What a week!

I guess things must be a lot better in the world this week. I was just reviewing some numbers and see that many of the financial stocks are up over 35% or more (in Bank of America’s case it’s a staggering 81%) since July 15th. Are the companies really worth that much more a week later, or was the extreme and indiscriminate selling prior to the 15th completely divorced from underlying business value? I will leave that as a rhetorical question. One thing we did learn was that while the earnings for these financial stocks were not good, the expectations were so low that even ugly numbers looked attractive. I guess beauty really is in the eye of the beholder!

I am not going to tell you the volatility is over. We still have high food and energy prices, a weak dollar, a slowing consumer, weak housing, an unpopular war... We also have a presidential election taking place and all the uncertainty which it entails. So I am not sure we are out of the woods, yet. But as I have been saying, there are good opportunities out there, you just have to look and have some patience.

I wish I could tell you that we were smart enough to buy all our financial stocks last Tuesday, but we were not. But we owned some of these stocks that did very well, and will likely buy more. We think the worst may be over for the financials, but caution is still necessary. But for investors with a longer time horizon, there is money to be made in this market.