Glen Doth Know

The purpose of this article is to outline my quest for the cheapest broker that lets me “do what I want” with the least amount of hassle and how the real hassle is always behind the scenes. I’ll also outline the public companies from the perspective as an investor.

I currently can trade with Firsttrade, Schwab (SCHW), Ameritrade (AMTD), E*Trade (ETFC), Merrill Lynch (BAC), and I have checking accounts with Fifth Third (FITB), and a savings account at Bank of America (BAC). So, what’s the scoop and why am I writing this article? I’ve been setting up a new E*Trade account for the past month and my patience is wearing thin. Why did I choose to open another account with E*Trade?

Merrill Lynch (BAC) won’t let me buy stocks less than $1. This is to protect me from myself, I suppose. But what happens when a company that you value over $10 goes below $1? Odds are you’d like to buy more and now your left buying it at a higher price of at least $1, whenever it surfaces back above that waterline. All for $29.95 a trade. What a great deal! Not.

Ameritrade (AMTD) has the best interface and is honestly in my opinion the best, except for that it won’t let me buy certain penny stocks because it doesn’t like the transfer agent. I fought Ameritrade on this a little bit, because if they would simply let me buy the companies that I want to buy, I’d push all my accounts to them.
Schwab lets me buy pretty much anything I want, but Schwab has proven to be a little more hands on than what I’d like them to be. I got a margin call on a $30,000 account that was over half marginable securities and we were sitting on about $1,000 of margin. That’s pretty ridiculous. Also, Schwab is more expensive than E*Trade.

So, here I am, setting up another account with E*Trade (ETFC) because I know it will be the most flexible once I get it going. I’ve been trying to set up this account for over a month now and have made a frustration timeline that you can see below. I’m still in limbo and haven’t received a phone call from E*Trade. I’ve had to take the initiative to call them up and follow up as to where exactly the money I sent them is. They still aren’t sure, so there is roughly $115,000.00 floating out there in E*Trade land.

Alright, how do these companies stack up as far as investments go? I would say that Schwab (SCHW) and Ameritrade (AMTD) are reasonably priced. Bank of America and Merrill (BAC) still appear to have over 100% upside potential within the next year and so does Fifth Third (FITB).
Lastly, I’ll note that I’ve been asked by a couple Fifth Third employees what I would consider investing in. I asked them if they had ever considered buying Fifth Third (FITB).

Disclosure: Glen and his investors own FITB and BAC.

Labels: BAC, FITB

Allow me to start off by illustrating my sentiment from January 2008 – February 2009: I hate banks and I have no idea what they are doing. I hate anything financially related.



But, I find myself not hating banks anymore. What happened? I’ve got 8 leading indicators that people might be aware of but aren’t catching headlines like they should be and I’ve got 4 monster catalysts. What do I know, I’m only the Motley Fool’s Hottest Player going into Easter Weekend. Further, My entire college tuition is riding on the stock market.



Leading Indicators:



1. Federal Funds Target Rate is nil. This means that banks can borrow as cheaply as they ever have been able to. When you borrow at these interest rates, the net present value of any opportunity where you can at least get your money back is a good one to be taking.
2. Banks as a sector cheap from a historical perspective. I wonder why? Fear, panic, disorder, lack of trust, lack of speculation --- just a few ideas.
3. There is tons of cash on the sidelines. Blood is in the streets. There has definitely been “the slaughtering of the speculator” over the past year and a half. I believe now is the time when the speculator finally gets congratulated.
4. We are up 28% off the bottom according to the S&P500.
5. Global Markets are leading the way. They are up 53.4% according to EEM [iShares MSCI Emerging Markets Index (ETF)].
6. My uncle who is a banker panicked and sold out of the market at Dow 6700.
7. Mark-to-market has been relaxed to ‘mark-to-whatever-makes-us-look-good.’ Aka: Mark-To-Profit.
8. The uptick rule might come back. In my opinion, this isn’t necessary at this point.



Monster Catalysts:
1. Citigroup and Bank of America said they were profitable in the first 2 months of 2009. Great! Now they can do whatever they want to their balance sheet with the relaxation of mark-to-market. What does that imply? How can you lose money when you get to put whatever you want on a balance sheet? Especially if you’re a bank and you thoroughly understand how to crunch numbers and make them look favorable, you’re going to be looking really good now. It’s the Enron dilemma of “mark-to-model.” I could come up with some great spreadsheet models that make me look like an undervalued opportunity.
2. It’s already happening! Wells-Fargo is coming in crushing analysts. Well, of course! What do you expect when you can borrow money to invest in opportunities and you’re not paying a significant interest rate on what you borrow?
3. Analysts are going to get caught with their pants down this week. Earnings are coming out. Tuesday: Goldman Sachs; Thursday: JPMorgan Chase; Friday: Citigroup. There is so much upside that they simply can’t see because they don’t really understand what’s going on. If they did, they wouldn’t be analysts. They’d be retired. What does this do? This sets up an opportunity for some huge price target upgrades, usually after the price actually appreciates to that target. Have you noticed that analyst price targets seem to be a lagging indicator of stock prices --- or is it just me?
4. Debt upgrades. Once Mark-To-Profit kicks into full swing, the ratings agencies have to think a little more highly of these poor banks.



