March 9, 2009
This weekend there was a lot of talk in the press about the declining market capitalizations of the major banks. There also were repeated comments concerning the governmentsbad investment”!in those companies. These are all being made because of the continued decline in the prices of bank stocks. Bank stocks are not going down because they are not lending or making money or growing their businesses. Plain and simple they are going down for two reasons: (1) speculators are shorting the shares, driving them lower, and (2) investors have no reason to have confidence in (purchase/own) bank shares as long as the US Government stands by and lets the shares continue to decline.
Capitalization = Market price per share X number of shares outstanding!
See my three suggestions below and if implemented to stock market will see a huge and extended rally, and bank stocks will all go up, solving this capitalization issue.