Markets live chat transcript for the chat ending at 12:02 on 13 Aug 2008. Participants in this chat were: Paul Murphy (PM) Bryce Elder (BE)
PM:
Hopefully this new session will work
PM:
Got rusty while i have been away
BE:
Right - testing testing 1,2,3
BE:
Right - let’s get on with it as best we can. Is it true you had no access to news whatsoever when you were on holiday.
PM:
Completely true. Didn’t know that Russian had invaded Georgia until yesterday morning.
PM:
Still not sure I know why.
BE:
For those of you who don’t know I can report that Murphy has been sunning himself in bloody Mozambique for the past three PLUS weeks.
BE:
Without internet and/or blackberry access
BE:
So why are you late back?
PM:
I have a proper excuse!
PM:
Let’s get on with it.
BE:
ETI, KGF, MKS –all under serious pressure.
BE:
VED, XTA, AAL all give a clue to why the index has not taken a serious bath this morning.
PM:
Whats all this alphabet soup nonsense???
PM:
These codes? I can remember all these!
BE:
Yes, you have been away for some time.
PM:
We should look at the banks
PM:
There’s some thing wrong with this machine.
PM:
What’s it called, a Reuters Terminal?
PM:
Im looking at the banks and all the prices are wrong.
PM:
Well, its odd, the movements today look right – down.
PM:
But like Barclays is quoted at 360p, down 17.5p on the day.
PM:
Shouldn’t that be 260p?
BE:
Er, you have been away for a good while.
BE:
Just to help you catch up, the rally in the financials has been punctured by Meredith Whitney etc
BE:
She and people like Mike Mayo.
PM:
I remember him – Dresdner.
BE:
Anyway – Goldman sachs subject to some heavy downgrades.
BE:
There’s also a general sense that the market has not yet factored in writedowns of leveraged loans.
PM:
What? I go on holiday for three weeks PLUS and people are still catching up with the fact that there will be some serious fall out from the PE binge.
PM:
What have people been doing??
BE:
Well that’s all added up to a fresh selloff amongst the UK banks this morning.
Barclays (BARC:LSE): Last: 362.50, down 16 (-4.23%), High: 372.75, Low: 359.00, Volume: 34.48m
Royal Bank of Scotland Group (RBS:LSE): Last: 232.75, down 12.75 (-5.19%), High: 240.75, Low: 231.50, Volume: 64.08m
HBOS (HBOS:LSE): Last: 307.50, down 23.5 (-7.10%), High: 324.25, Low: 305.25, Volume: 28.97m
PM:
Actually, I can add something useful to this debate.
PM:
James Montier has a note out this morning – Financials; Opportunity or value trap?
PM:
Yes, colleague of the ultrabear.
BE:
So presumably he is v v v v cautious?
PM:
Well, probably just v cautious.
PM:
Value investors are often a relatively homogenous group. While each does their own research,
they often tend to end up looking in the same places. This is a by-product of the tools and
techniques they deploy in their quest for bargains. However, views on financials have created
a schism in value land. One group thinks that financials are a clear opportunity. The other says
that valuing financials in the wake of a bursting credit bubble is foolhardy. To us the margin of
safety on the financials simply doesn’t look big enough given the risks of a prolonged
downturn.
This entry was posted by Paul Murphy on Wednesday, August 13th, 2008 at 11:07 and is filed under Uncategorised.
