http://money.cnn.com/2007/11/30/news/companies/financials_stocks/index.htm?section=money_mostpopularYouve likely noticed that many bank stocks are paying near a 5% div. Some are good and some are bad. The article lends favortism to regional banks.
Hello:Good read. Noting wrong with a good dividend.My only concern is how do with know the author is right about their mortgage exposure. It's not always easy to find out what the bank has.Splotto
My only concern is how do with know the author is right about their mortgage exposure. It's not always easy to find out what the bank has.The banks might mention this in their SEC filings which are assumed truthful lest they risk charges of fraud. One stock I own and has taken a beating is Umpqua. They state they have no subprime exposure but they have invested in housing development (subdivisions) which are ,as a result of the current mortgage "crisis", having problems.So they dont specifically need to have subprime loans to be having a profit crunch. My guess is that most regional banks have conservative lending practices and dont mess with low quality borrowers. But they can still be affected by the current crisis. The big difference is that the subprime borrower puts up 0% of his own money and the responsible or credit worthy borrower puts up 10 - 50% of his own money.
My only concern is how do with know the author is right about their mortgage exposure. It's not always easy to find out what the bank has.And the article doesn't help much, even lending credence to some well known disinformation. Two banks it mentions, Washington Mutual and Wells Fargo are the least likely to be bad investments. Washington Mutual is one of the best managed banks around and at the current price possibly represents a 100% stock gain over the next 3 years. Warren Buffett is loading up on Wells Fargo as present. Last I heard, he was no dummy and knew a thing or two about calculating risk. Proceed with caution, but the current hysteria is overdone. Wise buying will be repaid many-fold. glh
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