Thursday, July 26, 2007

US Banks

The US banks haven’t been a pleasant place to be invested recently. Here is a snapshot of the price history of some of the big US banks over the last month (remember these loses exclude any losses resulting from the rising CDN dollar)

June 25: $51.69
Now: $49.21
Change: DOWN 4.8%

June 25: $48.85
Now: $47.93
Change: DOWN 1.8%

June 25: $48.36
Now: $45.27
Change: DOWN 6.4%

June 25: $33.39
Now: $31.14
Change: DOWN 6.7%

June 25: $51.91
Now: $48.83
Change: DOWN 5.9%

June 25: $35.08
Now: $34.57
Change: DOWN 1.5%

As you can see there where some fairly impressive declines over the last month. So…does this mean it might be time to pickup some big US banks? Personally, I think there might be another round of declines. What’s your opinion?


MG (moneygardener) said...

It's hard to say how low they will go. I am getting really tempted to pick up BAC soon considering it should be yielding 5.2% come August.

Seems like a rare opportunity to pick it up with the Canadian dollar so high, coupled with the high yield and low P/E.

Warren said...

I think US banks have further to fall, but 5.2% is hard to beat. However that can always be decreased in the future.

I look extra hard when investing in US companies just due to tax reasons.

Unknown said...

What are the tax implications of investing in US equities?

Anonymous said...

I'd say wait. If you really are itching to get in, buy some long term options (with a lesser amount of your capital).

My guess and hunch is that this isn't the end of the sub prime scenario and now that all the easy money as dried up a lot more people can be expected to go bankrupt.

Then we still have the declining US dollar issue to deal with. The problem being that they are still spending and printing A TON of money and the rest of the world (mainly China) is starting to indicate they want to diversify away from dollars.

Then we have the whole oil trading in dollars or euros scenario...

I'm waiting for a change in leadership (regardless of what party wins, the leadership will change) and hopefully the new government brings in some financial stability and can balance the books! But that is still some time away and things will get worse before they get better, at least IMO.


Major money center banking stocks in the united states have always been a bad place to invest.