Think you already missed the rally in U.S. financials? The S&P Financials index has already soared 162% from its crisis lows.
That’s nothing, says Dick Bove of Rochdale Securities. He thinks American bank stocks could quadruple by 2012:
“Stocks are going to go much higher,” Bove, who is based in Lutz, Florida, said in a telephone interview. “The catalyst is the reduction in loan losses. That’s all that investors in banks care about.”
“Investors have decided they will bet on that rather than worrying about fundamentals,” he said. “The fundamentals are not good. The first quarter will not show any particular strength in bank earnings. What it will show is an improvement in loan quality and that’s all people are looking at.”
Nearly 60 per cent of the “big public companies” will lose money in the first quarter, Bove said.
Bove is clearly tempting investors with the prospect of an uber rally. He could be justified, as long as banks don’t suddenly discover that their balance sheets are in reality, once again, nothing like what their financial records make them out to be.
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