Whatchoo Talk'n 'Bout, Willis?

I don't actually know how long is now the time to buy financials has been part and parcel of every interview and while I have been underweight for ages, and still am, there is one aspect to this whole meltdown that we need to keep in mind.

An aspect that could be relevant especially if one year or two year performance does not matter.

Of the larger financial companies, will there be any that fail as a result of the entire event still unwinding? I believe Bear Stearns market cap topped out in the $20 billion range and if that is correct I would not say it was that large.

Obviously some folks think there will be failures and with history as a guide there might be one or two which would not be a lot. Point being most of them will survive.

As far as large cap, domestic banks go I cast my lot with Bank Of America (BAC) a long time ago but I seriously doubt that Citigroup is going to fail. The next 10 points might be down for all I know but at some point $21.22 (Thursday's closing price) is going to look like a steal of a price.

If one or two year performance does not matter then a 50% drop from here on its way to $100 at some point in the future (not a prediction of any sort) would not mean anything. While I am not predicting any price for Citi I will point out that after being left for dead in the early 1990s the stock went up 3000% in about ten years so the idea that some distressed bank stock could be a five-bagger sometime between now and the next financial crisis may not be ludicrous.

Further, any stock with a high yield that can maintain that dividend would add dramatically to the compounding effect of buying the right distressed stock.

To be clear I am not yet increasing my weight in the sector. The environment is not healthy but of course it will get healthy again and just as financials have lagged badly recently they will outperform at some point. Today's post is not a prediction of when it will happen just a little reminder of the cyclical nature of this sort of thing.

A quick word about the Celtics win last night. Who doesn't like a little James Taylor but talk about draining the energy out of a building during the National Anthem wow, he was a bad choice for the game. Also I think it started with the Bulls in the Jordan era but am I the only one who can do without the pyrotechnics and full length feature film played as part of or immediately after the home team's lineup is introduced? Lastly the Garnett dunk off the Posey miss with 1:32 left almost looked like a pass off the rim.