Comments on: Reverse Goldilocks bank stocks: The best buys weren’t really terrible or really good but just bad enough http://jubakpicks.com/2009/12/15/reverse-goldilocks-bank-stocks-the-best-buys-werent-really-terrible-or-really-good-but-just-bad-enough/ Tue, 22 May 2012 22:19:06 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: lotteollie http://jubakpicks.com/2009/12/15/reverse-goldilocks-bank-stocks-the-best-buys-werent-really-terrible-or-really-good-but-just-bad-enough/comment-page-1/#comment-2423 lotteollie Tue, 15 Dec 2009 20:57:43 +0000 http://jubakpicks.com/?p=2487#comment-2423 Jim: Thanks for your reference on Dubai. I managed to get in before the closing bell. Everything you do is much appreciated. Jim:
Thanks for your reference on Dubai. I managed to get in before the closing bell. Everything you do is much appreciated.

]]> By: EdMcGon http://jubakpicks.com/2009/12/15/reverse-goldilocks-bank-stocks-the-best-buys-werent-really-terrible-or-really-good-but-just-bad-enough/comment-page-1/#comment-2419 EdMcGon Tue, 15 Dec 2009 19:42:51 +0000 http://jubakpicks.com/?p=2487#comment-2419 Jim, while you are correct about banks and debt/equity, in a fragile economy such as we are currently in, I think that's a reasonable concern. For example, Bank of America's debt/equity is at 3X. I guess what I am trying to say is the banking industry has not recovered from the real estate collapse, and there are still real dangers out there, which your Citigroup post brought up perfectly. IF a "too big to fail" bank like Citigroup were to go under again, as you stated there would be more losses, even for an HSBC. Jim, while you are correct about banks and debt/equity, in a fragile economy such as we are currently in, I think that’s a reasonable concern. For example, Bank of America’s debt/equity is at 3X.

I guess what I am trying to say is the banking industry has not recovered from the real estate collapse, and there are still real dangers out there, which your Citigroup post brought up perfectly. IF a “too big to fail” bank like Citigroup were to go under again, as you stated there would be more losses, even for an HSBC.

]]> By: drogala2 http://jubakpicks.com/2009/12/15/reverse-goldilocks-bank-stocks-the-best-buys-werent-really-terrible-or-really-good-but-just-bad-enough/comment-page-1/#comment-2411 drogala2 Tue, 15 Dec 2009 18:53:15 +0000 http://jubakpicks.com/?p=2487#comment-2411 Thanks for the response Jim! Keep up the great work, love reading it 5 times a day now. Thanks for the response Jim! Keep up the great work, love reading it 5 times a day now.

]]> By: Jim Jubak http://jubakpicks.com/2009/12/15/reverse-goldilocks-bank-stocks-the-best-buys-werent-really-terrible-or-really-good-but-just-bad-enough/comment-page-1/#comment-2409 Jim Jubak Tue, 15 Dec 2009 18:19:38 +0000 http://jubakpicks.com/?p=2487#comment-2409 Ed, I've never seen anyone pay much attention to debt to equity ratios for banks. Most bank borrowing is for funds to lend out so as a bank's business expands its borrowing goes up. You'll note that most of HSBC's borrowing is short-term--that's exactly how banks fund loans these days. Much more important is the capital ratio and here HSBC is in good shape after the rights offering. The bank should list in China in 2010 and that should provide another shot of capital. I thought you were going to raise the issue of the big liabilities still in the U.S. business. HSBC is trying to wind down this portfolio but if the U.S. economy and the housing sector in particular dips back into recession the losses will be greater than I now expect. (My buy is based on my belief in a modest 1.5% to 2% growth in the U.S. in 2010.) In the short-term while the business in China is promising it is still generating losses so HSBC can't expect profits there to offset unexpected losses in the U.S. I think the biggest danger is that the recovery I'm looking for won't arrive in 2010 but will be delayed until 2011. I don't think that will happen but that is the downside. Current expectations at S&P are for operating earnings of $4.05 in 2010 so the stock isn't expensive if that projection is accurate. Ed, I’ve never seen anyone pay much attention to debt to equity ratios for banks. Most bank borrowing is for funds to lend out so as a bank’s business expands its borrowing goes up. You’ll note that most of HSBC’s borrowing is short-term–that’s exactly how banks fund loans these days. Much more important is the capital ratio and here HSBC is in good shape after the rights offering. The bank should list in China in 2010 and that should provide another shot of capital. I thought you were going to raise the issue of the big liabilities still in the U.S. business. HSBC is trying to wind down this portfolio but if the U.S. economy and the housing sector in particular dips back into recession the losses will be greater than I now expect. (My buy is based on my belief in a modest 1.5% to 2% growth in the U.S. in 2010.) In the short-term while the business in China is promising it is still generating losses so HSBC can’t expect profits there to offset unexpected losses in the U.S. I think the biggest danger is that the recovery I’m looking for won’t arrive in 2010 but will be delayed until 2011. I don’t think that will happen but that is the downside. Current expectations at S&P are for operating earnings of $4.05 in 2010 so the stock isn’t expensive if that projection is accurate.

]]> By: Jim Jubak http://jubakpicks.com/2009/12/15/reverse-goldilocks-bank-stocks-the-best-buys-werent-really-terrible-or-really-good-but-just-bad-enough/comment-page-1/#comment-2408 Jim Jubak Tue, 15 Dec 2009 18:12:11 +0000 http://jubakpicks.com/?p=2487#comment-2408 drogala, an off the topic question deserves an off the topic answer. The best I can figure is that the drop in Ormat is related to negative news on a DOE-funded geothermal project that recently pulled the plug. This was one of the pilot projects that got government funding in an effort to jump start the sector. I think Ormat is reacting to the disappointment but it doesn't have much to do that I can find with Ormat drogala, an off the topic question deserves an off the topic answer. The best I can figure is that the drop in Ormat is related to negative news on a DOE-funded geothermal project that recently pulled the plug. This was one of the pilot projects that got government funding in an effort to jump start the sector. I think Ormat is reacting to the disappointment but it doesn’t have much to do that I can find with Ormat

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