Meredith Whitney Continues to be Negative on Financials (and Housing)

By: TraderMark Monday, August 04, 2008 5:56 PM

Article Author

Bio and Articles
Author's Website

Vote for next session

The next market session will close:

Meredith Whitney has created a star for herself by going against the pack (along with certain bloggers) and denouncing the "this is the kitchen sink quarter in financials" thinking that pervaded the market last summer and fall. I've remained negative along with her (Mar 26: I'm on Meredith Whitney's Side) although it is a lot easier to be negative as an analysts than a stock picker because we've had these constant oversold bounces in the group which can rip your head off if you overstay your welcome on the short side. But as I repeat constantly, each oversold bounce is still a new shorting opportunity in my book.

She is out in a few media outlets this morning - I cannot embed most video from CNBC but this is a most worthy 6 minute video from this morning in CNBC. I could not agree with her points more - even when the "recovery" happens you will have (in most cases) companies with very impaired situations. Another 8 minute video here discussing her rise to prominence - another worthy video. I urge readers to view both - it is worth your 15 minutes and it combats all the Kool Aid you hear almost daily about how everything is just fine and dandy or will be "soon". (Jul 29: The Bottom is in Financials - Version 23,472) Here are some comments via CNBC website focusing more on home prices, which of course we've been pounding the table with similar comments since last summer.

Housing prices will fall more than 30 percent before the market recovers and banks will continue their reluctance to lend until the credit crisis clears up, Oppenheimer analyst Meredith Whitney said on CNBC.
In a wide-ranging interview, Whitney said the housing deterioration will be worse than even the doom-and-gloom predictions that already have circulated regarding the market. "There's one obvious area where the bad news isn't all out yet, and that's with home prices ... Home prices are going to fall much more than people expect," she said.
"I think it's going to be well worse than 33 percent, and here's why: If you look at the futures market, it's indicating a range right around between 2002-2003 levels, when home ownership rates were actually higher, but fewer people can qualify for a mortgage because you've got to put 20 percent down, and that's a lot of money for people," she continued.

Bookmark:
Email
Print


8/8/2008 4:38:12 PM The Meredith Whitney Hype Machine? by Anand Sanwal Like the internet days when we had superstar analysts (Henry Blodget anyone?), we now have the new market guru of the financials arena in Meredith Whitney. She’s undoubtedly made some prescient calls and hasn’t been shy in making them aggressively and in an outspoken manner, but the question really is whether Meredith Whitney is more sizzle than steak? When you look at her performance as reported in a Fortune Magazine article of August 18, 2008, it is average or even below average. “Based on the performance of her buy and sell recommendations relative to her industry peer group Whitney’s stock picking ranked 1,205th out of 1,919 equity analysts last year and 919th out of 1,917 through the first half of 2008.” However, given the love affair with Meredith Whitney, the article goes onto assert that “evaluating Whitney solely on the timing of her buys and sells misses the point” is one of the most patently ridiculous things I’ve ever read. It doesn’t miss the point. It is the point. If I’m a client or investor, I’m guessing that the correctness of stock picks is what makes me money and not the “brutality of her arguments and the evidence she summons in making them.” Looking at her stock picks as a metric for measurement is the right thing, and no matter how good her arguments sound, her stock picks aren’t that good. However, we all love a story and Meredith Whitney provides it. She is married to a WWE wrestler and more importantly, she makes swing for the fences calls which attract attention. If she was wrong on these big crazy calls, she’d have faded into obscurity. But because she has been right on some of these big, hairy prognostications, she’s been appointed a guru and CEOs and CFOs spend time with her. Unfortunately, it seems the frequency of being right which I presume the folks who are ranked highly in the equity analyst ratings are is being drowned out by the magnitude of correctness and slick PR. Let’s remember the primary objective of an equity analyst should be to make good calls that inform clients’ investment actions and enable their success. As a result of this, they should be rewarded. Somehow, being 919 out of 1917 equity analysts doesn’t seem worthy of much praise, but once again, style sells. The question now is if Meredith Whitney’s stock picking skills don’t improve, how long will the hype last? Regards, Anand Brilliont Reply Rating: (1) (0)
8/8/2008 4:38:12 PM The Meredith Whitney Hype Machine? by Anand Sanwal Like the internet days when we had superstar analysts (Henry Blodget anyone?), we now have the new market guru of the financials arena in Meredith Whitney. She’s undoubtedly made some prescient calls and hasn’t been shy in making them aggressively and in an outspoken manner, but the question really is whether Meredith Whitney is more sizzle than steak? When you look at her performance as reported in a Fortune Magazine article of August 18, 2008, it is average or even below average. “Based on the performance of her buy and sell recommendations relative to her industry peer group Whitney’s stock picking ranked 1,205th out of 1,919 equity analysts last year and 919th out of 1,917 through the first half of 2008.” However, given the love affair with Meredith Whitney, the article goes onto assert that “evaluating Whitney solely on the timing of her buys and sells misses the point” is one of the most patently ridiculous things I’ve ever read. It doesn’t miss the point. It is the point. If I’m a client or investor, I’m guessing that the correctness of stock picks is what makes me money and not the “brutality of her arguments and the evidence she summons in making them.” Looking at her stock picks as a metric for measurement is the right thing, and no matter how good her arguments sound, her stock picks aren’t that good. However, we all love a story and Meredith Whitney provides it. She is married to a WWE wrestler and more importantly, she makes swing for the fences calls which attract attention. If she was wrong on these big crazy calls, she’d have faded into obscurity. But because she has been right on some of these big, hairy prognostications, she’s been appointed a guru and CEOs and CFOs spend time with her. Unfortunately, it seems the frequency of being right which I presume the folks who are ranked highly in the equity analyst ratings are is being drowned out by the magnitude of correctness and slick PR. Let’s remember the primary objective of an equity analyst should be to make good calls that inform clients’ investment actions and enable their success. As a result of this, they should be rewarded. Somehow, being 919 out of 1917 equity analysts doesn’t seem worthy of much praise, but once again, style sells. The question now is if Meredith Whitney’s stock picking skills don’t improve, how long will the hype last? Regards, Anand Brilliont Reply Rating: (0) (0)

