Banks Will Be Huge
Mother's Little Helper portfolio was UP today +$359.88 (+0.36%).
Overall GAIN YTD: +$696.91 (+0.70%).
Our benchmark index, the S&P 500 is DOWN -0.36%
“Banks do not create money for the public good.
They are businesses owned by private shareholders. Their purpose is to make a profit.” ― John Rogers
I made my buys for the year on December 28, 2018, see the new portfolio here (Click Here).
Banks Reporting Earnings Earnings season is kicking off and first up are the major banks. On Friday we get reports from JP Morgan Chase, PNC, Wells Fargo and Citigroup. Unless we get a big surprise the banks should be reporting some huge upbeat numbers. The combination of rising interest rates, tax cuts, global synchronized growth and strong earnings are coming together to boost this sector to a degree we've rarely seen. Averaging analysts reports it looks like we'll see as much as 15%+ share price gains.
“My bank must stop trying to sell me identity theft protection.
You know why I expect you to protect my money? Because you're a bank.” ― Bill Maher
Don't We Hate Banks?
I recall not too long ago how banks were the most detested investment on Wall Street, banks were dead money after the financial crisis. More recently the buzz on the street was all about how awful banks have been, this was a moral judgement with respect to how much banks earn and how they treat their clients. I'd like to suggest that there is another side to the story. While politicians love to put bank CEO's on the hot seat and grill them for every impropriety they are and are not responsible for; banks serve a vital purpose that impacts us all. Like it or not our banks are the core of our financial system. Banks provide liquidity to our investments, 401K's, pensions and more. Banks, for all their petty fees still make money the old fashioned way, they lend it. Those loans buy houses, cars and more. Businesses large and small require bank services for checking accounts, credit cards, payroll, retirement accounts, investment services, short term cash management and a variety of other services that keep everything moving in our day to day lives.
Go to any country where it's hard to get anything and you'll find a complete absence of banking services. The yogurt isn't flowing from a local fro-yo because the owner can't get credit from a supplier because there's no bank that will lend to either of them. The farmer can't get fair prices for his crop because there's no banking industry to provide futures contracts. Home owners may want to improve their property but without a bank to provide home equity loans they can't leverage the value in their home. A strong, healthy, prosperous banking sector stabilizes the local currencies and prevents the growth of black markets in currency and lending which is fairly common in many parts of the world.
When you hear in the news that banks are buying back their own stock, that only happens when someone who owns the stock wants to sell. The shareholder may be a pension fund, an individual amateur investor, someone managing 401K plans for small businesses, and yes my mom. When you hear in the news that banks are making record profits, those profits come from bank customers and are rolled over into more loans to more customers which fuels the U.S economy. When you hear that banks are creating fake accounts or conducting their business in a less than admirable manner, get angry and then buy shares of the bank stock and vote on each and every proxy. You can just complain or take action that the C Suite managers listen to, shareholder voices. Our financial institutions are too important to be run into the ground by bad management.
Disclosure: I am personally invested long in some or all of these funds that appear in the Mother's Little Helper portfolio or manage these investments for my Mother's portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks and funds that do not appear in the MLH portfolio but may be mentioned or related to this article. It is not my intention to advise or encourage the purchase or sale of any security. Since I may on occasion discuss Bitcoin and other cryto currencies I disclose here that I personally own investments in the cryto-currencies listed here: VTI, VWO, VEA, VIG, XLE, MUB, TBT, GLD, Bitcoin, LiteCoin
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.