Our macro thesis for investing in financial institutions was laid out earlier on in the following posts:
Tea with a macro-investor, thoughts on the financial sector
Tay Fund Commentary 2011
, and more specifically, our investment thesis for Bank of America,
The Compelling Case for Bank of America – Research Report
I feel somewhat vindicated that our scenario has played out as it has been thus far. However, let us not get too far ahead of ourselves as the recent run-up in banks has in large been due to
(1) the apparent orderly restructuring of Greek debt, (2) the success hence far of the ECB’s LTRO refinancing operation, and its consequent effect of driving down the yields of sovereign debt, (3) the latest results of the Federal Reserve’s bank stress test.Indeed, it is this slew of good news that has led to a dramatic advance of the major indices since ...
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