Is Deutche Bank a buy?

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Erwin
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Is Deutche Bank a buy?

Post by Erwin » Thu Sep 29, 2016 1:02 pm

is Deutche Bank (DB) as in bad shape as the market says? Will Germany not interfere?
2014 -32.47%
2015 -16.80%
YTD -38.92%
Today -8++%
Erwin

lgs88
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Re: Is Deutche Bank a buy?

Post by lgs88 » Thu Sep 29, 2016 1:17 pm

You should ask AIG shareholders how well the US government's stepping-in worked for them in 2008.

If the German government does step in - by no means a certainty - it will almost certainly be at the expense of shareholders (and rightfully so).
merely an interested amateur

Erwin
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Re: Is Deutche Bank a buy?

Post by Erwin » Thu Sep 29, 2016 1:20 pm

lgs88 wrote:You should ask AIG shareholders how well the US government's stepping-in worked for them in 2008.

If the German government does step in - by no means a certainty - it will almost certainly be at the expense of shareholders (and rightfully so).
Right, but that was no the case for most of the big US banks in 2008
Erwin

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TomatoTomahto
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Re: Is Deutche Bank a buy?

Post by TomatoTomahto » Thu Sep 29, 2016 1:26 pm

DW and I are pretty familiar with DB. We would not buy.

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slayed
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Re: Is Deutche Bank a buy?

Post by slayed » Thu Sep 29, 2016 1:28 pm

You should definitely buy, I suggest getting it through VTIAX or similar.

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Re: Is Deutche Bank a buy?

Post by Levett » Thu Sep 29, 2016 1:36 pm

Maybe, finally, we have reached the point of "Too Big to Bail." :thumbsup

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nova1968
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Re: Is Deutche Bank a buy?

Post by nova1968 » Thu Sep 29, 2016 1:41 pm

Bottom Fishing is never a good idea

TomCat96
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Re: Is Deutche Bank a buy?

Post by TomCat96 » Thu Sep 29, 2016 1:49 pm

Erwin wrote:is Deutche Bank (DB) as in bad shape as the market says? Will Germany not interfere?
2014 -32.47%
2015 -16.80%
YTD -38.92%
Today -8++%

Falling knife principle applies.

Why if DB has been going down for so long, does it suddenly make sense now for it to go up?

Erwin
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Re: Is Deutche Bank a buy?

Post by Erwin » Thu Sep 29, 2016 2:41 pm

TomCat96 wrote:
Erwin wrote:is Deutche Bank (DB) as in bad shape as the market says? Will Germany not interfere?
2014 -32.47%
2015 -16.80%
YTD -38.92%
Today -8++%

Falling knife principle applies.

Why if DB has been going down for so long, does it suddenly make sense now for it to go up?
I have no idea! but I know that DB is as much Germany as GM is US, and typically markets over react. That is all
Erwin

lgs88
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Re: Is Deutche Bank a buy?

Post by lgs88 » Thu Sep 29, 2016 2:43 pm

GM shareholders got wiped out, too!
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Jags4186
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Re: Is Deutche Bank a buy?

Post by Jags4186 » Thu Sep 29, 2016 2:57 pm

Somehow I don't think handcuffing yourself to a sinking ship makes sense...

The stock is down because the company made poor investments and is losing money. It's not down because of some bad industry news not related to the underlying business.

Avoid.

TomCat96
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Re: Is Deutche Bank a buy?

Post by TomCat96 » Thu Sep 29, 2016 3:09 pm

Erwin wrote:
TomCat96 wrote:
Erwin wrote:is Deutche Bank (DB) as in bad shape as the market says? Will Germany not interfere?
2014 -32.47%
2015 -16.80%
YTD -38.92%
Today -8++%

Falling knife principle applies.

