Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Anyone like bank stocks?
Old 07-26-2007, 10:24 AM   #1
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,358
Anyone like bank stocks?

The yields are pretty attractive.

I own TCB and USB.

Interested in WFC.

The yield curve being a little inverted has hurt these guys, but I think that they are solid long-term.
__________________

__________________
Hamlet is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-26-2007, 10:36 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
You can slough off a lot of single name risk and get basically the same economics by buying an ETF: KRE.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 07-26-2007, 11:23 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,358
Where is the fun in that?

Quote:
Originally Posted by brewer12345 View Post
You can slough off a lot of single name risk and get basically the same economics by buying an ETF: KRE.
__________________
Hamlet is offline   Reply With Quote
Old 07-26-2007, 02:25 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,266
I like bank stock... but since I work for one I am way overexposed to them...

The yields are pretty good on some of the big names and they are (have been) making gobs of money...
__________________
Texas Proud is offline   Reply With Quote
Old 07-26-2007, 02:44 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Bank stocks are cheaper than they have been in maybe a decade. And they keep getting cheaper...
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 07-26-2007, 02:58 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Dawg52's Avatar
 
Join Date: Feb 2005
Location: Central MS/Orange Beach, AL
Posts: 7,436
Quote:
Originally Posted by brewer12345 View Post
Bank stocks are cheaper than they have been in maybe a decade. And they keep getting cheaper...
I might buy some more KRE at some point, but the talking heads on tv keep throwing the financials under the truck. Wish they would shut the frig up.
__________________
Retired 3/31/2007@52
Full time wuss.......
Dawg52 is offline   Reply With Quote
Old 07-26-2007, 03:18 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Actually, I am finally starting to see a select few not go down any more, and even trade up a bit. To me, that is the sign of things starting to bottom out. The guys with good credit quality could well benefit because A) they will soon have a lot fewer competitors for loans and B) if this gets ugly enough, the Fed will be dropping rates which will benefit the banks immensely.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 07-26-2007, 03:29 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,914
Let's cheer for ugly!!

For several months AU talking heads have been predicting increasing interest rates there. One of my local NPR stations broadcasts news feeds from international public stations in the middle of the night. A couple nights ago I woke up to a discussion there that their folks had found hints of inflation, that interest rates were increasing and that they had their own sub-prime mortgage problems.

This is particularly interesting because the AU $ has been very strong. I wonder if the fact that the US purchased a huge % of goods from China and China has worked at keeping their goods cheap for the American consumer has the effect of suppressing inflation here.... All of those who want the Chinese to recalibrate the dollar know not what they ask for.
__________________
Duck bjorn.
Brat is offline   Reply With Quote
Old 07-26-2007, 05:30 PM   #9
Recycles dryer sheets
 
Join Date: May 2006
Posts: 230
I think they are cheap. I've bought shares in five different banks at low points in the last six months. (Or at least at hope they were low points . . . )

With as much as some of these are earning in other businesses, I'm just not that worried about the worst case scenario being all that bad.
__________________
terminator is offline   Reply With Quote
Old 07-27-2007, 09:28 AM   #10
Full time employment: Posting here.
CCdaCE's Avatar
 
Join Date: Apr 2006
Posts: 887
I ran across this link on Diehards. It talks about how mortgage securities are repackaged/shuffled/etc. The impending subprime mortgage collapse. The investment bankers slice the MBS into several "tranches". These are known as Collateralized Debt Obligations, or CDOs for short. Now all of the CDO's are packaged up and the link talks about how the risk of the CDO's is gonna come home to roost.

But, then again, it's pushed by gold bugs. So, lots of doom and gloom from my perspective. Part doom and gloom and part "you should be aware of the risks".

I don't trust 'em.

I'm saying the information is good, but the conclusion to go to gold is lost on me. For all I know, regional banks have little exposure to this sort of thing, but their share prices may be affected regardless of the facts.

