Financials Look Like Dead Money

 | Sep 23, 2013 | 2:11 PM EDT
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Boy, have we lost the financials. They trade horrendously. It's almost as if the world has decided the quarters will disappoint and there's nothing here, no dividends, no buybacks, more rules, more earnings cuts. It's just a mess.

And you know what?

That might be right.

Have you noticed what the government is doing against JPMorgan Chase (JPM), which is the best of the best? Have you noticed that there is no end to the number of prosecutions?

What if I told you I think they are just beginning? What if I told you that there are going to be many many more suits brought over a host of mortgage issuances all over the country?

How about banks like Bank of America (BAC) and Wells Fargo (WFC). They were NOT in shape to handle the sudden slowdown in refis and mortgages. In fact, they were still gearing up.

Now they are laying off.

In this quarter, nothing worse. Nothing. That means you could have real disappointments here.

Or how about the regional banks? If things have slowed, and slowed badly, then you really have no reason to own them save valuation and there's nothing around that can bring out that valuation.

Of course they are all cheap. They all have very little downside, in my opinion, because to begin with they are cheap.

Here's my take. You can sell them, but down 5-7% they are probably going to be Buys again. I just don't know if that decline happens when we see the earnings. If that's the case, the nimble should sell.

Those who can't go out and in, what can I say? You are in dead money that could be deader money before they come back.

If everything else were bad out there, then you could say "hey, they won't do so poorly, it is worth it to struggle with them." But I think the international stocks are the place to be.

Just look at 3M (MMM) and Boeing (BA). There are no government issues, they are levered to other countries and have long cycles. Plenty of opportunity.

That's the competition. Too stiff!

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