Mortgan Stanley (MS)

[England]

I'm looking forward to getting into this stock, along with MER. I was too late in buying them at 59, but I'll have my chance. I'm looking at MS closely as well.

[Airelon]

That's where I'm at.

Did some introductory buying here and there. But really haven't bought too heavily, and won't until I see some confirmation that we can get out of this sideways channel we seem to be stuck in . . .

[Fredledingue]

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.

[Airelon]

: peaks head and looks around :

Looking nice . . .

Anyways, I hear ya Fred, and I'm having the same thoughts. There will be some trickle down to other sectors, but what occurred in the past can only have so much impact before it's worked itself out.

I have to say on a humorous note - being a Seinfeld fan, I was reminded of this video . . .

[Fredledingue]

MS lost another 6% today, -30% from the last 52-w high. That's insane when you consider the real impact on their business.

Should it go under $50, I will consider to buy more, but I have to stay very cautious. The market could enter a panic-crash period.
Thought I'm largely in the red and that today was an ugly day for my portfolio, I don't lose my morale.

It won't be like the dot.com bubble even if to some extent it ressembles to that. Let's say it's a mini-bubble.

[Airelon]

Not sure if I'll buy again unless I get some technical confirmation that the downtrend is actually over. I'll wait for consolidation then check out the ol' technicals. Accumulation / Distribution. EMA's. Volume Averages, etc. Then I'll start buying again . . .

[Stocktrading101]

Guys, I don't think financials are the place to be "value buying" right now. As you stated earlier the crisis is not over and if anything these guys are just starting to write of Billions in subprime losses. Who is to say they will have more losses to add to the list come next quarter?

If you want to play the financials so bad buy leeps and go a year out on the call side.

Just IMO.

[Fredledingue]

Financials can be very good value buying because, practicaly they lose on subprime-related assets but a company like MS made very good results on other operations.

The losses due to subprime is worse than I thought, but it will last no more than one year. By mid 2008 this stocks will recover nicely. All the write-off will be done.
I hope they would be half done yet, but I'm not very gifted for timing financials.

Remeber that's a mark to market loss. That means that such loss fluctuate with the asset value. It's not like they sold less products, it's more like you buy bonds which lose half of their values. But they also make profit on commercial operations and other stuffs.

If mortgage backed securities rise in value due to a rebound in real estates, lower interrest rates, less deliquency, let's say in one year, they will post a profit where they posted a loss before.

Of course I remains cautious, that's why I don't consider buying above $50.

Now that the market knows about the worse case scenario, we will reach the bottom. That's why I think there is little downside based on $50.

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