-CC
__________________
"There's those thinkin' more or less, less is more, but if less is more, how you keepin' score?
It means for every point you make, your level drops. Kinda like you're startin' from the top..." "Society" - Eddie Vedder
CCdaCE is offline   Reply With Quote
Old 07-27-2007, 09:45 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Regional banks tend to be portfolio lenders rather than lend and sell the loan guys, although many do some of both. If you are a portfoio lender (classic example: AF), you make the loan with the intention of holding it until it pays off, and you generally have financing lined up to make a spread (deposits and some borrowings, usually). If you stick to higher quality loans, you are in a steady, but unexciting business that usually results in a stable, high stock price. The banks that fit this picture have been trashed by the market along with the guys who lend & sell the loan, and wit the guys who make risky/junky loans. So its a clear buying opportunity for the guys who keep their noses clean, and many of the lend & sale and risky loan guys are attractive at current prices, too.

The CDO market is currently closed, more or less. But unless "this time its different", the window will re-open in a while and people who depend on that market will get on with business, assuming they don't blow up while the window is shut.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 07-27-2007, 11:53 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
KRE is at 41.90, and the 52 week low is 41.57. I'm wondering if the support level is 41? If it breaks through 41, it probably has 5-10% more downside in it.

Quite intriguing, I am putting it on my watch list. Here in Wisconsin, Harris Bank bought two wellrun small banks for about $130 million each, so consolidation is still happening...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 07-27-2007, 12:35 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by FinanceDude View Post
Quite intriguing, I am putting it on my watch list. Here in Wisconsin, Harris Bank bought two wellrun small banks for about $130 million each, so consolidation is still happening...........
If anything, consolidation has stepped up as banks facing an uncertain future are having "come to Jesus" moments and deciding to fall into the arms of a larger suitor.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 07-29-2007, 12:50 AM   #14
Moderator
bssc's Avatar
 
Join Date: Dec 2005
Posts: 9,927
I have Bank of America, Chase, Citi and Washington Mutual.
__________________
bssc is offline   Reply With Quote
Old 07-31-2007, 08:42 AM   #15
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Hey Brew,

How much longer do you think it will be before the bad news works its way through the financial cycle? Don't know if you can answer that. I am not saying financials are expensive (some have pretty low exposure to the mortgage fall out) but if more bad news comes down the pipe I can always rely on the media to discount things further. Being ready to buy several times and keeping some cash on the sidelines is probably the best approach with the financials. I am loving the financial risk coverage in the media -- burn baby, burn.
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Old 07-31-2007, 09:14 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Dunno, but anything at a price, and banks are cheap, cheap, cheap.

Really, unless we head for a depression, I think the worst will be over in credit quality within a couple of quarters. If not, Mr. Bernanke will be warming up the helicopter directly. Wanna see what rate cuts do for bank stocks? Check out the last cycle of cutting.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 07-31-2007, 09:31 AM   #17
Thinks s/he gets paid by the post
wildcat's Avatar
 
Join Date: Feb 2005
Location: Lou-evil
Posts: 2,025
Quote:
Originally Posted by brewer12345 View Post
Dunno, but anything at a price, and banks are cheap, cheap, cheap.

Really, unless we head for a depression, I think the worst will be over in credit quality within a couple of quarters. If not, Mr. Bernanke will be warming up the helicopter directly. Wanna see what rate cuts do for bank stocks? Check out the last cycle of cutting.
That's what I was guessing. I get too caught up in the timing of it -- always trying to get the best price.
__________________
"These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"
wildcat is offline   Reply With Quote
Old 07-31-2007, 09:41 AM   #18
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Quote:
Originally Posted by wildcat View Post
I am not saying financials are expensive (some have pretty low exposure to the mortgage fall out) but if more bad news comes down the pipe I can always rely on the media to discount things further. Being ready to buy several times and keeping some cash on the sidelines is probably the best approach with the financials. I am loving the financial risk coverage in the media -- burn baby, burn.
Quote:
Originally Posted by brewer12345 View Post
Dunno, but anything at a price, and banks are cheap, cheap, cheap.
I'm still shaking my head in amazement over the retail bank ETF (KRE). Take a look at a chart; I bought on the 27th & 30th for a $42.05/share basis. (Most of July's gigantic purchase volume was due to Brewer.) At 55 cents/share in quarterly dividends the 5.2% yield is higher than many CDs. Just a 0.35% expense ratio. It's only been around for a year so it's low volume & volatile.

