Point Of No Return?

Point Of No Return Or Perfect Buying Opportunity?

By Bespoke Investment Group LLC | 23 June 2008

The recent declines in many Financial stocks have put them in unprecedented negative territory. Below we highlight historical charts of the percentage from 52-week highs for Lehman (LEH), Wachovia (WB), Citigroup (C), Merrill Lynch (MER) and Bank of America (BAC). At its low point earlier this month, Lehman was 72% below its 52-week high, making it the furthest below it has ever been. Wachovia is 68% below its highs over the last year, and Citi got down to 66% below back in March. Merrill Lynch and Bank of America aren't quite at record territory yet, but they're getting close. Back in 1998, Merrill got down to 65% below its 52-week high, and it is at -60% now. In 1990, BAC was 66% below its 52-week high, and it's at -50% now.

The consensus view is that the struggling Financials still have much further to go on the downside before the pain is over. But if they fall much further, they might have dug a hole they can't get out of. Taking a longer-term view of one, two, or even five years from now, will these charts have marked a screaming buy, or a clear sign that the companies were "toast?"

[ Normxxx Here:  As usual, if you buy here and the stocks go up— for more than a few weeks, anyways— you'll be a hero; contrariwise, if you buy and they go down significantly further (eg, through dilution, even if the market may be bottoming here), you will be the thrice-warned dunce!  ]

Normxxx    
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