Is it a good time to invest in Banking stocks that are at record lows?
Best Answer
368 points
ads answered 9 months ago …
One thing to keep in mind is that it will depend to a large degree how some of the bad debt currently on the books as well as the bad debt that will be hitting the banks books gets dealt with. There are still a fair amount of mortages that can be a problem for the banks (especially some that 6 months ago were not thought of as being bad due to the increaseing unemployment situation due to the slowing and changing economy). Personally I'd stay away from any financial institution unless you know for sure that they are in good shape with regards to mortgages and related derivative products (have minimal holdings in any that are or may become risky over the next couple of years). But on that same note, I'd not invest into any that are not in a very good position from a value investing perspective (and I'm not talking about simply being at a veyr low price, I'm talking about having P/B and P/B ratios that are very low, even when compared to the financial industry as a whole.
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2222 points
readytoretire answered 9 months ago …
Many of the bigger names are too risky right now. There is too much uncertainty and our elected people at times seems determined to take over several of them. As yesterday showed, one stupid remark and C and BOA go down hard. Smaller regional banks do have some promise, but I would tread lightly until we have a clear direction.
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3963 points
MNSL answered 9 months ago …
Current situation is not the temporary cyclical shift in the economic system. We will have permanent structural shift in the world economy.
Global consumption has evaporated. Debt burden west will buy less now. The commodity boom is over for the foreseeable future.
It will take longer period to bring back confidence to the financial sector. Still no body knows their extent of liabilities for instruments and debts. We have to be careful in dealing with banks, insurance companies and other financial institutions now. .
Many countries should emerge as a more innovative, more sustainable and diversified economies.
Asian will have to create more consumers’ domestically. They will have to change their export market as well. Some industries will lose their dominance and some industries will remerge as next most promising sectors. There will be some shortage in some products in some sectors. Investors should identify sustainable sectors. Some companies in financial sector will bankrupt and strong banks will survive at the end,
Eventually strong demand will re-emerge again. World economy will recover. Then we can see recovery in the financial sector.
