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And today we learned that the "subprime mortgage" saga is not over. Citi and other banks will write down in the 4th Q for even more than in the 3d one.
That's very bad news because I had hoped that they wrote down fully in the 3d Q and were done with it, but as mortgage deliquency agravates, the value of their assets followed.
But I'm still optimistic that the worse is behind because the world of finance has already reacted and is very councious of the problem, so are the central banks. And this for 3 months already. The number of bad loans should be much less in the future and investments in general, much closely supervised.
Banks will still lose money on subprimes for past risky mortgage loans, but not on future or recent ones. This write-off cascade won't last indefinetely.
Bank stocks may stay low or lower for the next 6 months. After that they will be more stable and be in more profitable, tidier, businesses.
MS will probably write off again like others. Their advantage is that their exposure to mortgage is moderate and their stock valuation lower than any other bank.
Finaly, with lower interest rates, that should go naturaly better for them.
If MS dare fall another 5 dollars, I'll buy more.
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