Why if DB has been going down for so long, does it suddenly make sense now for it to go up?
I have no idea! but I know that DB is as much Germany as GM is US, and typically markets over react. That is all
lgs88 has the right idea. You are correct that DB is as much Germany as GM is US. I do not contend that.
DB as a company will survive, just as GM is alive and kicking right now.

But you as a shareholder of said company may not. When GM was bailed out the old shareholders lost everything.

A quick google search brought this up.

"After the Chapter 11 filing, effective Monday, June 8, 2009, GM was removed from the Dow Jones Industrial Average and replaced by Cisco Systems. From Tuesday 2 June, old GM stock has traded Over the Counter (Pink Sheets/OTCBB), initially under the symbol GMGMQ[11] and currently under the symbol MTLQQ."

"The United States government-endorsed sale enabled the NGMCO Inc.[1] ("New GM") to purchase the continuing operational assets of the old GM."

Valuethinker
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Re: Is Deutche Bank a buy?

Post by Valuethinker » Thu Sep 29, 2016 3:56 pm

Erwin wrote:is Deutche Bank (DB) as in bad shape as the market says? Will Germany not interfere?
2014 -32.47%
2015 -16.80%
YTD -38.92%
Today -8++%
Think Citigroup or Freddie or Fannie in June of 2008.

Cheap?

Fools venture where brave men fear to tread ...

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Re: Is Deutche Bank a buy?

Post by Valuethinker » Thu Sep 29, 2016 3:57 pm

Erwin wrote:
TomCat96 wrote:
Erwin wrote:is Deutche Bank (DB) as in bad shape as the market says? Will Germany not interfere?
2014 -32.47%
2015 -16.80%
YTD -38.92%
Today -8++%

Falling knife principle applies.

Why if DB has been going down for so long, does it suddenly make sense now for it to go up?
I have no idea! but I know that DB is as much Germany as GM is US, and typically markets over react. That is all
Erwin

It's a bank. When it gets recapitalized existing shareholders (and bondholders) will take big pain.

Big pain.

It's a bank, essentially a giant confidence game.

Royal Bank of Scotland UK taxpayer is down something like £15bn on the bailout, 8 years later.

Valuethinker
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Re: Is Deutche Bank a buy?

Post by Valuethinker » Thu Sep 29, 2016 3:57 pm

TomCat96 wrote:
Erwin wrote:is Deutche Bank (DB) as in bad shape as the market says? Will Germany not interfere?
2014 -32.47%
2015 -16.80%
YTD -38.92%
Today -8++%

Falling knife principle applies.

Why if DB has been going down for so long, does it suddenly make sense now for it to go up?
On the way back to some kind of stability existing shareholders are likely to pass through zero, or near enough.

yearzero
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Re: Is Deutche Bank a buy?

Post by yearzero » Thu Sep 29, 2016 4:01 pm

Good luck with that.

Deutche has 42 Trillion in gross derivative exposure. Germany's total GDP is 3 Trillion.

A number of funds (10 of 200) that clear derivative trades with DB are already moving capital to other banks, fearing that 2008 Lehman Brothers-esque collapse is possible.

It will be an interesting rest of the year for EU banks. Today, Commerzbank, the second-biggest bank in Germany, suspended its dividend. Italy's biggest bank, UniCredit, is down about 70 percent in the past 12 months and Intesa Sanpaolo and especially Monte dei Paschi di Siena have been hammered.
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lgs88
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Re: Is Deutche Bank a buy?

Post by lgs88 » Thu Sep 29, 2016 4:10 pm

yearzero wrote:Good luck with that.

Deutche has 42 Trillion in gross derivative exposure. Germany's total GDP is 3 Trillion.

A number of funds (10 of 200) that clear derivative trades with DB are already moving capital to other banks, fearing that 2008 Lehman Brothers-esque collapse is possible.

