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Buy Financials! Catch a falling knife!

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  • Buy Financials! Catch a falling knife!

    Buy Financials! Catch a falling knife!

    By Ben Stooge, Corporate Press Weasel

    Years ago, I received a letter that asked a stupid question. The idiot writer asked, "I read you and you’re always telling me to buy stocks just before they go down or go down some more, and to not buy commodities before they go up some more. My portfolio is a wreck from following your advice. Why, oh why, do I listen to you?”

    I pinned the letter to the wall over my desk where it taunts me. This morning I finally tore it down. Enough of you! Listen up, dummy.

    If you read Business Week and The Wall Street Journal you’re going to get all confused. Those writers never agree with each other. It’s as if the editors give them freedom to express their own opinions. They are usually flat out wrong. Why read these writers when they are inconsistent and incorrect most of the time? Read me instead. I’m very consistent. I will always tell you to buy stocks. Buy at the top. Buy at the start of a bear market. Buy at the middle and buy at the bottom. In the long run stocks go up! So what if you may not live long enough to make up for your losses. That’s not my problem. My problem is that I’m 63 and need every dollar I can earn shilling for Wall Street today.

    Take financials, for example. Famous big name financial writers are down on financials.

    Ridiculous.

    They say the investment banks are early innings of attempts to de-leverage their portfolios of garbage mortgage securities. The collateral for the loans that those securities financed will continue to crater, they claim. For years Wall Street stocks and shares of financial companies will be a bad buy.

    Nonsense.

    That ill-educated youthful Wall Street Journal writer doesn’t know the first thing about how to evaluate a sector. Only a fool expects crashing stocks to never rise again.

    Look, home prices can’t decline forever. There is a natural limit to how many mortgages can default, somewhere between some of them and all of them. Debt can’t de-leverage forever. Sooner or later the mortgage securities owned by these banks will stop falling and so will financials. Like the proverbial falling knife, they will stop – thunk! – as they stick into the butcher block below. Should you wait for that? Not on your life. Stick your hand out now and catch a few.

    Won’t that hurt, you ask? Of course it will. Your brokerage account will bleed and bleed and bleed. But your pain will fade away after the mortgage market stops collapsing in ten or twenty years. Then your financial stocks will go through the roof, or maybe back to where they were when you bought them.

    The time to buy any stock or sector is after it’s been hammered down. The time to buy financials is when they are being slapped down by Wall Street Journal and Business Week writers and are trading at multi-year lows but before they reach the levels they hit in the 1970s.

    You can bet that will happen again. My correspondent doesn’t understand that the economic past predicts the economic future. It’s all about cycles. The happen again and again. Buy things when everyone hates them, but never sell them. Journalists lie about this. They tell you to sell stocks that are falling and have a long way to go. Patience is the key and the willingness to understand that investing is about your money in Wall Street’s pocket.

    Editor's Note: Ben Stooge parodies a corporate media business commentator. He does not own any of the stocks or other garbage he shills. He doesn't know what he's talking about but that doesn't keep him from expressing his opinions as if he did. Just like the guy he parodies, you should never take him seriously.

    Previously by Ben Stooge:
    Grease my Palm with Big Oil
    Another View of the Economy from Abroad

    iTulip Select: The Investment Thesis for the Next Cycle™
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    Last edited by FRED; 06-26-08, 01:53 PM.

  • #2
    Re: Buy Financials! Catch a falling knife!

    first!

    Simple Investing Truths
    June 20, 2008 - Ben Stein

    Years ago, I received a letter that asked a brilliant question. The writer essentially wrote, "I read many business publications including the well known ones like Business Week and The Wall Street Journal. I observe that not only are they often at odds with one another. But they often have columnists within each publication who vehemently disagree. Moreover, they often turn out to be mistaken in their observations and predictions. How then do I know who to believe and what I should read to know the truth?"

    The man's question haunts me. The older I get (I am now 63 and feel every hour of it), the more clearly I see that much of what is in the media and in the financial media about investments, in particular, is simply nonsense.

    --

    if you followed ben's advice and bought financials june 20, where'd you be now? bkx is down to 60 from 64, so you'd only have bled 6.25%...

    Comment


    • #3
      Re: Buy Financials! Catch a falling knife!

      Originally posted by metalman View Post
      first!

