KBW Regional Banking Index (KRE) Provides an Interesting Sideshow for the Financial Crisis

Posted on September 19, 2008

If you need a prime example of the height of insanity that our financial markets have reached, look no further than the KBW Regional Banking Index (KRE).

This index, which represents regional banks in the US, fell to a low of about $22 back in July when significant pessimism surrounding US financial institutions, especially FNM and FRE, really began to take hold. Amazingly, today on the heels of the Fed rescue plan, this index opened at $51 and climbed to $60, a multi-year high. If you were long this ETF and were able to take profits: congratulations!

In essence, in less than two months, during what was supposedly the worst financial crisis in decades, an index, which represents many companies supposedly facing a crisis, nearly tripled in value and reached prices from back in 2006 before this financial crisis even started. So, presumably holders of the KRE can naively and confidently reply, as the President of Brazil Lula did just the other day when asked about the financial meltdown: “Financial Crisis? What Financial Crisis?”

Comments and Discussions

The section below is intended to serve as a forum for intellectual debate about particular investment ideas or theories. Please refer to this section for any updates on a particular investment idea. If you have your own thoughts, please feel free to add them. We appreciate your feedback.

If you would like to make a comment, please fill out the form below. Please note that we only require an email for editing purposes. We will NEVER publish your email or use it in any way.

Subscribe for FREE

Enter your email below to receive free research summaries.

RSS Feeds:

Quick Links

Recent Comments:

Yehuda Hi Thomas, "the obvious way to modify a mortgage is to leave the principal alone, stretch out the... >>Read More

Thomas J. Costagliola Yehuda, Maybe it is just me, but it seems that the obvious way to modify a mortgage... >>Read More

Thanks Appreciate your reply. Perhaps the challenge of estimating the degree to which given expectations... >>Read More

Yehuda Fruchter I agree, "better than expected", which is why it is important to only look at distressed... >>Read More

Thanks Thanks. The quote is a great reminder of Lynch's approach. Should it be qualified somewhat: "If... >>Read More

Disclaimer:
This site may include market analysis and we may own shares in the stocks mentioned in our reports. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.