wamu / bank failures?

[queenlives]

my wife and i closed our biz accounts at wamu yesterday (because they now limit daily cash withdrawals to $5k) and this morning i read this:

http://www.thestreet.com/story/10406790/1/cramer-banks-could-go-the-way-of-the-home-lenders.html

werd.

 

[Dtrigg]

Thanks Hal. I don't feel like having breakfast now.:frown:

 

[NsXMas]

The media does what it does best - doom and gloom when the times are bad.

And then endless publishings about how real estate is a gold rush when times are good.

They feast on bad news when times are bad.

Good time to buy and invest right now.

Don't do what the herd of sheep do.

 

[queenlives]

The media does what it does best - doom and gloom when the times are bad.

And then endless publishings about how real estate is a gold rush when times are good.

They feast on bad news when times are bad.

Good time to buy and invest right now.

Don't do what the herd of sheep do.

there is truth in all you say, though (sadly) i think there will be even better buying / future profit opportunities ahead in most areas.

that said, your reply doesn't negate wamu's shift in cash-withdrawal policy and their significant stock price drop over:

9 months ago = $45 a share

1 month ago = $19 a share

10 days ago = $17.5 a share

yesterday = $10.7

my own casual observation has been that wamu was very big in the mortgage business.

according to this report: http://www.fool.com/investing/dividends-income/2007/01/18/washington-mutual-regroups-for-2007.aspx they were feeling the effects of their sub-prime strategy as reported last january.

then: http://findarticles.com/p/articles/mi_qn4176/is_20071211/ai_n21155204

so when i factor in my personal cash withdrawal limit, then combine that with having made it through the dotcom boom / bust cycle, i think i'd rather be aware / cautious rather than a toad as the water reaches a boil around him.

my bet is wm hits 8 before it hits 22 again (as it was just 5 weeks ago) and when it hits 8, it may be a buy.

 

[Mirroredshades]

I read some where that BOA stopped all withdraws on about 10% of their equity lines.

 

[DrVolkl]

We have our mortgage with WAMU...when we signed just over a year ago we got a $250k line of credit with the house....to use whenever, for whatever...came with checks and everything. I thought it was pretty silly, but whatever, it was cool knowing I could go write a check for a Ferrari, no questions asked.

2 weeks ago I get a letter in the mail : "We've recently recalculated the value of your house and due to the drastic loss in value, your line of credit has been substantially reduced. It is now capped at $60k"

Pretty funny stuff...living in Seattle, one of (from what I've read) 3 markets that homes haven't lost value.

Just tell the truth WAMU...you're in trouble and don't want to lend any extra $$ out!

So much for my Ferrari...I guess I'll just wait another 29 years and pay my loan off instead.

 

[heySkippy]

We got a letter from Indymac a couple weeks ago that they were freezing our HELOC. Pretty funny since we never took another dollar out of it after the initial disbursement 3 years ago.

 

[steveny]

We have our mortgage with WAMU...when we signed just over a year ago we got a $250k line of credit with the house....to use whenever, for whatever...came with checks and everything. I thought it was pretty silly, but whatever, it was cool knowing I could go write a check for a Ferrari, no questions asked.

2 weeks ago I get a letter in the mail : "We've recently recalculated the value of your house and due to the drastic loss in value, your line of credit has been substantially reduced. It is now capped at $60k"

Pretty funny stuff...living in Seattle, one of (from what I've read) 3 markets that homes haven't lost value.

Just tell the truth WAMU...you're in trouble and don't want to lend any extra $$ out!

So much for my Ferrari...I guess I'll just wait another 29 years and pay my loan off instead.

I am keeping my HELOC near the max because of this very reason. I am keeping all the cash on hand instead of paying the HELOC off.
On the other hand...I will be buying 2010 leaps on every single bank that are near 1/2 the price the banks were a year ago, probably for a nickle.:biggrin: And when those little bitches pop, I will be getting an ENZO and a CGT.:biggrin:

 

[Sig]

On the other hand...I will be buying 2010 leaps on every single bank that are near 1/2 the price the banks were a year ago, probably for a nickle.:biggrin: And when those little bitches pop, I will be getting an ENZO and a CGT.:biggrin:

While not exactly pure banks, I like JPM and GS for the long run. I am planning to build positions in each one over time. The next couple weeks will be very interesting times for Goldman due to their recent slaughter that came without any news and their impending earnings release.

