Sometimes I have to sit back, shake my head and chuckle when I hear momentum players tell value investors that its too early to buy value stocks.
For example, as I was watching many of the bank stocks out pace the Dow, S&P, and NASDAQ by a margin of 2 to 1, I read where Jim Cramer's- The Street.com- downgraded shares of Wachovia Bank (WB) from buy to hold.
The first point here is very simple. When someone recommends a buy, sell, or hold on any stock, you better know if that person is a momentum investor, or a value investor. If you are a value investor, do yourself a favor and ignore momentum players. The opposite is also true.
Jim Cramer, who I happen to like, is a momentum player. You have to be a momentum player to muster up the courage to buy RIMM, AAPL, GOOG, FWLT, and GRMN at these P/E's and prices.
While the Street.com was downgrading Wachovia (WB $46.27 +$3.11, or 7.65%) from buy to hold, Wachovia insider and director Lanty Smith ignored "the order" by purchasing an additional 100,000 shares at $38.70 last friday.
Lanty Smith and other Wachovia insiders have been actively buying large blocks of stock since August.
In my November 7, 2007 journal post- "Bank Stocks Look Like Incredible Bargains!"- I didn't think dividend yields of 6% would last very long. In fact, if these stocks decide to go back and revisit the prices we saw last week, I would consider picking up some more stock.
Here's how the five banks I highlighted on November 7th closed today;
Bank of America (BAC $46.27, up $2.29 or 5.21%)- last week $43.31.
Wachovia Bank (WB $43.74, up $3.11, or 7.65%)- last week $40.43.
Regions Financial (RF $26.49, up $1.27, or 5.04%) - last week $23.93.
Fifth Third Bancorp (FITB $29.91, up .92, or 3.17%) - last week $27.78.
Huntington Bancshares Inc. (HBAN $17.08, up .75, or 4.59%) -last week $15.78
DJIA- 13,307.09 + 319.54, or 2.46%
SPX- 1481.05 + 41.87, or 2.91%
NASDAQ- 2673.65 + 89.52, or 3.46%