      Simple Investing Truths
      June 20, 2008 - Ben Stein

      Years ago, I received a letter that asked a brilliant question. The writer essentially wrote, "I read many business publications including the well known ones like Business Week and The Wall Street Journal. I observe that not only are they often at odds with one another. But they often have columnists within each publication who vehemently disagree. Moreover, they often turn out to be mistaken in their observations and predictions. How then do I know who to believe and what I should read to know the truth?"

      The man's question haunts me. The older I get (I am now 63 and feel every hour of it), the more clearly I see that much of what is in the media and in the financial media about investments, in particular, is simply nonsense.

      --

      if you followed ben's advice and bought financials june 20, where'd you be now? bkx is down to 60 from 64, so you'd only have bled 6.25%...
      Could be worse. He could be spending all his time seeking "investing truths", instead of other kinds like this...
      Video: Ben Stein Movie Supports Intelligent Design, Distorts WIRED Headline

      By Aaron Rowe February 11, 2008 | 6:27:32 AMCategories: Evolution, Gossip, Video


      Ben Stein's latest work is evidence that he slept through more science classes than Ferris Bueller.

      In the trailer for his new film, Expelled, the misguided comedian champions the cause of academics who feel ostracized due to their belief in intelligent design.

      "There are people out there that want to keep science in a little box where it can't possibly touch god," says Stein while facing what appears to be an auditorium full of students. "Scientists are not even allowed to think thoughts that involve an intelligent creator."

      Oh really? I was unaware that the cabal of atheist scientists has paid a well-equipped army of thought police to lurk in the hallways of college laboratories.

      If his entire movie is as much of a farce as the publicity material, we all will be in for a good laugh.

      While checking out the official Expelled website last night, I came across a link to a post by my fellow WIRED Science blogger Brandon Keim.

      Our headline, Denied Tenure, Astronomer Alleges Intelligent Design Witchhunt, must not have been good enough for the honest folks at Premise Media Corporation. On their site, they decided to rephrase it as WIRED Suspicion: Gonzalez is Honest & Competent. The funny thing is, in that post, Keim never called Gonzalez honest or competent. He did, however, mention that the astronomer was as more prolific than some of his colleagues, but had one tenth as much research funding. In academia, grant money is part of the trinity that wins professors tenure. If they are not brining in lots of cash, the university punts them -- no matter what they believe.

      Considering that the people behind Expelled had to distort one of our blog entries as fodder for their website, the argument in favor of intelligent design is looking as thin as ever.
      http://blog.wired.com/wiredscience/2...ben-stein.html
      For more amusement there's this website:
      http://www.expelledexposed.com/

      Welcome to Expelled Exposed, a detailed look at the Ben Stein movie Expelled: No Intelligence Allowed. We'll show you why this movie is not a documentary at all, but anti-science propaganda aimed at creating the appearance of controversy where there is none.

      Last edited by GRG55; 06-26-08, 01:35 PM.

      Comment


      • #4
        Re: Buy Financials! Catch a falling knife!

        There has been so much bottom calling and flip-flopping on financial calls just within the past month, how can anyone take these guys seriously?

        "Merrill's Guy Moszkowski, the top-ranked brokerage analyst in Institutional Investor's annual survey, on June 11 changed his rating on Lehman to ``neutral'' from ``buy'' and cut his target price to $28 from $36. It was Moszkowski's fourth call on Lehman this month. He shifted to ``underperform'' from ``neutral'' on June 2 and recommended investors buy the stock twice, on June 4 and then on June 10, the day before he moved back to ``neutral.''

        That's helpful, right up there with Dick Bove's sage advice. I think Bove is a French word meaning pimple. He recently lowered his price target on Sun Trust Bank by 33%. Thanks. On Tuesday you're worth $60, today $40. I was just kidding when I said $60, hope you didn't buy, ouch....

        http://www.bloomberg.com/apps/news?p...YOA&refer=home

        http://www.marketwatch.com/news/story/analyst-suntrust-now-worth-more/story.aspx?guid=%7B47D3E4D7%2DAD1C%2D4529%2D84B7%2 DE0979CBD443C%7D&dist=msr_6

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        • #5
          Re: Buy Financials! Catch a falling knife!

          there's one decent sell side analyst, and that's the guy from FBR. He called this shit aaagees ago.

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