Picking It New School
Over the past few days the idea of bank stock valuation has come up in several conversations. Other than indication that we have some fairly boring conversation I found this interesting on several levels.
It seems everyone wants to reinvent the wheel when it comes to stocks and valuations. Yesterday our own Brain Sozzi asked if old school measures like book value still mattered. On Twitter the other night an analyst suggested that earnings were the major determinant of bank stock prices. Given that accounting practices allow me to take a junk bank on the verge of liquidation and make it look profitable that's a ridiculous assumption. Give me a bank at a discount to book value, solid metrics and some time and I will make money. More importantly, I will avoid grievous losses. As I reminded Sozzi, those of us using old-school metrics have the advantage of having survived long enough to be old....491 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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