Since JPM (JP Morgan) reported earnings last week, I have heard many banking analysts talk about BAC (Bank of America), GS (Goldman Sachs) and other financial institutions in regards to what seems to be a cheap stock based on such fundamentals as: business lines & earnings power, Price-to-Tangle Book and ROE. Yesterday, we saw GS (Goldman Sachs) swing to a quarterly loss for the first time since they went public. Many analysts believed that this was mainly because of the lack of earnings power from the lost prop trading business. I do not even begin to try to determine the fundamental reason why these complex institutions trade at the multiples they do or for that matter, try to figure out which financial institutions will be the best performer. I would even argue, neither should these same analysts that failed to see Bear Stearns or Lehman going to zero.
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