# Banks stocks in 2012



## madeincanada (Dec 2, 2011)

*Bank stocks in 2012*

Hi everyone, new here. I've been investing since the beginning of 2009 and what a roller coaster ride it has been. 

What do you think about banks stocks for 2012. Mainly US banks like BAC and C. Would you invest money in them and if so how much of your portfolio. I have ALOT in cash and planning to go big on all US banks. C will probably get most of the funds.


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## Square Root (Jan 30, 2010)

Sounds like a very risky deal. Much better to look at the Cdn banks if it's banks you like. Without a better understanding of your goals and net worth hard to give much advice.


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## Oldroe (Sep 18, 2009)

I don't even think US banks are risky. They are for fools. 

1 The euro crisis will and is affecting US dollars.

2 there is a serious backlash for the 2008 crash still brewing 

3 US bank go bankrupt often.

I've owned Citi since 2007,avg. down to $9.50 and expect to hold for 10-20 years.

Sure hope you are right.


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## Belguy (May 24, 2010)

Cramer says to avoid financials like the plague and, if you have any, sell them. I don't know if this goes for Canadian financials though???


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## mind_business (Sep 24, 2011)

After watching Cramer take a beating for his bad advice on Jon Stewart, I can't take him seriously anymore ... not that I ever did


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## madeincanada (Dec 2, 2011)

I'm going to take some big risk here. But I analyzed my situation and I think it will be worth it. My prediction is based on the fact that we are headed for another big bailout of Euro nations.


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## Belguy (May 24, 2010)

Well, he knows more than a lot of them!! He's got himself a good job at CNBC and that's more than I have!!! Like everyone else, he can make bad decisions and I have seen him own up to them on more than one occasion. You have to do your own research no matter what any of the pundits happen to recommend. After all, it's your money--not theirs!!


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## gibor365 (Apr 1, 2011)

I hold just JPM from US banks...got hit hard this year, but believe that this one is one of the best banks in US


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## Assetologist (Apr 19, 2009)

I have rolled the dice on BAC


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## KaeJS (Sep 28, 2010)

Belguy said:


> You have to do your own research no matter what any of the pundits happen to recommend. After all, it's your money--not theirs!!


You should always do this.

I listen to nobody and hardly ever watch talking heads.

I barely read articles...

However, I think madeincanada's idea is a bad one.

You are maximizing risk and minimizing profit by buying american banks right now. Bad idea.

Where is the upside? I don't see it...

Where is the downside? Oh, look, it's _right there._


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## Assetologist (Apr 19, 2009)

KaeJS said:


> You should always do this.
> 
> I listen to nobody and hardly ever watch talking heads.
> 
> ...


What are you trying to say? 

I would appreciate your rationale?

Thanks.


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## madeincanada (Dec 2, 2011)

KaeJS said:


> You should always do this.
> 
> I listen to nobody and hardly ever watch talking heads.
> 
> ...


How do you invest if you don't listen or read anything? I am quite the opposite because I like to listen and read what everyone has to say. I may or may not invest based on it. We are at an inflection point in the coming months. If nothing big comes out of Europe we can continue to tread downwards.


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## KaeJS (Sep 28, 2010)

I try to only read articles that are based on facts and show the ups and downs of a situation or company.

I try not to read those articles that say things like:

"The best stock this year..."

or

"Could ABC be headed lower?"

I remember almost a year ago now, every talking head on BNN was saying how they are long on Suncor and thought it was a great buy even in the 40's. Some of them even had Suncor as their top pick.

Now look!!

All I am saying is that a person's opinion can influence your decisions.

For example: I don't read many of the Keystone XL pipeline articles, because I know it will be approved eventually. So, I just continue to hold my TRP and forget what other people are saying. Are there roadblocks with TRP? Yes.

But they will sort it out (or so I believe).


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## v_tofu (Apr 16, 2009)

gibor said:


> I hold just JPM from US banks...got hit hard this year, but believe that this one is one of the best banks in US due to *insider trading and other illegal activities that will destroy the middle class but not get prosecuted since they are contributors to the Obama Rama Drama Campaign*




There I fixed it for you


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## scomac (Aug 22, 2009)

madeincanada said:


> I have ALOT in cash and planning to go big on all US banks. C will probably get most of the funds.


Why?



madeincanada said:


> I'm going to take some big risk here. But I analyzed my situation and I think it will be worth it. My prediction is based on the fact that we are headed for another big bailout of Euro nations.


