Banks Stocks Down: Time to Buy or Value Trap? 🏦🚨 #Banks #Earnings

Now, this is not a name I talk about a lot. I'm just not particularly interested in bank stocks very often, although I do look at them to sort of gauge where we might be and, you know, economic health-wise. Goldman Sachs has entered a bear market after falling more than 20% from July's all-time high. This This really caught my attention cuz it kind of snuck up on me. I wasn't really even tracking this one and then I looked one day and I'm like, "Wow, this one's This one's getting hammered." So, although I don't have a ton of interest in bank stocks, I do have to be honest and I say when I see Goldman down 20% plus, I look at that as a pretty compelling buying opportunity cuz we know Goldman's not going to go anywhere. They have alums across the government, across federal agencies. They print money. In fact, I just saw a story that the Goldman Sachs paid out over 500 million to its executives. So, clearly they don't have any concerns about where they are health-wise John. What do you think? Are you Do you find Goldman's situation a compelling buying opportunity right now? >> Well, I I think you have to think about the whole banking, right? We talked about this. We thought that if the market is going to make these new highs, that we would like to see financial markets go with it, right? Or kind of lead. And certainly this if we see Goldman Sachs turn and rally, that would be a good sign. But, it's not only Goldman Sachs, right? Here I only pull up my chart here. It's also Here's Goldman Sachs, but here is Here's Morgan Stanley, right? Let's Let's see even JP Morgan. Maybe not as far of a sell-off. I think this is only about a 10% correction. But, from a technical standpoint, you know, both of them do kind of look a little bit weak. So, I think the question here for us is what is the business model that we want to buy into, right? Right? We got earnings growth, we got valuation, we got market exposure, and then we'll also get to talk about the technical price structure. So, you think about Goldman Sachs, right? You know, they offer a greater direct exposure to investment banking, trading, institutional activity, uh some asset management, right? In other words, you know, they're making deals, IPOs, and and mergers and acquisitions. So, if that is you think that is what's going to continue, then then it makes Goldman Sachs attractive. What JP Morgan brings to the table is that they combine both a consumer and a commercial portfolio in banking, credit cards, payments, corp- corporate earnings, right? This is more of a broad-base and lending and, you know, deposits. Sometimes it's referred to as net income net interest income, right? The the money that they make off of that. So, you know, we are entering earning season, right? Both of these companies are going to report on October 13th. And this is in that backdrop why there's thought these stocks have come off, you know, because of, you know, rising interest rates and this question about, you know, funding costs or credit risk, right? The all that is kind of baked into the price right now. So um what I think is for the investor or the trader is again, there's two ideas here, investing versus trading. That where is the risk or where is the opportunity, right? So, if you think about Goldman Sachs, I think the risk is the business cycle, right? Where are we at in the business cycle? If the risk with um JP Morgan might be, you know, credit deterioration or, you know, higher um deposit costs, right? They got to pay out more because the yields yields are going higher or maybe even weaker loan demand. So, um from that perspective, Thomas, I think you I think you're right. I think Goldman Sachs might be the better trade if we believe that the financial market is going to run because technically, right, it could rally back to the 200-day moving, that mean reversion, right? That seems like a lot more room for it to run, but from an investment standpoint, right? If Goldman Yeah, go back to Goldman Sachs here, right? It's only gone down since its second quarter earnings, where it was they were stellar. They were they knocked it out of the park. So, the market's kind of telling you something right there, right? We got to listen to what the market is telling us, and that maybe the market is looking down the road and saying, "Hey, maybe the business cycle is a little bit weaker than we thought it was." You know, I don't know. That's what the price is, right? Remember what Buffett says, it's a voting machine. When we look at Morgan JP Morgan, right? It's come off, but it's held above its 200-day moving average. It's technically a little bit more supportive. And again, if you look at, for instance, things like relative strength or momentum, you know, again, these are lagging indicators, but the relative strength is a little bit better. Momentum, you know, okay, still not great. And again, if we go back to Goldman Sachs, again, from a technical aspect, the relative strength, you know, doesn't look great. Now, it has been pinned down here right around the oversold, so that it could be a potential positive, but I think I would wait until after earnings and see more of a confirmational reversal before I would take either a trade in Goldman Sachs or an investment opportunity in Morgan Stanley. Excuse me. I say it all the time. I say this all the time. JP Morgan. You know, I thought Goldman was a compelling buying opportunity, and I like to practice what I preach. so yesterday I did buy Goldman. I put a limit at 879, it got filled, so I guess you know it's up a little bit since then. We'll see. Hopefully it can recover the 200-day. I think that's the first step. Um and I agree with you, John. The earnings report it punished Goldman, right? And now my only counter that would be yeah, it's been punished by 20 some percent. So that could be fact that could be sort of baked into where we are um at the moment. >> But if the market's forward looking and they think they're going to have great earnings again this quarter, well why did the stock fall 25%, right? So I mean again, it could be more of a function of what's going on in the in the yield curve and the dynamics of maybe what's going on in trading and you know, M&A and IPOs and stuff like that. >> Uh again, if you guys are watching on our social channels, you could do John and I a huge favor. Share it, give it a thumbs up, leave a comment, tell us what you're what you're looking at in the market. We would be super grateful.