Relative to financial institutions going under... the Thornburg news is very troubling and is a huge tell of the severity of the credit crunch. Thornburg was not some sheisty sub-prime house and to see them get hit like this is worrisome.

 

[steveny]

While not exactly pure banks, I like JPM and GS for the long run. I am planning to build positions in each one over time. The next couple weeks will be very interesting times for Goldman due to their recent slaughter that came without any news and their impending earnings release.

Relative to financial institutions going under... the Thornburg news is very troubling and is a huge tell of the severity of the credit crunch. Thornburg was not some sheisty sub-prime house and to see them get hit like this is worrisome.

Are you going long the stock or going with options/LEAPS? There is some real big money to be made on this play once these things bottom. Spread out properly it is pretty close to a sure thing. I think a few banks are going to fail for sure but the rest of them should be able to purge the bad debt and be up and running in the next 2 years.

 

[Sig]

Are you going long the stock or going with options/LEAPS? There is some real big money to be made on this play once these things bottom. Spread out properly it is pretty close to a sure thing. I think a few banks are going to fail for sure but the rest of them should be able to purge the bad debt and be up and running in the next 2 years.

I will probably do both on JPM. However, I leaning toward only going long shares on the Goldman side with premiums being so high there. The 2010 Jan-200's are still trading in the low-$20's! I hate the idea of needing a 40% move just to break even. Then again, if they suprise the street next week... the pps will probably exceed 200 the next day.

With all the blood in the steet these days, I think we may just get a spring rally. Although, I think the late-summer timeframe is going to be very dangerous. That will be the time when the true character of the downturn will(should) be evident. In theory, we should either be in a death spiral or looking at some light at the end of the tunnel by that point.

 

[steveny]

These don't look too bad. about 1/2 the share price and almost zero premium (1.50) No real lotto ticket type plays yet. I want to see the options that where stock was 6 months ago selling for a nickle. It will probably never happen but if it did I would load up across the board 1k each.

http://finance.yahoo.com/q?s=WJPAD.X

 

[Dtrigg]

My money managers have been accumulating financial institutions/banks for the past few weeks.

 

[Da Hapa]

I have been in banking now for more than 12-years. I started my career and spent 5 years at Citi before leaving for a smaller, boutique finance company. I have now been with a large, regional bank as a commercial lender for what will be 4 years in May. Thankfully, my current employer is one of the few that was prudent/smart enough to not get involved with the sub-prime bullshit.

Anyone who could tell his ass from a whole in the ground knew that this was coming. Contrary to what all the "smart" folks on Wall Street and at the head of such prestigious institutions as B of A, WAMU, Citigroup and others were saying... real estate will not go up into perpetuitiy. Everything comes in cycles.

As an investor, what really burns my ass is that many of the same banks/lenders we've discussed continue to pay huge salaries to the very same executives who steered these companies down this path.

In the last two weeks, in fact, WAMU announced that they are re-structuring their compensation packages for high level executives to help "shield" them from the fallout. What bullshit! I don't own any WAMU stock but if I did, I'd be clamoring to throw those bastards out on their ass, not guarantee their pay.

Contrary to what Gordon Gecko said in the movie Wall Street, greed is not good. Some very well compensated people made a lot of money off some very bad business decisions and they are continuing to profit today.

It's a shame.

 

[Ski_Banker]

Apologies if this msg reads poorly, I'm typing via blackberry on a train.


So...you guys are going to lose your shirts buying financials. Yes, I said so two months ago. If you don't believe me, or the "great depression" poll-thread I started...fine. But this is probably a good data point: despite all the negative sentiment, and very attractive dividend yields, and seemingly attractive long term valuations, Warren Buffet isn't buying. He rescued Salomon Bros. in the early 90s and made a lot of money doing so. What's different now? All the big banks are insolvent and overlevered. He isn't stupid. You shouldn't be either. These commercial banking stocks are going to zero.

 

[steveny]

Apologies if this msg reads poorly, I'm typing via blackberry on a train.


So...you guys are going to lose your shirts buying financials. Yes, I said so two months ago. If you don't believe me, or the "great depression" poll-thread I started...fine. But this is probably a good data point: despite all the negative sentiment, and very attractive dividend yields, and seemingly attractive long term valuations, Warren Buffet isn't buying. He rescued Salomon Bros. in the early 90s and made a lot of money doing so. What's different now? All the big banks are insolvent and overlevered. He isn't stupid. You shouldn't be either. These commercial banking stocks are going to zero.