Again why? What does your situation have to do with the merits of a US bank as an investment?



madeincanada said:


> We are at an inflection point in the coming months. If nothing big comes out of Europe we can continue to tread downwards.


Once again, why and what does this have to do with the investment you are proposing?

You talking about investing in a bank and I have yet to read one word of why that bank in particular is a good investment at this time. All I'm reading is a lot of speculation about what might happen in the future with no reference as to how that affects the company(s) you are proposing on buying. To my way of thinking, you shouldn't be making an investment on what might happen, but rather inspite of what might happen because the reasons to own something won't have changed.


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## Sampson (Apr 3, 2009)

KaeJS said:


> For example: I don't read many of the Keystone XL pipeline articles, because I know it will be approved eventually. So, I just continue to hold my TRP and forget what other people are saying. Are there roadblocks with TRP? Yes.


According to this logic, and your willingness to 'wait it out' the American banks would make equal if not better investments than TRP.

Why? Valuations. These banks will eventually make money again, and if they are trading at 0.26, 0.48, 0.71, 1.15 P-B (for BAC, C, JPM, WFC respectively), then they have huge upside potential. Most of these banks have made acquisitions over the past few years using TARP $ that have yet to pay out, but they will once the toxic assets are off the books.

You ask for evidence, but even your TRP, you provide none. I don't disagree that Keystone XL will get approved, but certainly the downside risk of that project failing similar in magnitude to the continued Worldwide recession and deleveraging.


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## KaeJS (Sep 28, 2010)

Sampson said:


> I don't disagree that Keystone XL will get approved, but certainly *the downside risk of that project failing similar in magnitude to the continued Worldwide recession and deleveraging*.


I'm not sure if I believe that is a fair comparison.

TRP is not the same as BAC and I don't think the risks are the same, either.

Either way, people can invest in whichever way they choose. There are some stocks that I read about, others I do not.

I have not read a single article on BCE since I bought it. Nor do I care to.

I've probably read 20 articles on AAPL, though, as I am not sure if I still have the same level of confidence. The chart and stock price are kind of waivering and loafting.

You need to look at the bigger picture. Articles will only sway your opinions. They are a good read if you take them for what they are and don't let your mind wander too much. If you can't think for yourself, you're probably going to have issues making money in the market.

For every article saying "yes", there is an article saying "no".

And as human nature takes its toll, you also have to make sure you are reading both types of articles, not just the ones you _want_ to read.

Some people say invest in BAC, others wouldn't touch it with a 10 foot pole.

I am neutral right now on American Banks, but I still think madeincanada's idea is a lot riskier than it needs to be. Why, with all the opportunity that was/is recently out there, and with all the opportunity there is going to be, would you take a risk like the American Banks at this point in time?


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## gibor365 (Apr 1, 2011)

v_tofu said:


> There I fixed it for you


You know....I don't give a [email protected]# about it. All banks and other financial institutions in the world are parasites of the society.... They produce nothing and earn money on playing with investors money....
I work in financial institutions for long time and see very good how this system works...


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## PMREdmonton (Apr 6, 2009)

KaeJS said:


> You should always do this.
> 
> I listen to nobody and hardly ever watch talking heads.
> 
> ...


The upside is BAC's normalized earnings are probably somewhere around $2 per share. When they are around $5 that means you are getting them at a PE of 2.5 under normal conditions. 

If you put a normal PE of 10 on the stock it gives you a future stock price of $20 or a 4-bagger from $5. This on a stock which will not bankrupt. If the US wanted them nationalized and bankrupt they would have done it by now. They have weathered the worst of this storm already.


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## Sampson (Apr 3, 2009)

KaeJS said:


> Why, with all the opportunity that was/is recently out there, and with all the opportunity there is going to be, would you take a risk like the American Banks at this point in time?


Not at this point, but I'm staying tuned. The short term downside risk IS too high for my liking. The exposure of US banks to the Eurozone is variable, and in some cases, not very deep, however, they will be slammed if/once the Eurozone mess gets dirty.

I'll wait for now.


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## KaeJS (Sep 28, 2010)

Sampson said:


> Not at this point, but I'm staying tuned. The short term downside risk IS too high for my liking. The exposure of US banks to the Eurozone is variable, and in some cases, not very deep, however, they will be slammed if/once the Eurozone mess gets dirty.
> 
> *I'll wait for now.*


Agreed


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## underemployedactor (Oct 22, 2011)

according to what I've dug up doing my DD, BAC is probably undervalued at current SP, so I took a smallish position in the high risk/high reward part of my porfolio. Agree that, all going as planned could easily be a 4 bagger. As far as US versus Canadian banks - they are apples and oranges, and both capable of bearing bitter fruit.


