now is the time to buy banks; buy 'em when nobody wants 'em. wfc, which i do not yet own, looks especially good right here - no subprime, very good balance sheet. it is the u.s.' only AAA bank in the eyes of both major credit rating agencies; has not had to seek outside capital. did make some bad home-equity loans, but that's it.
bac, which i do own, is also a buy right here. look for the cfc purchase to close in 3q08....and be a steal over the next several years' time. just counting current business, cfc services over a trillion dollars in mortgages and bac becomes the largest servicer overnight. should be almost immediately accretive to earnings; look for estimate bump-ups later in 2008 and in 2009.
yes, even c is a buy here. c, which i also own, seems to be determined to clean up its major messes of the past few years. pandit, in my opinion, will be hailed as a great manager over the next several quarters - the saudi prince ain't stupid - and he's buying right here. c will refocus; some of these non-cash, accounting charges will be reversed; and c's world-wide focus will become an asset again, not a millstone as it is now.
P/Es are reasonable again in bank-land; estimated p/e for '08 for wfc = 11; bac = 10; c = 8; jpm = 10 and wb = 9.
yes, we may be in a recession. but the relentless selling in bank names since last summer almost assuredly discounts all but the absolute worst-case scenario - buy the banks - wfc, bac, c, jpm and wb (but be sure to do your own DD - these are just MY opinions).