First a couple of definitions,

the MAGIC moment - It's the start when a turnaround stock turns vertical, getting re-rated is what pros call that.

the catalyst(s) - simple, fundamental improvements in businesses (but before the MAGIC moment dawns on the stock price, invisible)

So WHAT is the magic moment?

Generally, it's when

A) the company reports a profit after losses, or
B) the company's cash flows have improved so much that it finally can use its internal cash to pay down debt and/or buy back stocks

If both A) and B), it's the most powerful combination in the marketplace.

To illustrate with a past example where I was luckily a good part of: Amkor Technology (AMKR). I started buying in 2005 after seeing the company showing first signs of operation improvement, but not yet profitable again. People kept worrying about its debt load (and surprise or no surprise it's also a Citi analyst kept calling for BK while their investment arm were picking up shares...another story). THEN, the magic moment came as AMKR reported both a profit, in early Feb 2006 for Q4 2005, and also declared that they would start to pay down debt using internal excess cash flows.

Stock doubled in DAYs!

Now, onto things that matter to this MB.

WHEN will be the MAGIC moment for ETFC???

We all know that ET is well on its way to accumulating its yearend target of $1bn excess cash for safety cushion (That's BTW one of the key differences of Layton and the old gang: in business, you just can't spend your last dollar on your greatest idea(s); GREAT if it's your dollar #1,000,000,001. The environment is improving, that's good, but safety net is called safety net for a reason...so however much I'd like them to buy back stocks and bonds NOW given the prices I support this $1bn safety net program.)

Here's my prediction: this $1bn target will be reached well ahead of schedule, almost certainly by q3 and very likely by end of this q2.

WHY?

These are my bases:

i) They already accumulated $695m as of Q1
ii) The pile goes up by $260m in one quarter
iii) Now ET is also accelerating in its non-core assets sale program

After that, when the $1bn target reached, any extra excess cash can be spent on debt/stock buybacks. Both should be greatly accreditive to shareholders and which should be the focus depends on where the prices are by then. At current prices, both are steals: bonds yielding some 12% and stocks at barely 2x normalized operating earnings.

To stay the obvious, the MAGIC moment for ETFC will the day after Q2 report (since ET reports AH) in July - IF Mr. Market stops its function as both an investment place and a speculation field; EARLIER if Mr. Market still functions as such.

I put 80+% probability on ET

A) reports a profit, AND
B) reaches the $1bn target

by THAT DAY.