I have no short positions on nor do I have any plans to buy any of the major banks. The market is saying they’re blown up, Jim Cramer is saying that if there were no Euro pressure they would be screaming buys.
I very much disagree with him, I think the old Wall Street bulge bracket business model is cooked forever and is now in secular decline – there is simply no way to estimate what their true earnings power is or will be next year combined with the opacity of their balance sheets. In addition, the odds of recession grow each day along with the chance for further home price erosion and an even higher unemployment total. These headwinds may not be lethal for the banks but they certainly won’t encourage higher earnings or share prices.
If I’m right, these stocks recover eventually but make for poor investments – some of them eventually disappear. If Cramer’s right, we should be loading up on them with three hands.
I guess we’ll see.
Tags: $MS $XLF $C $BAC $GS