The trailing price/earnings ratio for the Datastream World Banks index is now 12.4 times. It has only been lower twice before: at the nadir of the last stock market crash at the end of 2002 and momentarily during the Russia/LTCM crisis of 1998. Some investment bank heads are insisting that todayâs credit woes will only have a limited effect on earnings. So far, equity investors seem to be sceptical; after all, five months after LTCM blew up global bank earnings fell 20 per cent. I like banks...especially the ones that are not subprime related
I think a once in a generation opportunity is coming to buy the banks, but we're not there quite yet.
Concur. Will get worse b4 it gets better. Foreign banks may fare better than US moneycenter banks but it seems that credit market contagion may reach further than anyone expected, so I am not entirely sure.
Agreed! There are some banks that have very little exposure to subprime and when the time comes those will be the ones we should want, but the real-estate-building swoon is going to hit virtually all commercial banks.