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Post by glennkoks on Aug 2, 2024 23:44:08 GMT
It will be interesting to see if this dip is due to short term profit taking or the start of something bigger.
I have long been concerned that too much of the weight of the market has been carried by too few.
I still don't feel like inflation has been extinguished and the Fed will be under intense scrutiny to cut rates. If they give in I would expect inflation to spike and we will be right back to where we started in 2021. I still don't feel good about the state of the economy. Equities are still way over priced for the state of the real economy in my opinion.
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Post by walnut on Aug 3, 2024 0:43:20 GMT
It will be interesting to see if this dip is due to short term profit taking or the start of something bigger. I have long been concerned that too much of the weight of the market has been carried by too few. I still don't feel like inflation has been extinguished and the Fed will be under intense scrutiny to cut rates. If they give in I would expect inflation to spike and we will be right back to where we started in 2021. I still don't feel good about the state of the economy. Equities are still way over priced for the state of the real economy in my opinion. I think that it is strange. The trucking companies have been finding business way too slow and rates are reasonably low. I think we are being lied to. Very comfortable in T-bills and I'll watch this market come down if it will. |
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Post by walnut on Aug 3, 2024 3:02:15 GMT
Interesting short discussion (I think) with Claude AI on, "what is the point of investing in bank stocks?"
CM
I have noticed many times that bank stocks generally seem to offer very little to the investor. Very very slow price growth, typically low dividend yields priced in. Can you explain what is the point of investing in bank stocks?
Your observation about bank stocks is astute and shared by many investors. However, there are several reasons why investors might still consider bank stocks, despite their often modest growth and yield characteristics:
Stability and reliability:
Banks are typically seen as stable investments, particularly large, well-established ones.
They often provide consistent, if not spectacular, returns over time.
Economic barometers:
Bank performance is often linked to overall economic health, making them useful for diversification and as economic indicators.
Potential for dividend growth:
While yields may be low, many banks have a history of steadily increasing dividends over time.
Regulatory environment:
Banks are heavily regulated, which can limit growth but also provides a degree of safety for investors.
Interest rate sensitivity:
Banks can benefit from rising interest rates, potentially leading to increased profitability and stock performance.
Cyclical nature:
Bank stocks can perform well during certain economic cycles, particularly during recoveries and expansions.
Value investing:
Banks often trade at lower price-to-earnings ratios compared to other sectors, appealing to value investors.
Financial innovation:
Some banks are at the forefront of fintech innovations, which could drive future growth.
Share buybacks:
Many banks return value to shareholders through stock buybacks in addition to dividends.
Potential for deregulation:
Changes in the regulatory environment could lead to increased profitability and growth opportunities.
It's worth noting that not all bank stocks are created equal. Regional banks, international banks, and specialized financial institutions may offer different risk-reward profiles compared to large national banks.
Would you like to discuss specific types of bank stocks or strategies for evaluating them in more detail?
CM
It seems to me to almost go beyond that. All of that capital and expertise seems to produce little income to investors. Are banks management just able to skim off profits before they reach shareholders?
Your skepticism is well-founded, and you're touching on a critical issue in corporate governance and financial sector dynamics. Let's delve deeper into this:
Management compensation:
Bank executives often receive high salaries and bonuses, which can indeed reduce shareholder returns.
This has been a point of controversy, especially since the 2008 financial crisis.
Regulatory impact:
Stringent regulations, particularly post-2008, require banks to hold more capital, limiting their ability to leverage and potentially reducing profitability.
Complex business models:
Banks' operations are often opaque and complex, making it difficult for outsiders to fully assess their true profitability and efficiency.
Risk management costs:
Banks incur significant expenses in risk management and compliance, which may not directly contribute to profitability but are necessary for stability.
Technology investments:
Substantial investments in technology to compete with fintech firms may suppress short-term profits but are crucial for long-term viability.
Market dynamics:
In a low interest rate environment (which we've seen for years), banks' traditional profit models are challenged.
Agency problem:
There's often a misalignment between management's incentives (short-term performance metrics) and long-term shareholder value.
Inefficiencies:
Large banks can become bureaucratic and inefficient, leading to higher costs and lower returns for shareholders.
Profit distribution:
Banks may retain earnings for various reasons (e.g., future expansion, regulatory requirements) rather than distributing them to shareholders.
Comparison to other sectors:
The finance sector's ability to generate outsized returns for shareholders has diminished compared to sectors like technology.
Your point about management "skimming off profits" isn't entirely unfounded. While it might not be as direct as skimming, there are certainly questions about whether bank management structures optimally align with shareholder interests.
This situation has led to increased scrutiny from shareholders and regulators, and some banks are working to improve their efficiency and shareholder returns.
Would you like to explore potential solutions to this issue or discuss how some banks are trying to address these concerns?
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Post by glennkoks on Aug 4, 2024 1:27:19 GMT
The Magnificent Seven (Apple, Tesla, Meta, Microsoft, Nvidia, Amazon, Google) make up about 31% of the S&P 500. If you take away the gains of these market monsters the growth over the last couple of years does not look so good. Tesla has struggled for a few months and now Berkshire Hathaway has announced they have slashed their Apple stake by 50%
This is not good news...
