Ilargi at the Automatic Earth has a great big picture post on the real state of financial institutions and why we may be headed back to 2008 and bank bailouts again: Using his mock portfolio, he offers a very different picture than the one you’ll get in the news:
As you can see, there are a number of stocks in there that not everyone would have in a finance portfolio, and some others that may be missing. But I like it this way. I still left Lehman and Fannie and Freddie in (though none are exchange traded anymore), and included GE and Société Générale, among others.
This portfolio shows a completely different picture than the complete Dow and S&P numbers. The financial world is not doing all that well.
My portfolio is down 15.46% from August 4 2010 to August 3 2011, not up 10% or 11%. What’s more, from its peak on February 8, 2011, it’s down over 30%. That is in less than 6 months. Here are a few examples from my list:
Bank of America’s stock is down 34.1% over the past 12 months, 34.51% over the past 6 months, 14.2% over the past month alone.
Citigroup is down 9.78% YoY, 22.64% over 6 months, 13.22% over the past month.
Morgan Stanley: down 24.23% YoY, 30.12% over 6 months, 12.33% over one month.
Goldman Sachs: down 13.95% YoY, 19.93% over 6 months, 3.53% over one month.
JPMorgan: down 3.21% YoY, 12.54% over 6 months, 4.38% over one month.
Société Générale: down 34.82% YoY, 36.39% over 6 months, 30.28% over one month.
Crédit Agricole: down 30.9% YoY, 31.66% over 6 months, 30.8% over one month.
Deutsche Bank: down 31% YoY, 17.61% over 6 months, 16.48% over one month
RBS: down 35.61% YoY, 25.12% over 6 months, 17.73% over one month
I guess it should be obvious that we’re watching an unfolding bloodbath here (even Goldman lost almost 20% in 6 months). But then again, when JPMorgan CEO Jamie Dimon said recently that banks are so flush with cash they’re going to issue nice and juicy dividends, I think he meant, and believed in, what he said. It’s just that they’re flush with your cash, not their own.
But there’s nothing, nothing at all, on the economic horizon that carries even the least bit of hope that these banks will be able to make good on their lost stock values. No jobs increases, no increases in home sales, none of that. They’ll just be gutter dwellers, if they stay alive at all, though, granted, your money may provide for plush gutters.
One major issue with all this is that all of the banks above, except for Crédit Agricole, are primary dealers.
Ilargi’s mock portfolio gives a wider perspective than the Dow – and an important one. Another bank crisis is looming over us – and that’s not good news.