The quarterly reports for the big banks were terrible across the board, but stocks are up because the psychology and the method of valuing bank stocks have changed, said Richard Bove, financial strategist at Rochdale Securities. (See below for his stock picks — and pans.)
“Goldman Sachs had real earnings; JPMorgan had no earnings,” Bove told CNBC.
“JPMorgan saw its deposits, loans go down. It saw its margins go down, it saw its trading go down, it had big capital gains it had pulled out from somewhere to come up with a positive number.”
Bove said although he is also unsatisfied with Citigroup and Bank of America’s results, the markets are willing to accept the numbers because the method of valuing bank stocks has changed.
“So I’d still buy the stocks I have mentioned,” said Bove, “But you’re going to see terrible earnings out of every bank that reports because most of these banks do not have the benefit of capital markets activities. I’d say 50 percent of them are going to lose money.”
- BofA, JPMorgan or Goldman? Strategist's Top Pick
- Dick Bove: Financials Rally Set to Continue
Bank of America
Bank of NY Mellon
Bove's Stocks to Avoid
Fifth Third Bancorp
Marshall & Illsley
No immediate information was available for Bove or his firm.