Tags: Kotok | Bank | Stocks | fire | Sale

David Kotok: Bank Stocks at 'Fire-Sale' Prices

Thursday, 03 Nov 2011 08:22 AM

David Kotok, Chairman and Chief Investment Officer of Cumberland Advisors, says now is a great time to buy bank stocks.

"Not just the big banks, but smaller banks, mid-sized banks, regional banks, the banking system is at a fire sale price," Kotok told CNBC. "We think that there is an opportunity here."

"Stocks are cheap, no one wants them, everybody's afraid of them, that's a strategic time to be into the market, not leave it," says Kotok. "In this sell-off, we're back in."
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"There was a time a few weeks ago when you could buy the entire banking sector of the United States at the market prices at which they traded, below their tangible book value. In other words, the liquidation value, that's cheap."

Any time in history when you could get banks below book value, it's been an entry point, not a time to sell them, and that's how they're trading now, Kotok explains.

Kotok recommends buying U.S. regional banks, which have held up reasonably well, using an exchange-traded fund like the S&P Regional Banking Index, which has gained 15 percent since the start of October.

The S&P Financial Index, which tracks major U.S. banking stocks, has sold off nearly 20 percent this year, considerably more than the 3 percent decline in the S&P 500 this year.

Business Week reports that the Standard & Poor’s 500 Index is 33 percent cheaper than average for periods of similar inflation, making some energy and financial stocks “attractive,” according to Goldman Sachs Group’s Abby Joseph Cohen.

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David Kotok, Chairman and Chief Investment Officer of Cumberland Advisors, says now is a great time to buy bank stocks. Not just the big banks, but smaller banks, mid-sized banks, regional banks, the banking system is at a fire sale price, Kotok told CNBC. We think that...
Kotok,Bank,Stocks,fire,Sale
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2011-22-03
Thursday, 03 Nov 2011 08:22 AM
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