Top 10 US Financial Stocks for Systemic Risk
Glen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
NYU Stern puts out a very useful list of the most systemically risky banks using a proprietary formula that they run across US and now Global Financial Institutions. Without Further Ado, here's the list.
Ironically, you'll notice that the top 5 also have the most exposure to credit default swaps.
Coincidence, I think not. That said, if this whole mess is swept under the rug, these are the names you want to own because they have the most systemic exposure and will outperform if things go better than I expect they will. That said, I'm forecasting a harder than predicted Chinese crash landing, which began metasticizing itself in March of this year and has spread throughout their industrial pipeline of non-value-add activities. The way I figure, real estate speculation and low quality exports are their bread and butter and they just ran out of bread.
Then you have the European situation, which is structured like a vendor financing ponzi scheme that makes Germany look like it is better than it actually is. What is really happening is that Germany is lending people with terrible credit histories more money than they can afford to spend and Germany is overproductive as a result all things equal.
That said, I kind of have a similar perspective as Marshall Auerback. I figure that there are points in history where the systemic risk was as great if not greater for an eminent collapse and somehow things work themselves out. Europe can print their way out or create EuroBonds. I figure that after enough head fakes in the right direction, you eventually are charting a course in the right direction, and that's kind of what is happening in Europe. Sure they aren't solving any of their problems but they are consistently averting disaster. In the meanwhile, these US Financial institutions are hugely exposed to a potential Eurocrisis and that is why we see these in particular topping the charts for Systemic Risk.
Glen and his clients do not hold positions in Bank of America (NYSE: BAC), JP Morgan Chase (NYSE: JPM), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), MetLife (NYSE: MET), Wells Fargo (NYSE: WFC), Prudential Financial (NYSE: PRU), American International Group, Hartford Financial Services (NYSE: HIG) or Bank of New York Mellon (NYSE: BNY).