I took a post from M13. This is a possible
scenario
Anything can happen in a year, if the US recession
becomes a reality (which I most often think it will), there
will be more job losses and defaults on mortgages exacerbating
the already traumatised financial sector.
The kind of analysis you are giving is self justification for
holding for a losing stock. Believing that a stock would definitely
go up.
In investments there are no certainties, only Risks
versus Rewards.To prevent a complete wipe out of
investment like bear stearns, one has to control the percentage of
exposure of a portfolio.
Whether to buy banking stocks depends on your current portfolio.
If you have zero exposure, maybe now its a time to consider buying
a little.(if you have an appetitie for risks) If
you bought at the same timing as GIC or Temasek, its simply foolish
to average down your losses.
What M13 wrote is simply describing the market sentiment of
wall street, hence can i know what is the message are you driving
at when you quote that statement?
I believe you have to take a look into past cases
of succesful acquisition to understand exactly what
Temasek and GIC are doing because if what really seperate the
great investor from an average one is the ability to seize
opportunities when everybdoy is staying away. or what separate the
man from the boys when come to investing during crisis.
Just to quote you an example, during the 2001/2 recession, when
indonesia was still in a big mess, Temesek, through ST
telemedia, acquired a 41% stake Indosat for US$630 million.
During that time, the outlook were just a bleak, there is risk that
the country will collapse due to riot, and the huge threat
comoing from China for labour intensive manufacturing.
And fast forward to 2008, STT sold their entire stake to Qatar
Telecome for US$1,800m, or 285% US$ profits over a span
of 6 years or about 45% per year.
