Citi soars as $300bn bail-out is agreed - DOC081125123457.pdf
Citi revived but its ills not cured - DOC081125123945.pdf
Lessons from the Citigroup rescue - DOC081125123659.pdf
Citi sicker - DOC081125123721.pdf
Citigroup aid package triggers strong rebound - DOC081125124039.pdf
Harry, a fellow co-worker of mine bestowed me with a couple of gem stock stories, and I have to share them. (Hope you're not too irritated by me sharing!)
"One fellow I met through my sons soccer practice, had inside information that the BOJ wouldn't let a trust fail. So he commenced in begging and borrowing, even borrowed from his in-laws, and was able to scrape together 50 mio Yen, a feat in and of itself! He bought Yasuda Trust when it dropped below 50 Yen, and got out when it came back up to and past 400 Yen. He just came back tanned from a multi-month golf tour in the UK," says Harry.
"Another fellow, got on his yearly review a comment that 'he wasn't motivated at work,' and when asked he would said, 'it's because I'm not motivated.' This fellow, just for the hell of it, bought 1 stock of Yahoo, and during the IT bubble, Yahoo split, and became the first 100 mio Yen stock. He had 4 stocks worth 400 mio Yen or roughly 4 mio US Dollars. The sad thing is that he still owns them."
Harry suggests that this low point in Japanese equity is one of those rare opportunites, and when the market gives you a gift, you're obliged to take it.
(By the way, C is looking pretty bad in the
But is it?
Blasting to the past --- Here is 10 years of the Daiwa Nikkei 225 look-a-like fund, showing that indeed the Nikkei is at a 5 year low.
Compare MUFG's situation with Nomura. Both banks bought Japanese arms of nearly failed or failed US IBs. However Nomura got a steal, while MUFG overpaid. Granted MUFG is practically government-sponsored, Nomura, for instance, seems pretty wiley.
Along with the Nikkei, MUFG is at a 5 year low, but the most common price on this graph is about 1000,
Todays close of 453, puts you at about 2:1. --- Up 12 (2.5%) from yesterday.
FYI, MUFG dividends have been 14 yen/yr, which is 3% annually on 453 Yen stock.
For the bank stock with the most traded volume, and in a country where the risk free rate is almost zero, 300bps is undoubtably a steal.
Nomura is probably a better bet for that matter, Nomura is at a multi-decade low, and during approx the same period,
Nomura spent most of its times in the upper 1000s and lower 2000s...
Closing at 645, that puts at about 3 or 4:1. --- Down 21 (3.5%) from yesterday.
Dividends have been 34 Yen/yr, which at 645 Yen/stock, that's 5.2% annually. Again, the ability to sit on 520bps annually is huge.
Conclusion: Going in on a downtrend is to risk catching a falling knife. Worst case, both companies go bust. Best case, they both return to 2004-2005 levels. Moderate case, They stay at these levels and you continue to earn 3-5% on investment. Sounds like a pretty good return picture for your risk money.
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