Like the internet days when we had superstar analysts (Henry Blodget anyone?), we now have the new market guru of the financials arena in Meredith Whitney. She’s undoubtedly made some prescient calls and hasn’t been shy in making them aggressively and in an outspoken manner, but the question really is whether Meredith Whitney is more sizzle than steak? When you look at her performance as reported in a Fortune Magazine article of August 18, 2008, it is average or even below average. “Based on the performance of her buy and sell recommendations relative to her industry peer group Whitney’s stock picking ranked 1,205th out of 1,919 equity analysts last year and 919th out of 1,917 through the first half of 2008.” However, given the love affair with Meredith Whitney, the article goes onto assert that “evaluating Whitney solely on the timing of her buys and sells misses the point” is one of the most patently ridiculous things I’ve ever read. It doesn’t miss the point. It is the point. If I’m a client or investor, I’m guessing that the correctness of stock picks is what makes me money and not the “brutality of her arguments and the evidence she summons in making them.” Looking at her stock picks as a metric for measurement is the right thing, and no matter how good her arguments sound, her stock picks aren’t that good. However, we all love a story and Meredith Whitney provides it. She is married to a WWE wrestler and more importantly, she makes swing for the fences calls which attract attention. If she was wrong on these big crazy calls, she’d have faded into obscurity. But because she has been right on some of these big, hairy prognostications, she’s been appointed a guru and CEOs and CFOs spend time with her. Unfortunately, it seems the frequency of being right which I presume the folks who are ranked highly in the equity analyst ratings are is being drowned out by the magnitude of correctness and slick PR. Let’s remember the primary objective of an equity analyst should be to make good calls that inform clients’ investment actions and enable their success. As a result of this, they should be rewarded. Somehow, being 919 out of 1917 equity analysts doesn’t seem worthy of much praise, but once again, style sells. The question now is if Meredith Whitney’s stock picking skills don’t improve, how long will the hype last? Regards, Anand Brilliont

Rating: (1) (0)

8/8/2008 4:38:12 PM

The Meredith Whitney Hype Machine? by Anand Sanwal

Rating: (0) (0)

Post Comment

Name:

Alert for new comments:

Your email:

Your Website:

Title:

Comments:

The above story is the opinion of the author only and it does not reflect iStockAnalyst opinion. Further, the author is not personally advising you regarding the suitability of the story for your investment needs. In no event iStockAnalyst will be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from or arising out of, or in connection with the use of this information. Please consult your investment advisor before making any investment decision.

Related Stories