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Post by ratty on Aug 4, 2024 7:00:05 GMT
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Post by douglavers on Aug 4, 2024 11:30:53 GMT
I think recession has started in the US.
Intel sacked 15% of its staff, and Berkshire Hathaway just sold half its Apple holding.
In my view, reasonably significant straws.
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Post by walnut on Aug 4, 2024 13:39:14 GMT
I think recession has started in the US. Intel sacked 15% of its staff, and Berkshire Hathaway just sold half its Apple holding. In my view, reasonably significant straws. With the artificial manipulation of the money supply, and interest rates, this is really hard to nail down. I've been pessimistic so long but now I think that maybe we are getting through it later this year. I kinda expect a stock market down turn and one more business slowdown this winter and then we begin recovering. Our business in building materials has actually been fairly decent. We were the first in and might be the first out as interest rates come back down some. But, this might take longer than I hope, bank stocks and dividend blue chips need to come way back down, and the economy will be disrupted by a large market correction. |
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Post by code on Aug 4, 2024 18:20:42 GMT
I think recession has started in the US. Intel sacked 15% of its staff, and Berkshire Hathaway just sold half its Apple holding. In my view, reasonably significant straws. |
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Post by missouriboy on Aug 4, 2024 20:02:14 GMT
I think recession has started in the US. Intel sacked 15% of its staff, and Berkshire Hathaway just sold half its Apple holding. In my view, reasonably significant straws. I think you're right. And very soon we will find out whether the American Public prefers a loud-mouthed successful business man ... or a loud-mouthed unsuccessful anything. Am I being fair? |
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Post by glennkoks on Aug 5, 2024 12:17:33 GMT
Stock market looks rough. We're officially in correction territory now. Anecdotal evidence in my part of the world seems to indicate a downturn. Seafood is a "luxury" and my markets have been slow. My boat is now spending more time tied to the dock than it is harvesting seafood.
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Post by walnut on Aug 5, 2024 13:05:26 GMT
Stock market looks rough. We're officially in correction territory now. Anecdotal evidence in my part of the world seems to indicate a downturn. Seafood is a "luxury" and my markets have been slow. My boat is now spending more time tied to the dock than it is harvesting seafood. I've been thinking of coming down there with a kayak and trying for redfish or trout in some bay area. I have no experience with that kind of fishing but it looks fun and I need a change of scenery. I was thinking of somewhere up around Galveston or maybe Rockport / Aransas. Do you think I'd have any chance at catching a few fish? I know how the luck usually goes when you first try a new type of fishing lol. |
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Post by glennkoks on Aug 5, 2024 14:39:35 GMT
Stock market looks rough. We're officially in correction territory now. Anecdotal evidence in my part of the world seems to indicate a downturn. Seafood is a "luxury" and my markets have been slow. My boat is now spending more time tied to the dock than it is harvesting seafood. I've been thinking of coming down there with a kayak and trying for redfish or trout in some bay area. I have no experience with that kind of fishing but it looks fun and I need a change of scenery. I was thinking of somewhere up around Galveston or maybe Rockport / Aransas. Do you think I'd have any chance at catching a few fish? I know how the luck usually goes when you first try a new type of fishing lol. Absolutely. Fishing has been great since the Hurricane. Lots of Redfish and Trout. If you can wait til early October it won't be so darn hot and miserable. First few fronts really stir up the action. Can't go wrong with either Galveston or the Rockport/Port Aransas areas. Galveston has more to do as far as eating and entertainment but the shallow water back bay fishing is probably better in the Rockport area. In either case you can't go wrong. |
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Post by missouriboy on Aug 5, 2024 19:20:07 GMT
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Post by ratty on Aug 5, 2024 21:34:35 GMT
I've been thinking of coming down there with a kayak and trying for redfish or trout in some bay area. I have no experience with that kind of fishing but it looks fun and I need a change of scenery. I was thinking of somewhere up around Galveston or maybe Rockport / Aransas. Do you think I'd have any chance at catching a few fish? I know how the luck usually goes when you first try a new type of fishing lol. Absolutely. Fishing has been great since the Hurricane. Lots of Redfish and Trout. If you can wait til early October it won't be so darn hot and miserable. First few fronts really stir up the action. Can't go wrong with either Galveston or the Rockport/Port Aransas areas. Galveston has more to do as far as eating and entertainment but the shallow water back bay fishing is probably better in the Rockport area. In either case you can't go wrong. Are permits required? |
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Post by glennkoks on Aug 5, 2024 21:40:03 GMT
Absolutely. Fishing has been great since the Hurricane. Lots of Redfish and Trout. If you can wait til early October it won't be so darn hot and miserable. First few fronts really stir up the action. Can't go wrong with either Galveston or the Rockport/Port Aransas areas. Galveston has more to do as far as eating and entertainment but the shallow water back bay fishing is probably better in the Rockport area. In either case you can't go wrong. Are permits required? Just a state of Texas fishing license with saltwater stamp |
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