FTSE yield up - BOOM!

GoSeigen · Post by **GoSeigen** » March 18th, 2023, 4:03 pm

Bubblesofearth wrote:
GoSeigen wrote:
Yes Bank of Ireland, Manchester BS, Permanent TSB.

GS
Can you provide a link to the post(s) you made around the time of purchase please? I'm sure there was at least one but my dismal abilities with the search engine on here are preventing me from finding it.

Bubblesofearth · Post by **Bubblesofearth** » March 18th, 2023, 4:24 pm

GoSeigen wrote: I don't post all my trades in real time, but here's a selection of posts of recent years to give a flavour of my thinking:

02 Dec 2017 Gradually buying banks https://www.lemonfool.co.uk/viewtopic.p ... 37#p100737
13 Feb 2019 Dipping into Manchester BS https://www.lemonfool.co.uk/viewtopic.p ... 59#p201059
19 July 2019 Buying MBSR @16p https://www.lemonfool.co.uk/viewtopic.p ... 95#p237795
24 Sep 2019 Added to overweight MBSR https://www.lemonfool.co.uk/viewtopic.p ... 15#p253515
17 Mar 2020 Adding to bank positions https://www.lemonfool.co.uk/viewtopic.p ... 56#p291456
05 Apr 2020 Sitll buying banks https://www.lemonfool.co.uk/viewtopic.p ... 86#p297886
24 Apr 2020 Ords better than prefs, buying MBS https://www.lemonfool.co.uk/viewtopic.p ... 31#p302831
27 May 2020 Banks a goood buy https://www.lemonfool.co.uk/viewtopic.p ... 12#p312612
23 Jun 2020 Been buying banks https://www.lemonfool.co.uk/viewtopic.p ... 40#p320640
22 Jul 2020 Been buying more bank shares https://www.lemonfool.co.uk/viewtopic.p ... 43#p327843
18 Sep 2020 Bank of Ireland a buy https://www.lemonfool.co.uk/viewtopic.p ... 40#p341240
11 Dec 2020 Banks a wonderful purchase https://www.lemonfool.co.uk/viewtopic.p ... 71#p364971
16 Dec 2020 Still buying banks https://www.lemonfool.co.uk/viewtopic.p ... 87#p366687
04 Feb 2021 Added to DBK holding https://www.lemonfool.co.uk/viewtopic.p ... 66#p383566
14 May 2021 I love Lloyds https://www.lemonfool.co.uk/viewtopic.p ... 77#p411977
11 Nov 2021 Buying Bank of Ireland https://www.lemonfool.co.uk/viewtopic.p ... 10#p457210
19 Nov 2021 Things can only get better https://www.lemonfool.co.uk/viewtopic.p ... 68#p459368

GS
[EDIT: The links should be right but sometimes my relevant comment will be in quoted sections.]

Thanks for the comprehensive answer. I was aware that you were positive banks back then but couldn't recall the specifics. As you point out some have done very well but the major UK ones not so much. So far I've resisted the urge to buy more but confess I'm very tempted to add to existing positions. I think I'm frozen looking for the bottom and still fearful of a repeat of the falls to near zero back during the GFC.

BoE

GoSeigen · Post by **GoSeigen** » March 18th, 2023, 8:06 pm

Bubblesofearth wrote: Thanks for the comprehensive answer. I was aware that you were positive banks back then but couldn't recall the specifics. As you point out some have done very well but the major UK ones not so much. So far I've resisted the urge to buy more but confess I'm very tempted to add to existing positions. I think I'm frozen looking for the bottom and still fearful of a repeat of the falls to near zero back during the GFC.

BoE

The major UK banks maybe didn't fall to quite the deep value of those other banks. I think their returns still have a long way to go though, and they will be strongly cash generative for a while yet because of the structure of their loan books.

If you're afraid of losses that is good and is the time to be brave. Make it easier by opening with small positions and wait until your purchase has been affirmed by market action, then buy more (i.e. average up).

GS

Lootman · Post by **Lootman** » March 20th, 2023, 1:43 pm

simoan wrote:
GoSeigen wrote:"short end of the equity curve"

That's a new one for me. As for banks being junk...
Well, banks are dreadful long term investments. I don't think there's much doubt about that. And as we have found out again very recently, no-one has a bloody clue what is on their balance sheets, including the management.

Banks have been terrible long-term investments. A simple look at XLF over its life versus the S&P 500 shows how bad banks really have been over nearly 25 years.

The US bank sector is up just 43% since the inception of XLF in 1998. The S&P 500 is up about 143% over that same period. So $1,000 invested in banks gave you just $1,430 after a generation, versus $2,430 in the broad index. British banks have been even worse.

Could an individual investor have got lucky with his choice of bank or with his timing? Sure. In fact some inevitably must do. But it does not follow from that that banks have been a sound bet. Not even close.

Backache · Post by **Backache** » March 20th, 2023, 5:21 pm

Lootman wrote:
simoan wrote: Well, banks are dreadful long term investments. I don't think there's much doubt about that. And as we have found out again very recently, no-one has a bloody clue what is on their balance sheets, including the management.
Banks have been terrible long-term investments. A simple look at XLF over its life versus the S&P 500 shows how bad banks really have been over nearly 25 years.

The US bank sector is up just 43% since the inception of XLF in 1998. The S&P 500 is up about 143% over that same period. So $1,000 invested in banks gave you just $1,430 after a generation, versus $2,430 in the broad index. British banks have been even worse.

Could an individual investor have got lucky with his choice of bank or with his timing? Sure. In fact some inevitably must do. But it does not follow from that that banks have been a sound bet. Not even close.

This has been 25 years broadly of falling interest rates which according to most are relatively good for stocks in general but relatively bad for financials. I guess the next 25 years may not repeat the pattern.

Lootman · Post by **Lootman** » March 20th, 2023, 5:35 pm

Backache wrote:
Lootman wrote:Banks have been terrible long-term investments. A simple look at XLF over its life versus the S&P 500 shows how bad banks really have been over nearly 25 years.

The US bank sector is up just 43% since the inception of XLF in 1998. The S&P 500 is up about 143% over that same period. So $1,000 invested in banks gave you just $1,430 after a generation, versus $2,430 in the broad index. British banks have been even worse.

Could an individual investor have got lucky with his choice of bank or with his timing? Sure. In fact some inevitably must do. But it does not follow from that that banks have been a sound bet. Not even close.
This has been 25 years broadly of falling interest rates which according to most are relatively good for stocks in general but relatively bad for financials. I guess the next 25 years may not repeat the pattern.

True. But then this latest fright in bank shares is being attributed to higher rates. Banks like a steep yield curve since that contributes to margins. But we have an inverted yield curve right new which isn't so good for banks. And higher rates can mean more corporate failures and so higher credit risk on those commercial loans.

The only bank I hold in any size is JPMorgan, often regarded as the safest bank. I do hold a couple of other financials, like Visa, Berkshire and Morgan Stanley, but they are not banks per se.

The Lemon Fool

FTSE yield up - BOOM!

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