Well looks like picking John Mack was a good idea according to Merrill. They are saying:
"Risk of brain-drain and lost business dissipates now that leadership and succession issues are resolved," Merrill analysts wrote in their report.
I seem to remember that most of the brain-drain happened because those bankers were leaving for better deals at the other brokers. I guess Merrill thinks that Mack is going to throw more money at the bankers to keep them loyal. Let's hope that move doesn't hurt their bottom line.
However, it may be a good idea to look at these brokerage stocks. I read an article in the Economist that says that the majority of these stocks are undervalued according to their metrics. Their valuations are lower because their profits are pretty hard to predict. One quarter they do great (Lehman last quarter) and the next they do poorly (Morgan last quarter.)
I guess brokers valuation is how they are because they really are the definition of the cyclical stock. When the economy is doing good there will be lots of mergers, trading profits, and lots of trading fees are generated. It is just the opposite when the economy hits a rough patch. So that risk is built into what their stocks trade at. They used to say this about housing stocks and they seem to go up and up and still have low P/Es
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