In our never-ending quest to find needles in hay-stacks - as opposed to finding them right at our feet - we present to you someone else saying something nice about banking. From Bronte Capital
Indeed provided you can maintain access to funding
the opportunities in banking are the best that they have ever been in
my life. [Emphasis added] The margins are massive. Many people want (even need) to
borrow money – and if you have money to lend you can select on the
absolutely best credits. Your risk is much lower than it was on the
average loan in the boom. The implied return on equity is much higher.
Happy days.
Of
course they are happy days only if can maintain your funding (far from
being a given) and you do not have losses so big from the boom that you
will be wiped out (also far from being a given).
But
in the past most banks that have got into trouble have been
recapitalised by pre-tax, pre-provision earnings. And at the moment
pre-tax, pre-provision earnings are going up.
For
the record this is very different to Japan. In Japan bank spreads
collapsed to 30bps. They did this because of the vast excess deposit
bases at zero interest rates. But I cannot find another banking crisis
in which bank spreads have fallen. [Emphasis added] Does anyone else know one?
We noted another blogger yesterday making the point that this is not Japan and also saying something nice about the banking system.
And what do you think? Would you buy SOME banks right now?
Posted by: dacian | February 27, 2009 at 08:54 AM
You have to find the right banks. I cannot stress that enough.
T.
Posted by: Toro | February 27, 2009 at 09:03 AM
Another view: Will the banks survive?
http://money.cnn.com/2009/02/27/news/economy/tully_banks.fortune/index.htm
Posted by: bill chan | February 27, 2009 at 10:57 AM
Spread the risk lest buying the wrong one, buy UYG FAS
Posted by: bill chan | February 27, 2009 at 10:59 AM