More Bearish Insights
Posted on | August 24, 2009 | No Comments
I am going to harp on the theme that all is not great in the stock market. I saw this piece in the Inoculated Investor that warns about what I have been hinting at that the current stock market as a whole is overbought. That is too many people bidding up stocks.
I particularly agree with him on how overpriced the bank stocks are. I am actively looking at smart ways to participate in the bank stock decline in the next quarter or so. Has everyone forgotten that many of these banks are either insolvent or would be insolvent without the governments help. It won’t take much for there to be a panic in bank stocks. The likely upcoming bad news in real estate that should emerge as a likely candidate. We have government support of real estate prices right now, because of the moratorium on foreclosures, and the tax rebate for first time home buyers. If not that it will perhaps occur when the Option ARMs that are resetting over the next year or so increase delinquencies. At some point rationality will return to owner’s of bank stocks and they will realize there are not a whole lot of new write downs or provisioning going on in the bank 10Q’s. A danger sign if there ever was one.
I don’t own any banks stocks. They have seemed too risky and too hard to value in this uncertain climate. But now is a time to ball park value for the more feeble bank stocks and figure out a bearish investment in those companies. Bet they are going to go down in the next year, the when is the big question.
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