It will be an interesting rest of the year for EU banks. Today, Commerzbank, the second-biggest bank in Germany, suspended its dividend. Italy's biggest bank, UniCredit, is down about 70 percent in the past 12 months and Intesa Sanpaolo and especially Monte dei Paschi di Siena have been hammered.
It is interesting to watch from across the pond, though I would not hazard a guess for how it will turn out. EUR 360 billion of loans on Italian bank balance sheets are "troubled": http://www.wsj.com/articles/bad-debt-pi ... 1467671900

And it takes 8 years for insolvency procedures to wend their way through Italian courts.
merely an interested amateur

Stonebr
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Re: Is Deutche Bank a buy?

Post by Stonebr » Thu Sep 29, 2016 4:15 pm

Reminds me of Bear Stearns. It seemed like a one-off at the time...

Buy Wells Fargo too for a little diversification.
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Valuethinker
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Re: Is Deutche Bank a buy?

Post by Valuethinker » Thu Sep 29, 2016 5:00 pm

lgs88 wrote:
yearzero wrote:Good luck with that.

Deutche has 42 Trillion in gross derivative exposure. Germany's total GDP is 3 Trillion.

A number of funds (10 of 200) that clear derivative trades with DB are already moving capital to other banks, fearing that 2008 Lehman Brothers-esque collapse is possible.

It will be an interesting rest of the year for EU banks. Today, Commerzbank, the second-biggest bank in Germany, suspended its dividend. Italy's biggest bank, UniCredit, is down about 70 percent in the past 12 months and Intesa Sanpaolo and especially Monte dei Paschi di Siena have been hammered.
It is interesting to watch from across the pond, though I would not hazard a guess for how it will turn out. EUR 360 billion of loans on Italian bank balance sheets are "troubled": http://www.wsj.com/articles/bad-debt-pi ... 1467671900

And it takes 8 years for insolvency procedures to wend their way through Italian courts.
The problem is the German electoral cycle.

Italy and Germany need to do a deal, Italy bails out MPS and Germany DB. But instead, because of the German electorate, they'll have to be a fudge "bail in" which will simply allow the panic to spread to more institutions.

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Re: Is Deutche Bank a buy?

Post by tedclu » Thu Sep 29, 2016 5:08 pm

DB can't fail. They will be bailed out. The day the government bails them out is the day stock goes to zero.

Every financial services firm is looking at their exposure right now. And they are all trying to limit them.

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Re: Is Deutche Bank a buy?

Post by Tanelorn » Thu Sep 29, 2016 6:27 pm

A German bailout may be hard to manage politically without setting the precedent of bailing out the many other much worse off banks in the PIIGS. DB is right on the edge of being insolvent, and if the other bank counter parties start calling in their debts, they could blow up pretty fast. Interesting times. I'd rather be short than long if I had to pick.

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Re: Is Deutche Bank a buy?

Post by basr518 » Thu Sep 29, 2016 6:37 pm

slayed wrote:You should definitely buy, I suggest getting it through VTIAX or similar.
Exactly just buy the index! JPMorgan will be the next bank to get caught screwing the American public or Bank of NY Mellon. Banks are inherently corrupt. Dividends can be found elsewhere. Avoid WFC. They (Wells Fargo doesn't know nor care if you buy their shares in the open market), so why play their game?
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whodidntante
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Re: Is Deutche Bank a buy?

Post by whodidntante » Thu Sep 29, 2016 6:48 pm

How does a stock go down by 90%? Well, first it goes down by 80%, and then it gets cut in half.

Tier1Capital
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Re: Is Deutche Bank a buy?

Post by Tier1Capital » Thu Sep 29, 2016 8:52 pm

This is an equity tantrum, which others have indicated, could possibly end with DB equity and sub debt being wiped out as part of a bail-in recapitalization. Bank capital ratios are higher vs. the pre financial crisis landscape. It's well within Germany's capacity to fix this with additional equity, but that doesn't necessarily make DB a buy.

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siamond
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Re: Is Deutche Bank a buy?

