Bank Discussion

In 2008, most failed to forecast the magnitude of the economic and housing downturn. I saw it by contrast. What I didn't see (in part, owing to the opaqueness of
the banking industry's disclosure) was the magnitude of the weight of the toxic assets held on their balance sheets.

Now market participants are aware of the depth of the problems, and the industry has been recapitalized. Normalized earnings will come into greater focus, and
the value of a low-cost and stable deposit base will emerge following solvency fears.

The stocks have been huge winners, and Armageddon is thankfully off the table.

I suspect that the pace of increase in share price appreciation will not moderate as the above factors come into focus. I also think that there is risk of a double-dip, but I strongly believe that before that double-dip becomes an issue, the bank stocks will continue on their ascent. (BAC at $40, anyone?)

The group is game-able, as I'm deferring legitimate cycle concerns for the time being....