- Why there's still not much to like about the bank stocks;
- why taking profits Friday made sense; and
- why Dollar Tree was mistaken to announce a buyback.
What About the Banks? Posted at 1:39 p.m. EDT on Thursday, Oct. 6. The owners of these banks seem to have stopped selling for the moment. That reinforces the fact that the selling could be related to two exogenous causes and not the short-term fundamentals. The first cause is margin selling. I don't want to be one of those people that says, "If you read my book, Confessions of a Street Addict, you will see what I mean." But in Confessions I talk about how the end of September brought huge margin calls for me because of redemptions. I think that last drop down in the financials accelerated because of this redemption/margin selling, which should have peaked yesterday as investors were well aware of how horrible these managers performed and had their redemption notices in by the end of the month for quick withdrawals. > > Bull or Bear? Vote in Our Poll Second, any attempt to offer a serious Troubled Asset Relief Program (TARP) plan by Europe, or any plan that takes off systemic risk, makes the banks there "less good" shorts. Of course, you haven't been allowed to short those banks, so you went after these banks: Citigroup ( C), Bank of America ( BAC) and Morgan Stanley ( MS). Those shorts need to be closed out before squeezes begin. Given that there is nothing new good about these banks, it stands to reason that the end of margin selling and the covering of European shorts are driving things higher. Doesn't hurt, by the way, that Treasury Secretary Tim Geithner reiterated on the Hill how different and stronger our banks are than theirs and all of the safeguards as now have. I remain negative on the stocks for fundamental reasons. I don't know how to value them. Book value isn't working. There's no revenue growth. The earnings power is difficult to figure. The Federal Reserve has ruined the margins for them, and Washington trashes them daily.