Post by siamond » Thu Sep 29, 2016 9:09 pm

lgs88 wrote:You should ask AIG shareholders how well the US government's stepping-in worked for them in 2008.
I had to laugh when reading this post. The very last individual stock I bought was... AIG after its fall from grace. I enjoy being a contrarian (ask my wife!), and thought that after its dizzying fall, AIG would *inevitably* go up, and this would be a fun and profitable bet to make. Eight years later, I am not amused, nor did I get rich. It wasn't a really bad investment, but it wasn't a good one either, and I would be in better shape if I had spent the money on an S&P 500 fund.

Now that I finally gave up on the idea of proving myself right (took me a while!), I have a position to slowly eliminate without suffering annoying tax consequences, oh joy. Oh well, this was the final nail in the coffin of my 'individual stock picker' former self. Good riddance!

lgs88
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Re: Is Deutche Bank a buy?

Post by lgs88 » Thu Sep 29, 2016 9:18 pm

siamond wrote:
lgs88 wrote:You should ask AIG shareholders how well the US government's stepping-in worked for them in 2008.
I had to laugh when reading this post. The very last individual stock I bought was... AIG after its fall from grace. I enjoy being a contrarian (ask my wife!), and thought that after its dizzying fall, AIG would *inevitably* go up, and this would be a fun and profitable bet to make. Eight years later, I am not amused, nor did I get rich. It wasn't a really bad investment, but it wasn't a good one either, and I would be in better shape if I had spent the money on an S&P 500 fund.

Now that I finally gave up on the idea of proving myself right (took me a while!), I have a position to slowly eliminate without suffering annoying tax consequences, oh joy. Oh well, this was the final nail in the coffin of my 'individual stock picker' former self. Good riddance!
Take heart. There are some among us (not naming names, obviously!) who bought AIG before its fall from grace... and kept buying on the way down!
merely an interested amateur

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siamond
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Re: Is Deutche Bank a buy?

Post by siamond » Thu Sep 29, 2016 9:28 pm

lgs88 wrote:Take heart. There are some among us (not naming names, obviously!) who bought AIG before its fall from grace... and kept buying on the way down!
Oh boy. My sincere condolences. :(

PS. at least, you don't have a tax management problem... a (weak) silver lining!

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Re: Is Deutche Bank a buy?

Post by LadyGeek » Fri Sep 30, 2016 5:25 am

This thread is now in the Investing - Theory, News & General forum (general question).

In reference to some earlier posts, please stay focused on the investing aspects.
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Re: Is Deutche Bank a buy?

Post by mmcmonster » Fri Sep 30, 2016 8:20 am

Stonebr wrote:Buy Wells Fargo too for a little diversification.
Best comment ever!

But seriously, are these sort of stocks shortable? (Not that I would. I don't have that sort of risk tolerance in me.)

Or does the 'catching a falling knife' principle hold there as well?

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Re: Is Deutche Bank a buy?

Post by Tanelorn » Fri Sep 30, 2016 9:11 am

mmcmonster wrote:But seriously, are these sort of stocks shortable? (Not that I would. I don't have that sort of risk tolerance in me.)
Yes, DB is very easy to short. You can think of the first fraction of a % of your allocation sold short as offsetting the risk you didn't want in your index funds that hold Deutsche.

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Re: Is Deutche Bank a buy?

Post by Engineer250 » Fri Sep 30, 2016 9:51 am

slayed wrote:You should definitely buy, I suggest getting it through VTIAX or similar.
M* says DB makes up 1.12% of shares held in Vanguard Total International. So I think I am good where I am at.
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shakenbake
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Re: Is Deutche Bank a buy?

Post by shakenbake » Fri Sep 30, 2016 9:59 am

Looks like it was a buy- it's up 7.7%.
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Re: Is Deutche Bank a buy?

