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Gilead Sciences: Smart Company, Great Track Record
Why We're Ignoring Big Stock Market Moves
An Optimist Looks at the Market
1. Gas and oil prices are lower BECAUSE economies across the globe are slowing.
2. The GDP growth number is entirely fictitious. If one applies a realistic deflator (5%? 12%) instead of a ridiculous 1.3% inflation rate, then economic growth is negative--and has been for over a year.
3. The dollar is strengthening against the currencies of nations that are following us into recession.
4. The once in a lifetime opportunities are probably on the short side. Citibank and GE will survive in at best a diminished form. Microsoft is a plausible investment, but it faces many real risks.
5. Housing needs to drop another 15% before it reaches the historical average level of affordability. And it will probably overshoot on the downside. An average is not a floor.
5.
A Continued Short Case for Automobile Finance Companies
A Short Update on My Four Short Ideas
US Banks: The Good, the Bad, and the Ugly
News Flash: Major Market Turns Aren't Announced In Advance
Tom knows an enormous amount about banks, and he was the top banking analyst on the street for seven years, if I am not mistaken. But he is clearly not objective in his assessment of this particular industry and the substantial risks it still faces.
There is also something deeply wrong with the culture of American banking. The incentive systems all revolve around volume rather than credit quality. At Anglo Irish Bank, one of the best-run banks in the world, you could get fired for bringing the central credit committee several risky loan proposals. At the typical large American bank, you might well get fired for trying to derail an unsound but temporarily lucrative corporate loan. A friend of mine had this experience at Citibank. He was saved only by a last-minute downgrade of the credit rating of the potential borrower. But the bankers he was supporting never forgave him. They didn't give a hoot whether the loan defaulted somewhere down the road. All they cared about was meeting their quotas.
It is possible that an investor might make money on some banks in the next three years. But why try to catch the falling knives and tomahawks when there are so many great companies, financial and otherwise, that don't have trillions of dollars of Level III capital and off-balance-sheet hanky panky? In the financial sector, I would point to Markel, Interactive Brokers, and CME, to name just a few. All three of those companies have managements that are not just prudent and ethical but visionary.
There's Been Major Deflation for Some Products
Consensus Subprime Mortgage Loss Estimates: Mathematically Impossible?
Brown knows an enormous amount about banking, but his relentless cheerleading for the industry has cost him and his investors a great deal of money. And I suspect his rigid optimism will CONTINUE to cost him money.
Dendreon: The FDA's Commissioner Doth Protest Too Much!
Biotech Stocks: Sector Outlook and Top Picks
BioMarin is also an excellent company, but as far as I can tell it is not quite as grossly undervalued as ZymoGenetics.
Countrywide Surges on Expected Return to Profitability in Q4