Signs of the storm
Posted
Dec 21 2007, 02:15 PM
by
Matt Koppenheffer
In turbulent times like these there are plenty of big signs that things are bad. Take the massive write-down that
Morgan Stanley announced earlier this week. When a major financial institution, and a savvy player at that, takes a loss of that magnitude it's not hard to recognize that there's a storm raging.
Sometimes, though, it's little things that can show the direction that things are headed. Wednesday's front page of The Wall Street Journal's Money and Investing section, for instance, sported an advertisement for
Barclay's. In good times these adverts typically talk about a firm's success with M&A activity or conducting IPOs. This particular one was focused on Barclay's capabilities working with companies going into and coming out of bankruptcy. In the stories in that section, you could've also found some more obvious signs of the times like
UBS'
fight to back out [subscription required] of a $1.5 billion financing or Cerberus trying to wiggle out of a $4 billion acquisition.
And in the midst of all of this we have a number of the top investment banks reporting fourth quarter earnings. As I noted above, Morgan Stanley's report was dismal thanks to a $9.4 billion write-down.
Bear Stearns wasn't much better. And even
Goldman Sachs, which reported positive year-over-year growth, saw investors prepared for the good and
focused on the bad.
Based on the CAPS ratings for these firms, it's easy to see that nobody is expecting a turnaround in the near future. Of the brokerage players, Goldman Sachs carries the highest rating of three stars (out of a possible five).
Lehman Brothers and Bear have both been saddled with rock-bottom one-star ratings.
There are, however, a number of CAPS players that have stepped up and said that even though the near term may be cloudy, at the current prices these stocks could prove long term winners.
Forbes10, one of CAPS top players, summed in a comment on Bear Stearns when he called the stock "toxic" but said that this "could turn out to be a bargain basement price."
Want to chime in with your own thoughts? Click over to
CAPS and let the 75,000-plus investors on CAPS know what you think.