Post by Beliavsky » Fri Sep 30, 2016 10:16 am

Erwin wrote:is Deutche Bank (DB) as in bad shape as the market says? Will Germany not interfere?
2014 -32.47%
2015 -16.80%
YTD -38.92%
Today -8++%
The current 1-month implied volatility of DB, from ivolatility.com, is 92.02%, compared to 22.72% for JPMorgan (JPM). To the extent you buy individual stocks at all, you should only buy DB if you think its expected return is about 4 times higher than that of a "normal" stock such as JPM.

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Re: Is Deutche Bank a buy?

Post by Tanelorn » Fri Sep 30, 2016 10:27 am

shakenbake wrote:Looks like it was a buy- it's up 7.7%.
You mean 12%, look again. The mortgage settlement might be less bad than feared.

Erwin
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Re: Is Deutche Bank a buy?

Post by Erwin » Fri Sep 30, 2016 12:10 pm

Of course I did nothing.
I have a friend that lives out of bad news. He tells me that the market never fails to exaggerate the problem. He started by allocating a small portion of his money that he said that he could afford to lose and that grew from a hobby to a way of life.
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Re: Is Deutche Bank a buy?

Post by Solo Prosperity » Fri Sep 30, 2016 12:25 pm

I have a very small "hobby" account, ~1-2% of invest-able monies, and I bought 10 shares of DB on Monday...Its been a hell of a ride. I am up on it, but it was for pure speculation and fun.

If it goes bankrupt, it won't affect me at all...if it turns into a 10-bagger, it won't affect me at all.

It has however provided a lot of fun/entertainment for me this week...and I think it will continue...would I put serious money into it? Nope, but some braves soul will and they will do very well or very poorly.

If you want, buy a few shares and enjoy it, just make sure it's money you can afford to lose.

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Re: Is Deutche Bank a buy?

Post by shakenbake » Fri Sep 30, 2016 3:07 pm

I bought one share for fun this am. Mid way through the day I thought why did I only buy one? I mean why not at least 2 or 3 or 10 while I was at it? :confused
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Re: Is Deutche Bank a buy?

Post by LadyGeek » Fri Sep 30, 2016 4:04 pm

Deutsche Bank AG (DB) is currently at $13.14. When you add the cost of the trade, how much do you have to gain in order to break even?
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Re: Is Deutche Bank a buy?

Post by shakenbake » Fri Sep 30, 2016 4:09 pm

LadyGeek wrote:Deutsche Bank AG (DB) is currently at $13.14. When you add the cost of the trade, how much do you have to gain in order to break even?
Trades are free at Robinhood.
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Re: Is Deutche Bank a buy?

Post by sperry8 » Sat Oct 01, 2016 3:46 am

The EU has a Deposit Guarantee Scheme to cover depositors http://ec.europa.eu/finance/bank/guarantee/index_en.htm

And Germany does too: https://www.db.com/hungary/docs/Informa ... ection.pdf

It doesn't specifically state that it covers non-EU residents. Any reason it wouldn't?
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Re: Is Deutche Bank a buy?

Post by sunnywindy » Sat Oct 01, 2016 4:14 am

With the Euro being such a mis-designed currency, DB might be a value trap. I think there are better gambles out there (although I think if you have a more than 10 year time horizon, you might be ok.)
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Re: Is Deutche Bank a buy?

Post by Valuethinker » Sat Oct 01, 2016 10:14 am

sunnywindy wrote:With the Euro being such a mis-designed currency, DB might be a value trap. I think there are better gambles out there (although I think if you have a more than 10 year time horizon, you might be ok.)
In the restructuring the subordinated bond holders (AT1s) and the equity holders will probably take significant pain.

German banking is not particularly profitable. At the core of Lloyds, Barclays, even RBS (Natwest) there is a strong and profitable retail franchise. DB doesn't have that.

What you basically have is an investment bank that doesn't have the efficiencies or make the money of Morgan Stanley, let alone Goldman. Plus a corporate bank-- again, competitive area. And it's a huge investment bank, unwinding it will take 10+ years.

