Buy U.S. Financials? (NYSE: BAC) (NYSE: WFC)

Allan Edwards my friend and the CEO of The Markets Are Open said to buy U.S. Financials on November 24, 2010 and his fashion he didn't recommend a particular institution. The article from the day is shown below as others like popular television host Cramer at the same time was un-recommending the banks on his show Mad Money on November 23, 2010. Despite this he claims to have recommended the banks all along. This is the trouble with people having dual sided opinions where they recommend both sides. There was really only one opinion. People like to buy stocks that have more value than other stocks. Meaning the banks only had one way to go. Edwards said that people make substandard returns because they try to make money every day. He said "others try to maximize daily returns, I just try to make money." While Cramer and others were so worried about what would happen tomorrow they ignored the actual economic value of the companies.

"Buy U.S. Financials I Am

U.S. FINANCIALS face large headline risk there is the foreclosure scandal, worries of government intervention and sour loans.

But ... I’ve been buying American Financial stocks. I now have 80% of my wealth in U.S financial institutions. This is based on my investment philosophy of being cynical when others are optimistic and being optimistic when others are cynical. And keeping an open mind when others have closed theirs. This is when the strategic opportunities are best seen. People are selling U.S. Financials at impossible levels on fear. Of course these banks have had rough times but the tide is turning and all the major U.S. financial institutions are beginning to show an exceptional amount of profit.

U.S. Financials are the most attractive in the world. Fannie Mae and Freddie Mac have done their job in keeping liquidity in the financial market and the government should also be given praise for this. Franklin Roosevelt created these institutions during the Great Depression to add liquidity to the financial markets. Because of this the large U.S. financial institutions are among the safest in the world. The banks have more equity then they have ever had and full liquidity will eventually return to the markets. Despite this U.S. Banks are getting large discounts to European, and Asian Banks and the market.

The past congressional election dictated that there is unlikely to be oppressive financial regulation. Nor do they deserve it, they have all paid back TARP and the government has made a large amount of profit from the banks. I have never seen such a distortion in the risk reward ratio. I see U.S. Banks everyday which I deem to have no risk that sell as if they have a 50% risk of bankruptcy. Now is the time to buy U.S. Financials."