How to play this one:



I like a couple insurance agencies in decreasing order: CNO, GNW, PNX. I think GNW didn’t need the TARP anyway. That’s a sign of strength. Am I the only one seeing this?



I like a couple bank plays, also in decreasing order: FAS, C, BAC. I’m not into the Wells-Fargo’s and the Goldman Sach’s or even JP Morgan’s of the world --- where is the upside there? 100%? Not enough.



Disclosure: Glen Bradford owns CNO, GNW, PNX, FAS, C, BAC and/or options on them in his and his investor’s accounts.

Labels: BAC, C, CNO, EEM, FAS, GNW, IYF, PNX

Allow me to start off by illustrating my sentiment from January 2008 – February 2009: I hate banks and I have no idea what they are doing. I hate anything financially related.



But, I find myself not hating banks anymore. What happened? I’ve got 8 leading indicators that people might be aware of but aren’t catching headlines like they should be and I’ve got 4 monster catalysts. What do I know, I’m only the Motley Fool’s Hottest Player going into Easter Weekend. Further, My entire college tuition is riding on the stock market.



Leading Indicators:



1. Federal Funds Target Rate is nil. This means that banks can borrow as cheaply as they ever have been able to. When you borrow at these interest rates, the net present value of any opportunity where you can at least get your money back is a good one to be taking.
2. Banks as a sector cheap from a historical perspective. I wonder why? Fear, panic, disorder, lack of trust, lack of speculation --- just a few ideas.
3. There is tons of cash on the sidelines. Blood is in the streets. There has definitely been “the slaughtering of the speculator” over the past year and a half. I believe now is the time when the speculator finally gets congratulated.
4. We are up 28% off the bottom according to the S&P500.
5. Global Markets are leading the way. They are up 53.4% according to EEM [iShares MSCI Emerging Markets Index (ETF)].
6. My uncle who is a banker panicked and sold out of the market at Dow 6700.
7. Mark-to-market has been relaxed to ‘mark-to-whatever-makes-us-look-good.’
8. The uptick rule might come back. In my opinion, this isn’t necessary at this point.



Monster Catalysts:
1. Citigroup and Bank of America said they were profitable in the first 2 months of 2009. Great! Now they can do whatever they want to their balance sheet with the relaxation of mark-to-market. What does that imply? How can you lose money when you get to put whatever you want on a balance sheet? Especially if you’re a bank and you thoroughly understand how to crunch numbers and make them look favorable, you’re going to be looking really good now. It’s the Enron dilemma of “mark-to-model.” I could come up with some great spreadsheet models that make me look like an undervalued opportunity.
2. It’s already happening! Wells-Fargo is coming in crushing analysts. Well, of course! What do you expect when you can borrow money to invest in opportunities and you’re not paying a significant interest rate on what you borrow?
3. Analysts are going to get caught with their pants down this week. Earnings are coming out. Tuesday: Goldman Sachs; Thursday: JPMorgan Chase; Friday: Citigroup. There is so much upside that they simply can’t see because they don’t really understand what’s going on. If they did, they wouldn’t be analysts. They’d be retired. What does this do? This sets up an opportunity for some huge price target upgrades, usually after the price actually appreciates to that target. Have you noticed that analyst price targets seem to be a lagging indicator of stock prices --- or is it just me?
4. Debt upgrades. Once ‘mark-to-whatever-makes-us-look-good’ kicks into gear, the ratings agencies have to think a little more highly of these poor banks.



How to play this one:



I like a couple insurance agencies in decreasing order: CNO, GNW, PNX. I think GNW didn’t need the TARP anyway. That’s a sign of strength. Am I the only one seeing this?



I like a couple bank plays, also in decreasing order: FAS, C, BAC. I’m not into the Wells-Fargo’s and the Goldman Sach’s or even JP Morgan’s of the world --- where is the upside there? 100%? Not enough.



Disclosure: Glen Bradford owns CNO, GNW, PNX, FAS, C, BAC and/or options on them in his and his investor’s accounts.

Labels: BAC, C, CNO, EEM, FAS, GNW, IYF, PNX

Bank of America - Now is a good time to buy January 2011 Calls on BAC.

Also, expect to see HIG beat the market this next week.

It's at $14.59, $20 sounds good. I expect $25. I expect it to be a lot like Citigroup, C.

These ideas are not like my Buffet ideas. But, my roomate wanted my thoughts on the industry for the next week. Also, I hate the autoindustry, but out of them all, I like Ford, F the best. And that's only if they get the bailout they want.

Labels: BAC, C, F, HIG