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Re: tregaron post# 20855

Friday, 09/26/2008 11:12:34 AM

Friday, September 26, 2008 11:12:34 AM

Post# of 51846
I can't understand why financials would be considered a buy under current circumstances? Some are already up 100% from July 15 lows. Plus, the game that allowed them to have expanding returns in the past (high leverage) should be one of the results of any legislation attached to this bailout.

If they adopt more reasonable leverages, like say 7:1, as opposed to 40:1, they should have one-fifth the revenue as a few years ago. Therefore, their prices should contract 1:5. So, if GS was selling for $250 last year, it should revalue to $50. It's twice that right now. Why would it pop if this bailout goes through?
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