The financial industry: Yeah, it's that bad - Top Stocks
 
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The financial industry: Yeah, it's that bad

Posted Jan 18 2008, 07:12 PM by Matt Koppenheffer
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Earnings have been pouring out of the financial sector all week and the picture hasn't been pretty. "Write-down" has commanded a starring role in this quarter's earnings reports dashing ahead of "earnings per share" as what investors seem to care about the most.

Citigroup, whose stock just can't seem to find a bottom, seems to have been the worst of the bunch. In an interesting twist, much of the pessimism over the company's quarter came because Citigroup only wrote down some $18 billion and didn't propose as many job cuts as the market was hoping.

CAPS still rates Citigroup just two stars out of five, but there has been some bullish sentiment after the company's earnings release. Michaelkoh1 rated Citi's stock an outperformer and noted that "2007 will be tough, and there will likely be more pain for equity investors as the financials muddle through this year, but this is a strong diversified franchise and will outperform the market over the next 2 to 4 years."

Meanwhile, Merrill Lynch got beaten up when it revealed its numbers -- complete with about $15 billion in write-downs -- but in my opinion showed some glimmers of hope. CAPS has slapped an even worse one-star rating on Merrill, though, and there's a lot of negative sentiment to go along with it. Some though, including CAPS All-Star Vavoom11, think that the worst may be over. He gave Merrill the thumbs up yesterday, noting: "[Merrill's CEO John] Thain wrote off as much as he could and risk/reward ratio is in our favor."

Have your own opinions on what's going on here? CAPS is absolutely free, so head on over and let the community know what you think.


(Full disclosure: I do not have a financial position in any of the companies mentioned.)

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Comments

 

The normal economic rules might not be relevant in this case.  If Citi Group is able to derive capital from sovereign wealth funds, the bank might think that it can avert layoffs and that it can begin the process of re-growing its business.  

Tom Donohue, NewsVisual, www.newsvisual.com (Posted 01.21.08 4:53 PM)

YES things are that bad and getting worse. Market numbers don't begin to depict what's happening on Main Street USA!  Wanna cover your butt? Put your checking and savings into a real hometown bank, keep cash on hand! If you're invested in any stock get out NOW because it has just started to rain and we are headed for a flood.

Scot Hines (Posted 04.09.08 6:13 PM)

The Economy will get worse before it will get better. All those people that are putting unwavering trust in stocks and 401ks need to look at the other side of the fence. Not saying you shouldn't invest, however, investing blindly without looking at the big picture of the "WORLD" economy is a bad idea. Stock up on food ( canned food, rice, etc...) and get a safe and store some "just in case money".

History repeats itself, so remember 10.29.29

Brent P (Posted 05.01.08 11:04 AM)

SIMPLE FIX FOR FINANCIAL HOUSING - DON'T COMPLICATR THIS-GET QUALIFIED BUYERS-INDIVIDUALS CAN BUY UP TO 3 HOMES BESIDES THEIR PERSONAL RESIDENCE-THEY GET DOUBLE INTEREST WRITEOFFS FOR 3 YEARS ON INTEREST PAID= THIS WILL TIGHTEN UP HOUSING MARKET VERY QUICKLY WHICH HAS SEEMED TO HAVE TOUCHED EVERTHING. LETS TRY A SIMPLE WORKABLE PLAN LIKE HIS NOT SOME COMPLICATED MESS LIKE IN OUR RECENT PAST,

BRYAN (Posted 06.07.08 5:40 AM)

The bailout programs that are being proposed (and implemented) are actually doing more harm than good. The more the supply/demand equation is tampered with, the longer it will take to recover from the housing mess. And the homebuilders have to get a LOT smaller before they will ever be profitable again

Alan B (Posted 06.07.08 6:58 PM)

How do you explain Wachovia insiders ( seemingly alone among the majors) buying so much stock between November and March as the stock trended below a 10 year low to date

Allen D (Posted 06.09.08 6:51 AM)

THE FINANCIAL INDUSTRY JUST GOT GREEDY.   ITS LIKE CHOPPING WOOD,  ONE MUST BE AWARE WHERE THE AX STRIKES OR ONE WILL END UP LOSING A TOE.

" THIS TIME THE BALOONS COST MANY TOES"

SPEAKER-1 (Posted 06.16.08 1:05 PM)

The housing price deflation and housing mortgage crisis is becoming a world wide problem. US problems are the worse now but the same thing is happening in England, Spain, Australia/NZ, Canada and many other countries. Can the global financial industry be saved? I fear that mega millions of poor, middle class, and even formerly well off families will be living on the street or in "Hoovervills".

RAP (Posted 06.20.08 4:07 PM)

This has happened because of greed...investers kept buying these loans and the banks kept writing them. People were getting 100% financing with credit scores down to 550 and we didnt think this would be a problem??? the market was flooded with tons of money for subprime loans and the wholesale lenders were making a quarter on every dollar. Now we have another issue the housing market has taken a dive people are upside down in there homes and of course foreclosures are on the rise. We now have gas that is five dollars a gallon so what does this leave us with more foreclsure and a broken economy.

ROB (Posted 06.24.08 7:44 AM)

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