So puts are the play? The puts are EXPENSIVE!!!!

I was thinkng 2 years out, LEAPs.

 

[Sig]

All the big banks are insolvent and overlevered. He isn't stupid. You shouldn't be either. These commercial banking stocks are going to zero.

Many will go to zero, but not all of them. Patient buyers will be rewarded if they wait to start their purchases until after the survivors are easily identifiable. The same situation occured for the tech/internet stocks between 2001 and 2003. On the whole, the winners clearly seperated themselves from the pack and the pretenders died. I had my biggest stock wins ever as a result of patient buying during that time period.

I am not buying tomorrow, but the time will come when financials will provide amazing returns to those who did their due diligence. I am not talking about picking bottoms here, rather buying once it becomes evident who will survive and who will die. The strongest franchises amongst the survivors will do wonderfully. Banking/financing is like water, it is a necessity and the need for it will always be there and grow along with the world population. Speaking of water, let me tell you how I feel about water stocks!!!!

 

[steveny]

Many will go to zero, but not all of them. Patient buyers will be rewarded if they wait to start their purchases until after the survivors are easily identifiable. The same situation occured for the tech/internet stocks between 2001 and 2003. On the whole, the winners clearly seperated themselves from the pack and the pretenders died. I had my biggest stock wins ever as a result of patient buying during that time period.

I am not buying tomorrow, but the time will come when financials will provide amazing returns to those who did their due diligence. I am not talking about picking bottoms here, rather buying once it becomes evident who will survive and who will die. The strongest franchises amongst the survivors will do wonderfully. Banking/financing is like water, it is a necessity and the need for it will always be there and grow along with the world population. Speaking of water, let me tell you how I feel about water stocks!!!!

A few options on all the decent companies on up will pay off over all. Some will be worthless but others will return amazing profits.

 

[Ski_Banker]

Be short. Really really short. That's the strategy.


Now, the funny thing is, that strategy isn't even remotely revolutionary. Even in Q4 07, it was common. So...how could LOTS of people have the same view without it being wrong?

My best guess is that the market has gone completely binary. You are either in the:

1) "This is short term and I'm contrarian and buying on a massive dip and the fed will save the day in short order. Don't fight the fed. Buy on the dips. Yada yada

and

2) holy shit. what we've all known was going to happen, at some point (between now and 2050), is upon us. This is it. It's the big one. Massive corrections happen every few generations, because it takes generations of people to learn finance/risk, and well our is learning...now.

There's really no middle ground here. You either think this is a massive, soon to be corrected buying opportunity, or the end of an era in the Western world.

 

[steveny]

Be short. Really really short. That's the strategy.


Now, the funny thing is, that strategy isn't even remotely revolutionary. Even in Q4 07, it was common. So...how could LOTS of people have the same view without it being wrong?

My best guess is that the market has gone completely binary. You are either in the:

1) "This is short term and I'm contrarian and buying on a massive dip and the fed will save the day in short order. Don't fight the fed. Buy on the dips. Yada yada

and

2) holy shit. what we've all known was going to happen, at some point (between now and 2050), is upon us. This is it. It's the big one. Massive corrections happen every few generations, because it takes generations of people to learn finance/risk, and well our is learning...now.

There's really no middle ground here. You either think this is a massive, soon to be corrected buying opportunity, or the end of an era in the Western world.

I am in the first camp. Cautiously.

 

[Ski_Banker]

And not to forget structural problems the market is facing.

>Certain hedge funds are facing liquidation
>Few hedge funds want to be long anything (so they aren't buying firesale assets)
>Traditional banks are conserving capital as they lose $$ every day on bad loans
>The Fed only has 200 bps or so to move. That's almost no dry powder. That's like going to battle with only 14 bullets -- it might work, but you're screwed if it doesn't.

Here's a specific example: Sankaty Advisors (the mezzanine/sub debt/PE lending arm of Bain Capital Partners) is, as of last week, no longer originating new loans.

Next post... what this nonsense all means...

 

[Dtrigg]

Apologies if this msg reads poorly, I'm typing via blackberry on a train.


So...you guys are going to lose your shirts buying financials. Yes, I said so two months ago. If you don't believe me, or the "great depression" poll-thread I started...fine. But this is probably a good data point: despite all the negative sentiment, and very attractive dividend yields, and seemingly attractive long term valuations, Warren Buffet isn't buying. He rescued Salomon Bros. in the early 90s and made a lot of money doing so. What's different now? All the big banks are insolvent and overlevered. He isn't stupid. You shouldn't be either. These commercial banking stocks are going to zero.

