These "Stress Tests" Are Such Horse ****

[Wezil]

http://www.apolyton.net/forums/showthread.php?t=184359&page=4

[DanS]

I rather like that thread. You were being terribly narrow-minded and were straining to prove a debater's point. I hope for your sake that this isn't the way you usually are.

[Wezil]

Yes, narrow minded. I simply wanted you to state your position. The best I could get after hours of asking was "some people". Very nice.

I guess to you it is a "lawyers trick" to get you to actually say where you stand on an issue. How dare me.

[DanS]

I simply wanted you to state your position.

My position wasn't important to the discussion. Who's to say I even had a position on the subject?

You weren't employing a "lawyer's trick." Rather, you were straining to prove a debater's point. It wasn't worth anybody's time.

[Az]

lots of lawyerspeak in this m/fer.

[Aeson]

Really really well = less good than buying the S&P over the same time period?

That's really not clear at all given the information we have... it could be better or worse. If it's worse, it's not by much. If it's better it could have been much, much better depending on the timing.

What is clear is that if he sold (as I specifically qualified my post), he would have gotten $8+... as the closing price was $8.09 IIRC. And perhaps as much as ~$11 depending on how you read "hold until earnings" and "I should have sold at..." As he got another shot at it very near his target for selling. (If it was options, that would usually mean selling sometime before earnings are released. As it's a stock play, I don't think it's very clear at all if he meant sell after earnings, or just before, or sometime before. The "then they can die" part seems to suggest that he thought the price action after earnings is expected to not be favorable for long plays.)

In any case, 20%+ gain in a ~ month is something you'd take every single damn time. Sure, in hindsight it might not have been the best investment possible over that timeframe... but then you're just back to laughing at someone for not winning the lottery.

[Aeson]

March 30 or 31 (no detailed intraday prices on yahoo for that far in the past it seems?) was the last point BAC was at or below 6.50 as far as I can tell. At the time the S&P 500 was at ~787. BAC at 6.50 could have been as early as March 16, the S&P 500 at ~750.

BAC from 6.50 to 8.09 (worst allowed case given qualifications on my original statement). 24% increase.

SPX from 787 (March 30) to 869 (best known case for the same timeframe). 10% increase.
SPX from 750 (March 16) to 869. 16% increase.

So actually it is clear. Just holding stock or index, the BAC pick outperformed the SPX over the timeframe of March 30 to April 21 and even in the worst (reasonable) case for BAC (@6.50) of March 16 to April 21. (I'm ignoring earlier BAC 6.50's, since you'd have to have real guts to have held through the dip to the $3 range that preceeded March 16.)

If you want to go with best case for BAC... it's even more not close

[Dauphin]

http://news.bbc.co.uk/1/hi/business/8039096.stm

Ten US banks fail 'stress tests'

Ten of America's largest 19 banks need a combined $74.6bn (£50bn) of extra funds to boost their cash reserves.

That is the main finding of the so-called "stress tests" to see if the banks have sufficient capital to cope should the recession worsen.

Bank of America is the most at risk, needing an additional $33.9bn.

"Our hope with today's actions is that banks are going to be able to get back to the business of banking," said US Treasury Secretary Timothy Geithner.

Other banks that need more money include Wells Fargo, which is said to require $13.7bn, and GMAC, the financial arm of General Motors, which needs $11.5bn.

Citigroup requires an additional $5.5bn of funds, and Morgan Stanley has been told to find $1.8bn.

'No surprises'

The 19 banks that were tested by Treasury Department and Federal Reserve officials account for two-thirds of the total assets of the US banking system, and more than half of the total amount of credit in the US economy.
The banks that require extra capital have been given until 8 June to finalise their plans to do so, and get them approved by regulators.

Mr Geithner said earlier on Thursday that no US bank being screened by regulators was at risk of insolvency, comments echoed by Federal Reserve Chairman Ben Bernanke.

The treasury secretary said he believed that the majority of the banks would be able to raise any additional money they need from private sources, but if they were unable to do so the government may have to provide them with more taxpayer money.

Analysts broadly welcomed the results of the stress tests.

"It seems to be that the leaks were very accurate, so there doesn't seem to be any major surprises," said Eric Kuby of North Star Investment Management.

