Harsh Punishment and Bank Stocks KBE

Too much hard work getting this small business off the ground has kept me away from blogging, but I hope to return to a more normal schedule soon. If you really want to punish someone force them to keep a diary.

All in I think this is an interesting time for investors as recent market dislocations have created some impressive buying opportunities, especially for stocks tainted with subprime exposure. There is real difference between an operating model that is core focused on sub prime activities vs various other businesses that are weakly linked or opportunistic investors in that market. See Why Wilbur Ross Likes Subprime. I agree with everything he says, except the part about gold. Gold has negative carry while TIPS pay cash interest.

Right now is the best time in recent memory to be buying bank stocks (KBE) and other credit sensitive investments. Wider credit spreads mean more return for each unit of credit risk. Banks are very lucky (well situated) in this environment because of their access to funding via FDIC insured deposits.