“Buy when blood is running in the streets“
– Baron Rothschild
It looks like the smart money is eyeing the banking sector.
For example, a recent piece from Kiplinger.com is reporting that the “mad wizard of wall street” Ken Heebner, is buying bank stocks. Kiplinger speculated that Heeber is optimistic on bank stocks for at least two reasons. First, Heebner estimates that the potential for profit in the finance sector has increased because a number of as weaker banks have gone bust. Second, Heeber estimates that the economy will start to rebound as many consumers will begin spending again in mid 2009 (1).
Its been all over the headlines, but billionaire investor Warren Buffett’s firm Berkshire Hathaway has taken a five billion dollar stake in the Goldman Sachs Group (1). This suggests that Buffett is optimistic about the long term potential of Goldman and probably the US banking system more generally.
What the big millionaires are doing seems to make personal sense. I’ve been talking with a couple of hedge fund guys – and the general feeling seems to be that there could be some good deals to be had in the financial industry. We are personally looking at buying some shares in Citigroup (C). While we haven’t checked their financials, a large company with global exposure like Citigroup might do well in the next five to ten years.
Best,
James
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