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## Causalien (Apr 4, 2009)

Debate about BAC is irrelevant at this point. All the data are out there, nobody can see what the true extend of the liabilities are (not even internal people) because the amount is humongous. It'll probably take a human their life time to verify every single deal. Their books are open for all to see. CDS, ABS, CDO, CMBS, you name it. 

Buy if you believe the books are real, sell if you do not. It's simple. Stay out if you are just watching with pop corns in hand


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## madeincanada (Dec 2, 2011)

I interested in what you people think about US banks after this run up. Are any of you guys buying if it pulls back 5%, 10% or 20%?


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## Sampson (Apr 3, 2009)

I bought some a while back, say 25% ago. I won't be adding any time soon, unless some sort of crisis hits.


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## jcgd (Oct 30, 2011)

I like to get some more WFC. If it pulls back I'll up my position. If it drops back to the low 20s I'll back up the truck.


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## madeincanada (Dec 2, 2011)

Sampson said:


> I bought some a while back, say 25% ago. I won't be adding any time soon, unless some sort of crisis hits.


Why not add shares on a pull back or do you believe there is more downside.


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## Sampson (Apr 3, 2009)

I added some *cough* american banks *cough* during the last pull back but now my allocations to financials are met. Unlikely to add more in anytime soon - unless valuations for european banks turn ridiculous. I have my eyes on UBS, but it will have to get hit really hard for it to become attractive.


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## fatcat (Nov 11, 2009)

i listen to people go back and forth on the banks
and the naysayers are always saying something like this: 
"they are a black hole, there is no way you can really evaluate what's on their books"
i have jp morgan and bac in DIA which is doing fine for me so i have stayed away though i have looked at XLF from time to time


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## madeincanada (Dec 2, 2011)

Watching BAC and C today is driving me nuts. Long BAC and short C.


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## KaeJS (Sep 28, 2010)

How can you be LONG BAC and SHORT C?

They are going to cancel each other out, just like right now. I bet you are gaining on BAC and you are losing on C.

These stocks have had a positive correlation for the past year.

The only way to benefit right now would be if you had more long shares of BAC than short shares of C.


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## madeincanada (Dec 2, 2011)

Its called hedging and its very simple to understand. Just pull up a YTD chart of BAC and C. BAC up 46% and C up 30%. That's a profit of 8% on your investment if you shorted C and went long BAC.


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## jcgd (Oct 30, 2011)

Can I ask you to explain in more detail how that works to protect you? I'm trying to see some real life hedges people use.

Long BAC while short seems contradictory to me. If I were to buy BAC someone could hypothetically twist my arm into me buying C as well. Normally I'd pick BAC because I think it looks better, IMO. 

To me, long BAC while short C would be me mentally saying I think I should be long BAC... I think I should be short BAC. So why/ how are you using this position? Not an attack here, I'm just looking for knowledge.


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## Causalien (Apr 4, 2009)

Because BAC is a focused US play while C has exposure to international conditions. That is the simple gist. The more complex issue at hand is the composition of their assets and the market value to TCE ratio. At least that's why I decided to long bac and Short C out of my financial sector buy..

C is crap, in my opinion and will remain crap.


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## KaeJS (Sep 28, 2010)

*madeincanada*

I understand how the hedging works, but I guess I just didn't really understand why you would short C.

BAC and C were already extremely low. Usually someone would hedge when they are unsure about their long position, or fear that there is a lot of downside potential.

I just didn't think there was that much more to be worried about in terms of downside risk when BAC was trading around $5-6.

Either way, it has worked out in your favour. And for that, I will have to congratulate you.

Did you purchase an equal weighting in both companies? Equal long BAC position and equal C positions in terms of % or Dollar Value $?


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## Argonaut (Dec 7, 2010)

Citi analysts forecast a good quarter for Groupon. Who are these analysts and why are they always wrong? Common sense analysis from CMF has shown to be much better.


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## madeincanada (Dec 2, 2011)

I just think BAC has more upside than C in this type of market. I want to limit my risk so I use C as a hedge which basically trades alongside BAC.


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## marina628 (Dec 14, 2010)

I sold GRPN before the earnings and I will buy again when it gets to $20.29 just placed my order.


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## madeincanada (Dec 2, 2011)

Not sure what GRPN has to do with bank stocks. Today is a good example of how long BAC and short C works.


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