Everyone is scared to death of the financial stocks. Herein lies the opportunities.
Unless every major bank goes bankrupt, and the US sinks into a depression, I have got to believe that many of the bank stocks yielding 5%++ are incredible bargains.
If the US sinks into recession, inflationary pressures will subside, giving the Fed more room to lower interest rates. For those with a 2-3 year time horizon, I believe buying high quality bank stocks at these levels will reward you greatly in 24-36 months.
I look at these high quality banks yielding 5% like cd's without the government guarantee. In 2004, at the World Money Show in Orlando, I recommended SBC Communications (now AT&T) at $25/ share. Today, the stock is at $42.20, which is a gain of 42.5%, and I collected a 5% dividend while I waited.
Market Commentary
On Wednesday, the talk over Turkey invading Iraq caused big swings in oil prices, and hence, wild fluctuations in the stock market.
The Turks are really pissing me off. They were upset that the US passed a resolution condemning the mass killings inflicted on the Armenians by the Ottoman Turks in 1915. Over 1,500,000 Armenians were slaughter during the Armenian Holocaust.
In response to the passed resolution, the Turks threatened to cut off US access to Turkish airspace and supply routes into Iraq. In addition, the Turks threatened to attack the Kurds in northern Iraq, further adding pressure to the oil markets.
Today, the November crude oil contract leaped above $89/bbl after closing under $88 yesterday. So, the response from the Turks is causing oil prices to spike even higher.
The Turks continue to deny the Armenian Holocaust ever happened, even while their own Nobel Prize-winning author Orhan Pamuk faces Turkish jail time for say, "One million Armenians were killed here and nobody but me dares to talk about it."
Here is a small example of what the Turks did to the Armenians in 1915. Do you find these pictures of the Armenian Holocaust strikingly similar to what happened in Nazi Germany?
A Mother and her children.
Mass Graves
Armenians marched from their homes to death camps.
As I had said a few days ago, the Turks killed my grandfather’s brothers, sisters, and mother in 1915 during the Armenian Genocide. My grandfather would have been killed too, but after the Turks stuck saber in my great grandmother, she fell on top of my grandfather covering him from view. His life was spared, and while I growing up, told me many stories about the massacre.
With the recent US vote, 22 nations, and the European Union have passed resolutions recognizing the Armenian Genocide. France has passed a law making it a crime for anyone denying the Armenian Holocaust.
The Bush Administration needs to stand up to these thugs in the same manner as if Turkey was denying the Jewish holocaust. They also need to stand up to Communist Chinese and tell them we will give a gold medal to anyone we wish whether it is the Dalai Lama, or Dolly Parton.
Despite new highs for oil, a troubled housing and credit market, and Mid-East issues that are going very poorly, the Dow has bounced back three times after being down over 100 points intraday.
This morning, Intel investors woke up to news that the company reported a 43% jump in earnings.
Financial stocks remained weak as some doubts continue as to whether the Fed will lower interest rates after its October meeting.
Coca-Cola (KO) announced that 3Q net income jumped +13 pct to $1.65 billion. It should come as no surprise that inflationary pressures have allowed many companies to raise the prices of their products. Disney has also raised prices which will boost earnings over the next few years.
Here is one thing to remember in inflationary times such as these. Companies will raise prices to offset higher costs. When inflationary pressures subside, costs will go down but prices will not. This will be a big boost for earnings.
Relative Strength Index (RSI)- Stocks Oversold/ Overbought
The list of oversold stocks continues to grow--RSI Stock Blog
