The Bull Behind The Banks

What fear of stress tests? All weekend I saw articles saying that this was the week for stocks to take a hit because there was such fear around the bank stocks. Well, that didn't really show today. Both Citi and Bank of America skyrocketed, and they are in my opinion the worst of the major banks. The rebound in housing makes all the loan portfolios of these banks look a lot better as most of the loans banks have come from mortgages. I was curious to know if banks would be sold going into the stress tests, or bought. So far it seems like they are being bought, and I think they only go higher. The stress tests should come out showing that banks need more capital, but not a whole lot more. And this recent surge in financials gives me confidence that the banks will be able to raise the money in the private sector. The good news from the stress test is not going to be that banks are full capitalized and doing well, I don't think anyone expects that, but that the banks will not need much more money and the money they do need will be raised privately. Some of these banks are drastically undervalued and I would buy them as a solid long term investment. My two favorties are JP Morgan and Wells Fargo as I think they have the least downside potential.