The friendly folks at Goldman recently ran a regression of which sectors do well with rising rates. If you can't read the chart below, rising rates are bad for stocks in the consumer, utilities, and software sectors, while they tend to support energy and financial services. To answer why, rising rates often coincide with stronger… Continue reading Financials outperforming tech? Yes it can continue.
We'll skip the Charlie Munder quotes; it's broadly apparent that we live in different times: US Debt: Inflation is the Only Way to Manage It (Treasury Dept) Nervousness is rational: Normally we don't see policymakers launch gargantuan, two-pronged stimulus 6 months after a 30% quarterly GDP growth, but election promises are promises, and voters on… Continue reading Tools for Financials Investors Nervous About Inflation and Rates
Improve portfolio growth by avoiding the "clones" Owning typical banks can be a losers game. Most banks compete on price, fight low rates, and miss out on innovations like digital currencies. For these reasons among others, regional banks have lagged the broader markets over the past 5 years. But among the 800 publicly traded banks,… Continue reading A Tool for Outperformance: Finding Great Businesses Hidden Inside “Boring” Banks
We lost a lot in 2020, but we are getting a lot of it back in 2021. One bit of good news apparent in fourth quarter earnings calls is the coming return of the bank merger and merger premium. Connecting the dots to create a portfolio of likely acquisitions should be a fun and profitable… Continue reading Now the fun begins! Bank merger investing in 2021…
Many years ago I attended a dinner with a group of bank investors, including a good friend later profiled in the movie The Big Short. The topic of Fifth Third came up. Fifth Third had recently sold its payments business to scrounge up capital and my friend blurted out "FIFTH THIRD - WORST BANK EVER!… Continue reading The worst large bank in America? (a constructive 3 minute exercise)