"The fears of nationalisation or of failure have more or less disappeared."

Criticism

However, some commentators have questioned whether the tests have been strict enough.

Professor Nouriel Roubini and Professor Matthew Richardson of New York University said that the doomsday scenario that the banks' books have been subjected to is actually no worse than the current economic situation.

And as such, they said "the stress test results will not be credibly interpreted as a sign of of bank health".

Others say that the tests do not take account of the banks' varying business models.

Are these different to the tests alluded to in the OP?

[KrazyHorse]

I think they're the same. But this standard of "failure" is different than the one alluded to in the OP I think.

Also, I note that 74.6 bill is BELOW the lower end of the reasonable range I've heard people talking about (100-200 bill), and far below the worst case estimates (500 bill?)

Morgan needing any capital at all is a bit of a surprise to me. What do they have...10 bill in TARP (IIRC this is what GS holds)? They were planning to pay that back pretty soon by raising additional capital through asset and equity sales, so the extra 1.8 bill probably won't be that hard to scratch up.

I'm assuming that since no mention was made of Goldman they passed the test as is.

[KrazyHorse]

BAC from 6.50 to 8.09 (worst allowed case given qualifications on my original statement).

Given what qualifications, you muppet? That he somehow managed to beat the rest of the market out BEFORE BAC tanked due to earnings?

Yeah, if he magically did that he got more than S&P returns. If he didn't then he got less.

[KrazyHorse]

Now THAT'S an investment strategy: hope that your 20(?) k brokerage account somehow has a faster turnover time on equity trades than hedge funds with billions in assets and dedicated computer banks IN THE SAME BUILDING AS THE EXCHANGE TO MINIMIZE LAG.

[Aeson]

Given what qualifications, you muppet? That he somehow managed to beat the rest of the market out BEFORE BAC tanked due to earnings?

Yeah, if he magically did that he got more than S&P returns. If he didn't then he got less.

The post is there for you to read. But since you seem incapable of navigating back to it, here is the specific qualification:

Nice call Japher (assuming he did sell at some point.)

Emphasis added. As for timing, I used the worst case scenario of selling out at the intra-day low during trading hours of the day in question.

As for whether or not he sold out before earnings, after earnings, or is still holding...

BAC is currently at 13.51, so even if he did not meet that qualification, and meant hold for some time after earnings, it's still a rather good call at this point.

[KrazyHorse]

Aeson, it's pretty obvious that's you've basically got the same judgment as a chronic slots gambler.

Almost nobody can time the market or pick stocks. Those that can are not messing about with a few thousand dollars in assets.

[Aeson]

Aeson, it's pretty obvious that's you've basically got the same judgment as a chronic slots gambler.

Almost nobody can time the market or pick stocks. Those that can are not messing about with a few thousand dollars in assets.

No. All that's obvious is I can give congratulations to someone who did (supposedly, if he met the qualifications) make a good call, unlike yourself. I have not addressed Japher's ability to consitently make good calls or not as you desperately wish to pretend. I have no idea as to Japher's actual abilities in this regard. Maybe he's some sort of stock picking savant who has just started out, maybe he's just lucky, maybe he's just a fool who will eventually lose all his money even on this specific trade. It has nothing to do with whether or not this call did well for him. Only the actual facts pertain to that.

I simply said, it was a good call if he did sell by that specified point. That is all it means.

As for my mentality... I am not in the market at all with my money. My only foray into the market up to this point in my life was shorting LEH via options, and I've even acknowledged (with no prompting) that such a investment could have easily lost me money. I am not ignorant of the risks. Looking forward, I have outlined my view on investment for the future on this board, and I'd call it extremely conservative (eg. buying extremely cheap agricultural land with no debt). I hardly think that qualifies me as a gambler.

But continue on with your delusions if you must. It's good for laughs to hear you call me a gambler.

[DanS]

Looking forward, I have outlined my view on investment for the future on this board, and I'd call it extremely conservative (eg. buying extremely cheap agricultural land with no debt). I hardly think that qualifies me as a gambler.

That is a very risky strategy, I hate to tell you. We can go into the reasons, if you wish.