On a day when the Dow plunged 250 points on economic worries, WHY did the financials go up?

Mike 03

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Mon Feb-23-09 06:19 PM
Original message

On a day when the Dow plunged 250 points on economic worries, WHY did the financials go up?

Edited on Mon Feb-23-09 06:21 PM by Mike 03

Citi, BofA, Wells were all up. If anything, this has to be the most troubled sector of them all.

What gives? I can't think of a reason in the world to buy any of the financials at all right now. Who is buying and why??

From what I can determine, some of these institutions are basically insolvent. What am I missing that is so appealing about these stocks right now?

:shrug:

Or is this a case of that old adage "the floor is the limit" and we can chock/chalk this up to pure wishful thinking and insanity.

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LSparkle

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Mon Feb-23-09 06:20 PM
Response to Original message

1. I'm wondering if people think nationalizing the banks will be a good thing ...

It won't be for shareholders (who I think I read here would lose
out completely), but some people may not be aware of that.

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Coyote_Bandit

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Mon Feb-23-09 06:22 PM
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2. Speculators

If the banks are nationalized then they will not be bankrupted. Their interest will most likely be diluted but it will not be liquidated. They are betting that the banks will be at least partially nationalized and that they will make money as a result because the diluted value of their shares will increase.

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Kurt_and_Hunter

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Mon Feb-23-09 06:28 PM
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3. The citi plan is more favorable to common share holders than feared

with implications for other banks in the sector

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endarkenment

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Mon Feb-23-09 06:29 PM
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4. They are up on speculation that the fed will buy the banks

consequently the stock has increased in value.

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paulsby

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Mon Feb-23-09 06:30 PM
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5. i trade

a fair amount of futures and some financial stocks.

simply put, stuff goes up when demand outstrips supply.

at these depressed levels, there was more demand than there was supply .

it's really that simple.

trying to rationalize short term machinations will drive you crazy... and lose you money.

i'm a short term trader (as well as investor). my short term trades are based on order flow. iow, i follow the institutions cause they move the markets.

trying to divine the "why" will leave you shaking your head.

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dkofos

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Mon Feb-23-09 06:40 PM
Response to Original message

6. Speculative buying in, before nationalization of the banks.

Some might even call it bottom feeding.

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