr7Y

I thought the big banks were all making money? :icon_mrgreen:

I guess they must still have a few bad assets left. It's going to be a lot cheaper if the FDIC would just shut the big boys down now.

Bank of America Corp. needs $60 billion to $70 billion of capital, according to Freidman, Billings, Ramsey Group Inc. analyst Paul Miller, who cited stress tests performed by his firm.

The bank earlier this month reported that first-quarter profit more than tripled on gains from home refinancing. Lewis said he “absolutely” didn’t think the bank needed additional capital.

 

[Terrel L. Shields]

Listening to a talking head today...an "expert" for whatever thats' worth. They were talking the Case-Shiller Index for Feb...flat... He said, gotta get thru 2010 to get the worst of foreclosures behind them, and to get those foreclosures off the market, and then we can talk "recovery" in housing. And then he said, "Don't expect it to rebound overnight."

Maybe he's wrong but I have been thinking the same thing. Our peak was Aug 2006 and a year before we recognized that this was real and this was serious. To Aug of 2010 would be 4 full years of receding prices...I expect 4 years more just to see solid footing, dramatic seems to be a probable "non-event" for some time to come.

Meanwhile I do not see the Financial system made to 'toe the line' with any effect. They will be given free rein in a desperate hope that they will lead us into a better and more vigorous economy, and reduce unemployment. Let's face it. We need construction jobs. Some people simply cannot train to be computer programmers - they don't have time, education, nor aptitude for such a change.

What can a 55 year old auto worker do after spending 30 years in a GM plant? Well, he might be good at mechanicing, crafting, machining, fixing, a lot of things...but they are used to working with their hands. The fact they can run a laser saw isn't proof they can design a laser saw. And to spend 4 years in college to retrain...?? get real.

 

[Riick]

Liars, Cheats & Thieves

Buying INTO financials..??? ... going in the opposite direction <short> would seem to make a lot more sense.

Following paragraph gave me a LONG pause
.... how Citi turned a 2.8b loss into a 1.6b "profit" woohoo
(( Skippy apparently is alive and well, and has taken up accounting at C. ))

http://www.frontlinethoughts.com/pdf/mwo050109.pdf

"Banks are not yet lending, and the past quarter's positive performance was mostly accounting gimmicks. Citigroup, for instance, said they made $1.6 billion. They did this by booking a one-time gain of $2.7 billion, because the value of Citigroup bonds have fallen (!), giving them the theoretical possibility of buying back their debt at a discount. And with consumer and credit card loans showing more weakness, Citi decided to REDUCE its loan loss reserves, allowing it to show another $1.3 billion in profit. And then there was the profit of $400 million from the new mark-to-market rules, which allowed them to produce a profit on "impaired assets." Without all these games, there would have been a loss of $2.8 billion."

.​

 

[Lloyd Bonafide]

Plenty more in bank losses coming:

Banks Face $400 Billion More in Losses, JPMorgan Says


http://www.bloomberg.com/apps/news?pid=20602007&sid=ahP7Xp58mE1U&refer=govt_bonds

April 20 (Bloomberg) -- Banks are likely to realize about $400 billion more in losses on soured assets, requiring further injections of government capital, JPMorgan Chase & Co. said.

Banks will need to set aside about $215 billion more in reserves against their holdings of $2.1 trillion of U.S. home loans that haven’t been packaged into securities, mortgage-bond analysts led by Matthew Jozoff in New York wrote in a report dated April 17.

On an anecdotal level, you would not believe how many properties I come across every day, where the owners are 100K, 200K, even 400K or more underwater on their mortgages. Even if real estate markets all stabilized tomorrow, almost all of these owners will eventually default, and bank losses are going to keep piling up for five years or more.

 

[JT1974]

I have some of my money in bank stocks and they have really done well over the last month or so. However, my best money maker going right now is CBG.....that's CB Richard Ellis.

Now all you CB appraisers turn off the Appraisers Forum and GET BACK TO WORK!!!

 

[Restrain]

Be ready to bail if you do. I check my stocks every day....and thank you Smith & Wesson.

 

[JT1974]

Be ready to bail if you do. I check my stocks every day....and thank you Smith & Wesson.

I used to own Smith & Wesson stock until they got caught up in an accounting scandal a couple of years ago. Now the only Smith & Wesson I own is my new M&P 9mm.

Gun stocks should be pretty good investments in the short run as there is a real panicked buying frenzy going on right now. Ammo companies are also making money hand over fist with all the hoarding that's going on now.

 

[Terrel L. Shields]

would not believe how many properties I come across every day, where the owners are 100K, 200K, even 400K or more underwater

I probably would but, of course, us Arkies have always been amazed at the Californians who come here and will pay $150 a SF for a house that cost $80/SF to build and think they got a huge bargain for a $250,000 house because "back in California I would have had to pay $700,000 for this..." Now those same folks are going belly up right and left....they paid TOO MUCH here and cannot unload their houses..

there is a real panicked buying frenzy going on right now

Ditto.. Primers have a waiting list at every store in the region and the stores are rationing them. Ammo at Wal-Mart is sold out by 7 am because they restock the stores at 4 am.