2 ms·
> Buying the common stock is a huge bet that First Republic can bounce back to what it was prior to this crisis, but that's looking extremely unlikely. Why not
by nerdponx 4y ago
> Buying the common stock is a huge bet that First Republic can bounce back to what it was prior to this crisis, but that's looking extremely unlikely.
Why not? If they do bounce back, I don't think that in ~10 years from now people will still think of them as being any worse than any other bank.
- zamnos 4y agoSure but if you got in at, say, $80/share, you have to wait 10 years to get back to that , you'd need to get 8% return every year just to break even unless the sector has a serious bounce. Right now that doesn't seem likely, but whoo knows.
- nerdponx 4y agoWell it's $12.18/share now, so now doesn't seem like a bad time to take up a long position. Maybe if you've already lost something then it will be a while before you've made up the difference (or never), but having lost money at $80 as a reason not to be long at $12 seems like the sunk cost fallacy to me.