The market is overvalued, no question.
However, the more time that passes without major dislocations in the commercial property sector and credit card sectors, the less the odds are that there will be a Regional bank crisis.
A sudden collapse in either might precipitate a *crash*.
Otherwise, it will be a slow grinding sort of bear market, with rallies and declines, until *value* appears, at which time we will get a new bull market.
FED has worked out well for you, and had we had a wager, you would now be in possession of Duc’s ducat.
The interesting observation currently in regard to many Regional Bank valuations, and FED being an example, is that the valuations are far below liquidating values, while the actual number of bankruptcies in the sector are very low.
This could also illustrate a divergence twixt the fear of bankruptcies, and the reality of bankruptcies.
I haven’t looked, but, the Regionals would need a pretty substantial exposure to Commercial lending, that has not yet been written down, combined with an actual turndown in Commercial property.
Smaller Regionals will not have much exposure to credit card debt, so a bit of a non-issue.
Consumer Personal loans…?
So while they are in point of fact selling down, are they selling down due to actual deterioration commensurate with financial damage, or, on the basis of herdlike behaviour in the Financial markets?
As to energy & ags reaching their tops, maybe yes, maybe no.
Calling tops I think is far more difficult than calling a bottom, though even that is fraught with problems.
July 2, 2008 at 8:22 am
Duc,
are you waiting for a crash?
July 2, 2008 at 8:36 am
Kat,
No, not really.
The market is overvalued, no question.
However, the more time that passes without major dislocations in the commercial property sector and credit card sectors, the less the odds are that there will be a Regional bank crisis.
A sudden collapse in either might precipitate a *crash*.
Otherwise, it will be a slow grinding sort of bear market, with rallies and declines, until *value* appears, at which time we will get a new bull market.
jog on
duc
July 2, 2008 at 8:40 am
Kat,
The market as a whole currently has very strong sectors, energy, resources, agriculture, and very weak, financials etc.
This gives us the bi-polar nature currently.
If for some reason, energy etc, also failed or entered a bear market, then we would see precipitous declines.
jog on
duc
July 3, 2008 at 11:34 am
Energy starting its’ blowoff. Ags as well.
FED @ $7.20. Next stop, $5.40.
July 4, 2008 at 7:38 am
Jake,
FED has worked out well for you, and had we had a wager, you would now be in possession of Duc’s ducat.
The interesting observation currently in regard to many Regional Bank valuations, and FED being an example, is that the valuations are far below liquidating values, while the actual number of bankruptcies in the sector are very low.
This could also illustrate a divergence twixt the fear of bankruptcies, and the reality of bankruptcies.
I haven’t looked, but, the Regionals would need a pretty substantial exposure to Commercial lending, that has not yet been written down, combined with an actual turndown in Commercial property.
Smaller Regionals will not have much exposure to credit card debt, so a bit of a non-issue.
Consumer Personal loans…?
So while they are in point of fact selling down, are they selling down due to actual deterioration commensurate with financial damage, or, on the basis of herdlike behaviour in the Financial markets?
As to energy & ags reaching their tops, maybe yes, maybe no.
Calling tops I think is far more difficult than calling a bottom, though even that is fraught with problems.
jog on
duc