I've generally avoided country & most sector ETFs but this KRE has opened my eyes to opportunity. I've been perpetually frustrated by our local Bank of Hawaii-- intriguing price & yield but too much single-stock risk (especially state politics). I've also been having a tough time figuring out a bank's balance sheet because there's just too much opportunity for shenanigans that'd confuse an experienced auditor, let alone a retail amateur like me. Analyzing BofA, let alone a regional, was a daunting task. KRE seems to own at least a couple retail banks with good yields from all 50 states, nicely resolving all my issues.

I shorted FirstFed (FED), a sort of poster child for California zero-amortization ARMs, back in Feb at $68/share. It was my third try and I finally got it right. I covered last month at a $9/share profit as the market reached its giddy highs, fearing a stupid private-equity buyout and having no reason to be greedy. (Every time I'd looked at the bank's numbers and decided that they sucked, the price would go up another $1/share.) If I'd waited until this week I'd have profits of over $20/share.

I'll be taking more looks at unloved sector ETFs. Every year or two there has to be something trading at a multi-year low that'll eventually revert to its mean. If it's sporting a P/E under 14 and paying a dividend then that's just a bonus...

Thanks again, Brewer!
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 07-31-2007, 10:04 AM   #19
Thinks s/he gets paid by the post
Milton's Avatar
 
Join Date: Apr 2007
Posts: 2,076
Quote:
Originally Posted by Nords View Post
I shorted FirstFed (FED), a sort of poster child for California zero-amortization ARMs, back in Feb at $68/share. It was my third try and I finally got it right. I covered last month at a $9/share profit as the market reached its giddy highs, fearing a stupid private-equity buyout and having no reason to be greedy. (Every time I'd looked at the bank's numbers and decided that they sucked, the price would go up another $1/share.) If I'd waited until this week I'd have profits of over $20/share.
I'm too conservative for that sort of aggressive speculation.
__________________
"To know what you prefer, instead of humbly saying Amen to what the world tells you you ought to prefer, is to have kept your soul alive". Robert Louis Stevenson, An Inland Voyage (1878)
Milton is offline   Reply With Quote
Old 07-31-2007, 10:21 AM   #20
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,315
Quote:
Originally Posted by Nords View Post
At 55 cents/share in quarterly dividends the 5.2% yield is higher than many CDs. Just a 0.35% expense ratio. It's only been around for a year so it's low volume & volatile.
The 55 cents dividend was for the last quarter (June). According to Yahoo, the two previous quarters were 27 cents (March) and 38 cents (Sep '06), respectively. Also Yahoo quotes a trailing yield of 3.1%. So, I'm not sure the yield is really 5.2%. That's not to say KRE is not attractive at current prices - I just think you may be overstating the yield. AFAK, not many regional banks are yielding over 5% (including none of KRE's ten largest holdings according to Yahoo), although a number of money-center banks have yields in this range.
__________________

__________________
FIRE'd@51 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Bank stocks brewer12345 FIRE and Money 7 10-20-2005 12:30 PM
Swedroe comments on buying individual stocks. Nords FIRE and Money 27 10-12-2005 10:20 PM
Net Bank - Poor Customer Service Lancelot Other topics 7 09-22-2005 05:51 AM
Book report:  "1st National Bank of Dad" Nords Young Dreamers 9 03-21-2005 10:30 AM
Bank Preferred Stocks Jason FIRE and Money 1 08-19-2004 09:34 AM

 

 
All times are GMT -6. The time now is 03:22 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.