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Re: Is Deutche Bank a buy?

Post by Valuethinker » Sat Oct 01, 2016 10:15 am

sperry8 wrote:The EU has a Deposit Guarantee Scheme to cover depositors http://ec.europa.eu/finance/bank/guarantee/index_en.htm

And Germany does too: https://www.db.com/hungary/docs/Informa ... ection.pdf

It doesn't specifically state that it covers non-EU residents. Any reason it wouldn't?

AFAIK it does, but that's nothing to do with the equity?

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Re: Is Deutche Bank a buy?

Post by Johnnie » Sat Oct 01, 2016 1:37 pm

This might have been said, but I suspect one gets more DB and other troubled foreign banks in VG's large cap international value fund, VTRIX.

Some day the boot will be lifted from the animal spirits and this will be a good investment. Maybe sometime this century even.
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Re: Is Deutche Bank a buy?

Post by sperry8 » Sat Oct 01, 2016 8:40 pm

Valuethinker wrote:
sperry8 wrote:The EU has a Deposit Guarantee Scheme to cover depositors http://ec.europa.eu/finance/bank/guarantee/index_en.htm

And Germany does too: https://www.db.com/hungary/docs/Informa ... ection.pdf

It doesn't specifically state that it covers non-EU residents. Any reason it wouldn't?

AFAIK it does, but that's nothing to do with the equity?
Thanks. Sorry, I shouldn't have hijacked this thread but rather posted a new one.
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Re: Is Deutche Bank a buy?

Post by Dansandiego » Sat Oct 01, 2016 11:00 pm

11111
Last edited by Dansandiego on Thu Oct 13, 2016 10:53 pm, edited 1 time in total.

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Re: Is Deutche Bank a buy?

Post by gips » Sun Oct 02, 2016 7:52 am

On a risk adjusted basis it's not a good buy or a bad buy. The same could be said for any liquid stock trading in an efficient market. That's why we index.

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Re: Is Deutche Bank a buy?

Post by Valuethinker » Sun Oct 02, 2016 9:01 am

Dansandiego wrote:I started reading this thread based on the thought that maybe the bonds were a good asset to buy (if there are DB bonds available through Vanguard's platform/desk). I always go for bonds in fallen large caps (FCX, CHK, WMB, S) vs. the equity. But very shortly into the thread I realized that the bonds are in the same boat as the equity. Either everything invested in DB ends up fine or everyone drowns (bonds included).
A contact bought the Senior Bonds at 90 on Friday morning and they closed at 97. So that's an impressive 1 day return from a bond!

However he's fairly sure (and he ought to know) that the AT1s will get hosed.

Bail in not bail out. There's a lot of difference in 1 word in terms of how it will play out.

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Re: Is Deutche Bank a buy?

Post by Valuethinker » Sun Oct 02, 2016 9:03 am

Erwin wrote:Of course I did nothing.
I have a friend that lives out of bad news. He tells me that the market never fails to exaggerate the problem. He started by allocating a small portion of his money that he said that he could afford to lose and that grew from a hobby to a way of life.
Except of course when the market is right. In Q2 of 2008 we had no idea just how right the market was. 90%+ falls in any number of major financials.

This is how Bill Miller and other value investors got wiped out: they "caught the falling knife" on FNMA, FMAC, AIG, RBS etc.

Yes if you'd bought JPM in Q4 you probably did alright. But there wasn't any way of knowing that the bailout would work, and that confidence would be restored so quickly. There are a lot of living dead "zombie" financial institutions out there, even now.

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Re: Is Deutche Bank a buy?

Post by Valuethinker » Sun Oct 02, 2016 9:05 am

tedclu wrote:DB can't fail. They will be bailed out. The day the government bails them out is the day stock goes to zero.

Every financial services firm is looking at their exposure right now. And they are all trying to limit them.
They will be bailed in, not bailed out. A lot of difference in that one word.

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