Hope you're wrong. PLEASE be wrong. Warren Buffet and Solomon Brothers was a disaster for both parties. He doesn't do financials, largely because of that, and that was a control issue. But, he is buying railroads for example. If he thought the world was coming to an end, what would he be shipping on his railroads? Could be hobos I guess.

If the big banks are insolvent and overlevered, why hasn't the feds shut them down? My money managers are looking at the second half of 2008. They told me in Q3 2007 to look for lots of volitity for the next 12 months. If B of A is insolvent how/why did they purchase Country Wide. We've been accumulating selective financials for a while.

If the commercial banks go to zero, then the world would certainly shut down.

As a side note, I was a broker for Morgan Stanley beween undergraduate school and graduate school. I had my NASD, NYSE, CBOE, etc. licenses. One thing i did learn is that retail brokers don't know crap, individual investors can't compete with professional money managers and hedge funds because they don't have access to the information, computer models, etc., etc. I also was involved in investor relations for years. I set up the meeting with my clients and institutional investors. Those are the guys in the know. I am NOT suggesting there was inside information.

Hope to agree to disagree. If you're right I'll be selling my NSX for $500 to buy food...if I can find a buyer.:biggrin:

 

[Ski_Banker]

Hope you're wrong. PLEASE be wrong. Warren Buffet and Solomon Brothers was a disaster for both parties. He doesn't do financials, largely because of that, and that was a control issue. But, he is buying railroads for example. If he thought the world was coming to an end, what would he be shipping on his railroads? Could be hobos I guess.

If the big banks are insolvent and overlevered, why hasn't the feds shut them down? My money managers are looking at the second half of 2008. They told me in Q3 2007 to look for lots of volitity for the next 12 months. If B of A is insolvent how/why did they purchase Country Wide. We've been accumulating selective financials for a while.

If the commercial banks go to zero, then the world would certainly shut down.

As a side note, I was a broker for Morgan Stanley beween undergraduate school and graduate school. I had my NASD, NYSE, CBOE, etc. licenses. One thing i did learn is that retail brokers don't know crap, individual investors can't compete with professional money managers and hedge funds because they don't have access to the information, computer models, etc., etc. I also was involved in investor relations for years. I set up the meeting with my clients and institutional investors. Those are the guys in the know. I am NOT suggesting there was inside information.

Hope to agree to disagree. If you're right I'll be selling my NSX for $500 to buy food...if I can find a buyer.:biggrin:

Doug I like you for several reasons. Not only are you smart and level headed, but you're from NC.

Frankly, I don't know where to start here. This isn't a Ski vs. DTrigg (or anyone else) thread. For *my* intents and purposes... I just want to be straightforward and open, when the rest of the investing world either *doesn't have a clue* or just doesn't want to be forthright.

The long term view is this: Yields are low. Stock prices are high (but could be much higher), commodities are high, real estate is high.

yields are low.

last time I checked, that means that every major asset class is overvalued and overpriced. Hmmmmmmm..... what to do now???

 

[steveny]

As a side note, I was a broker for Morgan Stanley beween undergraduate school and graduate school. I had my NASD, NYSE, CBOE, etc. licenses. One thing i did learn is that retail brokers don't know crap, individual investors can't compete with professional money managers and hedge funds because they don't have access to the information, computer models, etc., etc. I also was involved in investor relations for years. I set up the meeting with my clients and institutional investors. Those are the guys in the know. :

And where is their money right now?

Hope to agree to disagree. If you're right I'll be selling my NSX for $500 to buy food...if I can find a buyer.:biggrin:

Raises hand

 

[steveny]

Doug I like you for several reasons. Not only are you smart and level headed, but you're from NC.

Frankly, I don't know where to start here. This isn't a Ski vs. DTrigg (or anyone else) thread. For *my* intents and purposes... I just want to be straightforward and open, when the rest of the investing world either *doesn't have a clue* or just doesn't want to be forthright.

The long term view is this: Yields are low. Stock prices are high (but could be much higher), commodities are high, real estate is high.

yields are low.

last time I checked, that means that every major asset class is overvalued and overpriced. Hmmmmmmm..... what to do now???

Sell deep in the money calls?