Monday, November 19, 2007

Citigroup's Downgrade of ETFC Seems Fishy to Me Now

E*Trade Financial's (ETFC) stock took a "my name is Kunta" beating last week after Citigroup ( C) research investment analyst Prashant Bhatia had downgraded the stock.

I am not an investment analyst or an employee of ETFC any longer (exactly on the afternoon of the 50 basis Federal Reserve cut of all days-September 18th) and have nothing on the line either way but within my own opinion, I smell a "knock down the price and let's buy them cheap" move on the table.

Big fish devouring the little fish is what I am beginning to detect for some reason.

Now today Goldman Sachs (GS) kicks the chair out from under Citigroup while they were demonstrating how ETFC's demise might look to financial CSI types. Poetry in motion I say:)

If this is not a "Kill Bill" stand off in progress, then show me the door:)

Charles Gasparino is one financial reporter whose insights I trust almost blindly and his book "Blood on the Street" gave me a red pill on Wall Street wholesale, but the conspiracy theorist in me is seeing the string theory connect the dots like a room sweep flashback at the end of Mission Impossible. Why is everyone so quick to assume that it could not be a possibility in the wake of the financial service industry having to supposedly separate research analysts from investment banking activities?

Of course it would be premature to fully accuse
C or Bhatia of intentionally doing this, but game recognizes game and real recognizes real and C is not looking too admirable right now especially with former C CEO Prince falling on his own sword honorably (wink, wink).

I am not going on a hunting or fishing trip with anybody in this climate:) Any such requests are being turned down just as the numerous job offers from Nigeria, staff of disposed dictators, and to process orders for art dealers in the UK. Strings are being pulled somewhere for somebody.

The downturn appears to be a scenario where "I hope you die before I do to distract the attention from my own misfortune". Cramer may have this one right after all.

The best thing that everyone can do is to take a grain of salt with any analyst's upgrades or downgrades until February at a minimum.

No one has to the fortitude to downgrade
GS or challenge them honorably at the present time. Does GS have a bone to pick or are they looking for a discount? It does not matter since they have been doing so many things so right for so long, it would be welcomed if they were:)

I studied the financial supermarket concept in graduate school for my MBA in finance and it was a lofty idea back then in the mid 90s. But the execution of the idea has fallen short consistently.

Every company that I have worked for within the financial services industry has not gotten it right either. American Express (AXP) divested of its financial advisory division which is now named Ameriprise ( AMP). The only place where the consolidation of functions appear to be working is actually after an industry divestiture has taken place--the telecommunications industry.

After the US Department of Justice broke up Ma Bell (T) in 1984, time has revealed that the dry bones have been reconnected and a child (formerly known as SBC Communications) has grown up to consume the parent (bigger fish) through acquisitions.

Corporate philosophy and leadership are at an all time low right now. Too many companies are demonstrating that they do not know how to make money in hard times and the economy is paying the price through the wallets of the middle class. A hedge fund full of quants cannot save every company at the same time and although forex is a gravy train right now (even investing guru Warren Buffett has the Kool-Aid on his lips and tongue), corporate America is already busy forming a new bubble within foreign currency exchange from their long-term investments there.

Only after a system has been declared a failure has there traditionally been a restructuring and opportunity for new minds to be recognized and come to the table for implementation.

The AT&T that I worked in the early 90s undeniably failed just as those with a financial supermarket offering are doing so now.

I am not saying that the idea will never work, but clearly it will not work with the current personnel at the helm of these companies. The solution will only come from external sources or those not at the table when the current strategies were considered the right thing to do.

One significant problem that I saw at pre-
AMP is that the card carrying customers being called on repeatedly for a formal introduction to the financial advisory side of AXP at the request of managers and supervisors simply had a psycho-graphic composition totally different from what the marketing department thought they did. They were interested within the exclusivity and benefits of membership of the AMEX cards but not within investing.

Linking mentally (somehow as a great idea to an unnamed corporate John or Jane Doe) these customers' credit scores with their investing inclinations had the same effectiveness and was at the same level of doing a hardcore substance-abuse intervention for toddlers:) I kid you not!!! No one even looked at the advisor attrition levels to identify this as an input to my knowledge.

No one at pre-AMP had a clue of a suitable customer profile on any level (I asked repeatedly before taking things into my own hands) and as far as I can tell, the same is still happening there and is more prevalent than these all-in-one-stop companies would dare to imagine.

Anyone within any company that is being told to cross-sell and up-sell existing clientèle should begin to recognize the fallacy of this marketing myth.

You may ask what I am going to do as a result and I am glad that you have done so:) First, I am going to continue the implementation of a long-term proprietary strategy launched in the aftermath of my latest employment transition (nice way of saying that you will have to see my fruit since my seeds are more secure than VP Cheney's assets--LOL:) Secondly: since history has a fondness for repeating itself, I am going to keep my eyes open for the next SBC-type company that springs up within the financial services industry. I missed it last time due to working for the Death Star (as T was called back then in some corners).

Being outside the system is the only hope since the Kool-Aid has to be loyally consumed with every direct deposit.

Even since being terminated from my last employer, I still cannot get my jaw out of the divot from the mindset running rampant at the wholesale and retail levels within the supermarket segment of any industry pre-paradigm shift.

But I do know one thing that will absolutely never fail in my analysis of it all: the management severance packages and golden parachutes are being kept safely and securely by personnel dressed as the old Intel shiny suit commercials appeared. Maybe Diddy and Ma$e will auction their form of the shiny clean-suits:)

By choice and by force, no executive is fighting to stay in control in lieu of taking the big payday and running with it:) Their mamas did not raise any fools on that level!

May God help us all that are not as fortunate in our placement on the pyramid organizational charts.

Maybe the three-card Monty of network marketing may not look so bad after all when compared to this. LOL:) Surely I jest for the record.


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