This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Skip the Financials

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( InvestorPlace) --It's chaos out there. Market volatility has investors rushing in and out of stocks frantically trying to scoop up profits any way they can. It's a dangerous Wild West, and the mob is running the show.

I have to say, I understand investors' frustrations and reason for panic. The economic picture is hazy at best; jobs aren't picking up; we've lost faith that our elected officials can come to the table with real solutions (not to mention pass them into law) and there's the ongoing saga in Europe.

Related: 5 Reasons Everyone Hates Bank of America

If you invest according to your emotions, you're going to be caught in the same trap as everyone else: buying high and selling low as you're always one step behind. Now, it's not easy going against the crowd of investors rushing for the exits, but the fact of the matter is that frankly, investors are not rational. They're emotional. And right now they're heading for a world of hurt as they follow their emotions into "bargain" financial stocks.

There are only a few things that we have very clear insight into, and one of those things is that banking stocks are the worst choice investors can make right now.

I'm a former banking analyst. I worked for the Fed; I examined these banks and what I know would shock you. But I can tell you that banks always have manipulated their books. It's not unusual for a bank to have a performing loan that's underwater, and it is going to be years before the current mess is completely worked out.

Related: 5 Reasons Why This Is the Most Important Apple Event Ever

I can tell you that when a U.S. bank tries to "fix" a delinquent mortgage with a 2% workout loan, it just causes more problems. When a home is underwater, a 2% mortgage isn't going to do a darned thing except kick the problem down the road. The fact of the matter is the 2% workout loans are causing more homeowners to default because when they default they have more leverage to (1) restructure a better deal with their bank or (2) to get out from under their negative-equity home.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
C $52.90 0.00%
BAC $15.64 0.00%
JPM $62.60 0.00%
MS $37.36 0.00%
AAPL $130.28 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs