Leading Banking Analyst Cautions Investors During Downtrend

Unless buying materialises,says Richard X. Bove,vice president of equity research at Rafferty Capital,LLC in a note to investors,there is nothing to stop a massive move to the downside due to the lack of liquidity in the markets.At this moment,I would strongly caution to remain on the sidelines until a definable source of new funding is determined to maintain or bolster stock prices.
At its base,the key problem is that the historic protections that once existed in the markets to prevent massive downslides have been removed.This country's claim that it has deep and liquid markets is being put to the test.*
Mr.Bove is bitterly critical of the plethora of new regulations that have been imposed on the banking industry post-financial crisis.These include the US Congress passing the Dodd-Frank Act;Basel III,Supplementary Leverage Ratio;Liquidity Coverage Ratio;and the Orderly Liquidation Authority;and the Total Loss-Absorbing Capital Regulation.The impact of these regulations,rules and pieces of legislation has been the complete takeover of the banking industry by the government.In my view,the industry has been effectively nationalised,Dick Bove said in a December 2014 interview,in which he also predicted that banking industry regulations would limit the earnings of banks in the long term.It is these regulations that have also ultimately restricted the flow of funds to the point of making the markets vulnerable to collapse.