I have nothing to banks. Business as usual. Sure in latest decades there were a lot of transformation of the market. That’s natural, and that’s why we’re passively indexing, because lots of these changes are to large extent unpredictable. Nothing new under sky - before there were telegraphs, horse transportation, lift operators, etc, etc. Schumpter used to call it creative destruction.
Well, airlines are not very profitable, but banks surely are.
I think it depends on the particular market. In Poland for example the best performers of last decade were banks. That’s why currently MSCI Poland contains a big chunk of financials.
Yes - and why not? I still wouldn’t want to index in them.
Not that much really (in today‘s interest rate environment).
That’s already priced in. UBS market cap is 45 billion. Eventhough they are the biggest bank for private investors worldwide with 3500 billion AUM. Teslas market cap is 75 billion. Are they even profitable? Will they survive without Elon Musks money? How many clients do they have, how many cars did they sell? 100’000?
To me it seems that financials are extremely undervalued today.
Only due to enormous leverage, but intrinsically they are not particularly profitable
JPM - JPMorgan Chase & Co. Stock Price and Quote - ROA 1.2% - with 10x+ leverage becomes ROE 14.2%
Undervalued based on what? P/E? That’s not really the main valuation ratio for bank sector, as I said, they’re more valued on P/B
That’s why I said that they are particularly crisis-prone. Anyways, during bull market, which is more often than bear, they are profitable. And therefore, it makes sense to enjoy some of those profits via stock ownership. In any case, I’m not religious about any of those thing. Just in case I own all of them because I believe I’m not able to select a better portfolio with employment of time and resources that I currently employ.
I remember seeing this chart with the highest performing industry per year for the last 40 years and it was a wild mix.
This plus the beauty of an simplistic single etf investment makes me more and more a vt-only guy. Maybe another 20 percent investments in areas where I feel to know the market best. Let’s also not forget that it is quite nice to avoid any rebalancing within equities, which would trigger taxes if you ever live outside ch.
Elon Musk might be the epitome of the mad scientist of unlimited hubris. Or a great visionary whose company will shape the future of the automotive industry.
The jury‘s still out on that, I think.
Whereas for UBS, we have seen the market‘s/public‘s verdict (on their striving to become the biggest investment bank in the world): Stock‘s worth less than 20 years ago, 10 years ago they had to be bailed out by the government.
They still are a pretty fine bank for personal customers and private investors.
When making regular (monthly, quarterly) contributions to the portfolio, I would adjust the securities to be bought. That is, buy only the securities that you‘re shortest of, compared to your desired allocation.
Sure, that might only gradually rebalance the portfolio and takes a bit more effort - but I prefer it to paying taxes on capital gains.
Exactly, also having distributing ETFs rather than accumulating ones are an advantage for this, since distributing gives you the option to invest the dividends into a less performing ETF. Cant do that with accumulating ETFs.
Won’t work well after 10-15 years of investing. But cashflow rebalacing is pretty good at the beginning.
Exactly assume you hit fire you won’t have that much money to rebalance that way. In fact you will need the dividends for your daily needs.
The question is: How expensive will “normal” rebalancing be(come) later?
I wouldn’t be surprised if Switzerland followed suit by also taxing personal investors for their capital gains soon / in a couple of years.
With the current health crisis, a a crisis of government (tax) revenue and debt seems imminent - so they might have to look for new taxation options.
…which will be voted out.
…do you say now.
The assumption is very reasonable and likely under normal circumstances. They might change.