Be Greedy when Others are Fearful, Be Fearful when Others are Greedy.

These are wise words from Warren Buffett, the Richest Investor in the whole world.

A few months ago, when there was alot of uncertainties, I decided to buy some shares in 2 U.S. Banks, I only bought these 2 banks becos they were already announced to be 2 of the 9 Banks U.S. Government will support to ensure that they don't fail.

I bought CITIGROUP (at average cost of US$1.30) and Bank of America (at average cost of US$6.98)......to me, it was quite unbelieveable to be able to buy CITIGROUP shares (its Global brand name already worth billions of dollars) at a price cheaper than a Mcdonald's Big Mac in U.S....

Sold some of my shares yesterday, CITIGROUP at US$4.01 and Bank of America at US$14.55.....not bad, to NET (Realised Profits) over 200% for CITIGROUP and over 108% for Bank of America shares....

Anyway, the latest Stress Test confirms neither CITIGROUP nor Bank of America have any risk of collapsing.....but they do need to raise Capital......are the stock prices being pushed up so that these banks can raise Capital through Rights Issue? Possible. Think about it.

Above are just my personal comments, it is not meant as Investment Advice and not suggesting anyone to buy/hold/sell CITIGROUP and/or Bank of America's shares.

P.S. I've set up a New website to specialise in Financial Education, http://www.MasterYourFinance.com and I'll be conducting a full-day seminar to teach and share what I know. (details are at the website).

Regards.

Dennis Ng, http://www.HousingLoanSG.com

By Karey Wutkowski and David Lawder

 

WASHINGTON (Reuters) - U.S. regulators told top banks on Thursday to raise $74.6 billion to build a capital cushion officials hope will restore faith in financial firms and set a course out of the deepest recession in decades.

Within minutes of release of the bank "stress test" results, which showed smaller capital needs than once feared, several of the 10 firms needing capital immediately issued statements detailing how they planned to raise it.

Bank of America Inc, which accounted for almost half of the total capital shortfall with $33.9 billion to be raised, said it planned to issue $17 billion in common stock, sell assets and take other steps to fill the hole.

"We're going to be watching carefully to make sure they give us credible plans for raising capital and becoming privately owned again," Federal Reserve Chairman Ben Bernanke said at a news briefing, referring to the entire group and not just Bank of America.

The examinations -- which involved more than 150 regulatory officials poring over the books of the 19 largest firms -- effectively drew a line between healthy and weak, and quantified exactly how much those institutions struggling under the weight of souring loans must raise.

U.S. stock index futures edged higher after the test results calmed fears that the government would have to play an even bigger role on Wall Street. Many of the banks themselves are loath to take more government aid for fear of the scrutiny it may bring and tough conditions on executive compensation.

Several of the banks found to be adequately capitalized said they wanted to repay taxpayer money as soon as possible to get out from under the government yoke.

MIXED VIEWS ON CREDIBILITY

The relatively modest size of the hole discovered by regulators carrying out the tests, which were based on an "adverse" economic scenario, led to both applause from investors who believe the worst is over and skepticism among those who think the examination wasn't rigorous enough.

"The fears of nationalization or of failure have more or less disappeared, and now what we're getting is details of how banks are going to fill in their capital deficiencies," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.

The doubters believe the banks will need much more of a capital cushion than stipulated by the regulators, as the U.S. jobless rate soars and the housing market and economy takes time to pull out of a funk, driving up credit losses.

"I'm a skeptic. I don't see this as a genuine audit. They have been playing the marketing game strongly lately," said Robert Andres, president of Andres Capital Management in Philadelphia.

"The President, (Treasury Secretary Timothy) Geithner and Bernanke, they are trying to build the momentum of confidence. They are kicking the can down the road to stall for time."

The reviews, led by the Federal Reserve, were designed to gauge how the 19 banks would fare if the recession worsened.

Bank of America was found to have the largest capital need. However, it said it did not need any more government money.