Below is a message I copied from the Bank of America board. It was written and posted by jeff.moore1 and fleshes out some of the discussion re: banks in the thread below.


A significant correction on financial stocks started today and will probably last through the end of 2009

Banks stock price as of today are now at the highest valuations in the past five years based on their expected earnings.

But these are the cold hard facts that not Bernanke nor any individual can fix for at least 4 - 6 quarters:

1) Losses and write offs will continue to stay huge. Foreclosures at record pace. The majority of homes being sold cost less than $100K.

2) President Obama will announce 8/25/09 record and unexpected Federal Deficit that will send would-be treasury buyers running for the hills

3) The FDIC will announce on 8/25/2009 that it will increase bank assessments significantly to make up for bank closures. This amounts to a whopping of their earnings in 4Q 2009 and 2010!!!

4) Unemployment will stay in the 9 - 10% range for at least a year. no new jobs are being created. And like consumers, companies are learning to do more with less.

5) Toxic assets are still on banks' books and not property valued. BAC's derivatives exceed $80 trillion dollars, JPM nas more, C a little less.

6) New accounting rules being discussed will bring back toxic assets into bank balance sheets. BAC and C estimate that they have to set up reserves in excess of $150 billions if these rules are approved. It is not a question of whether or not they will be implemented but how it can be done with minimum pain

7) Commercial and regional portfolios continue to remain under severe loss pressures.

More proof?

1) It was a couple of days ago that they released the data that July set another foreclosure record

2) It was announced that mortgage defaults are now spreading to prime borrowers

3) credit card defaults rose again unexpectedly in July

4) July retail sales were weaker than expected

5) Back to school sales are the worse in a decade. Consumers are not buying anything unless it is absolutely necessary. And if they buy something they buy at WalMart, Target, or the Dollar Store.

6) Factory orders for the past few months have picked up to restock depleted inventories that had completely halted the prior months .. it's not because of economy being better. The clunkers program also boosted these numbers artificially since this is a one-time program.

7) Twenty five states are now at over double digit unemployment.

8) The city of Chicago had to close for a day recently


Take the blinders off. The same speculators that pushed the price of oil to $150 a barrel and then pushed the price of food, fertilizer and commodities through the roof are now playing the same hedging games with stocks. This will come to correct itself ... just don't get sucked in at these elevated prices.

And quit chasing stocks just because manipulators like Cramer and others at CNBC tell you to do it. You work hard for your money and you must spend some real time doing DD before you chase a hot stock just because everyone is doing that.