Time to Buy Financial Stocks ?

Last Friday, on Kudlow's show Jim Awad when asked about Financial Stocks, said the time to buy Financial stocks in about April. Jim's reasoning was by then we will have a better understanding of what happened in the first Q and also companies will have a better understanding of what is going on by then.


By opinion is, I am not sure when is the good time to buy these stocks, but the longer you wait the better you are . Since there are way too many issues that need to be resolved before one has a clear idea what to do.

Some of the issues that need to be resolved are:

• Are we in a recession, and how deep the recession going to be. The best time to buy would be in the middle of a recession, but sadly their is no way to know this.


• Mark to Model, or some would call it appropriately, Mark to Fantasy. This is the big one, unless their is a feeling all the loans are properly priced, it is just not safe to invest.
  
• SWFs role. Till now Soverign Wealth Funds, were willing to fund the capital needs of IBs and Money Center Banks . But this article in The Financial Times makes it clear, SWFs may not be forth coming with their money anymore.
• Also, some of the companies PE guys took private in the last two years are showing signs of stress. FreeScale SemiConductor and others. Even though as of now, the companies are still paying interest , if a deep recession ( which in my opinion, started sometime in Sep - Oct last year) takes hold. Then these companies will start having even more issues.
• How many more losses Banks will announce if Ambak (ABK) and MBI are downgraded.

Even though the above list of issues are not exhaustive, it is my humble opinion that, Financial companies, are treacherous for investing. I would wait atleast April/May/June to know where things are.

I am right now playing Financial Stocks with SKF, which is an ETF Pro Shares Ultrashort.