Friday, June 19, 2009

E-Trade is a good buy now

I was miserably wrong in my analysis of E-Trade originally (really just wrong in my assessment of the mortgage trouble) and I have paid a pretty penny but I think if there was ever a time to purchase this stock it is now.

The biggest issue with e-trade has and still is it's mortgages, specifically the HELOCS. I believe there are two positive things to consider. First, they have already written off a boatload of the loan losses and second they have provisioned like crazy. I don't know how much more severe the loan losses will be but I would say that it is statistically likely to be far less severe than about one year ago. We also have some confirmation of this based on available loan data.

Finally, the current price is overly pessimistic in my opinion and doesn't value the new likelihood of survival.


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