MQG overvalued in the current market, page-54

Thanks for the kind words. This is not advice and this is what I am planning.

This is a macro call and not specific to MQG. I think S&P 500 should decline to at least 3450 to 3500 (please see the reasons behind this value and people who are a lot smarter than me are slowly revising their year-end target eg. BOA). This is the level I am constructive. So at least another 15% down from the current level. From a technical standpoint, it will at least breach the 52-week low set a few weeks ago.

Still, there are few optimistic people l as you can see and most people capitulate before it turns. VIX should be close to 40-45. none of this happened. There are a few other indicators I seek before changing my perception of entry-level.

If I have to think of an analogous period, it is 2001. There was so much irrational exuberance (monetary stimulus, QE, crypto wealth) leading up to this period and this excess has to be flushed out. It takes time. There were bear market rallies sometimes close to 50% in that period. That was truly nerve-wracking for someone waiting on the sideline.

Comparison of Citi to MQG: I respectfully disagree
1. It was one of the most undervalued banks going into reporting. Its PB was close to 0.4. In a very superficial comparison about 60% cheaper than JPM (80% cheaper than MQG).

2. Management changed last year

3. Expectation was very low for the bank going into reporting season and much easier to beat them

4. The main contribution to outperformance was the very volatile trading revenue. As you might have guessed, you could very well lose money as well as from trading. The new management was focused on bringing new people to rectify this and it has worked for them.

5. Citi and MQG are very different banks to MQG. JP Morgan and Morgan Stanley are better comparisons.

It is mentally challenging to be a bear.
Everyone has their levels of comfort either actioning now vs waiting. I am prepared to wait as my thesis is FED is going to deliver the hikes (terminal rate of 4 with at least 4-5% persistent inflation), RBA will be dragged on to it and we will have a recession at some time. Banks do not do well in a recession, especially not expensive investment banks. At least this is my thesis.

I hope that helps. DYOR