If you are at a poker table and can’t spot the sucker, then it is you. So here I am. If someone has money they want to invest (not a huge amount of money, just a few thousand) are there any investments worth looking into that a person intends to hold on for either a medium or long term?
It seems with the fed reducing interest rates, income for the top 1% and corporate profits skyrocketing and corporate cash reserves at 2 trillion, that if there were good investments that they’d be all over them since there seems to be trillions in capital sitting around doing nothing. I don’t know much about investing, but that dichotomy makes me wonder if there is anything worth looking into.
Precious metals seem like they might be a bubble, but who knows if/when it’ll go down (I assume when good economic news starts up again). I thought about industrial metals like copper, but the prices have already rebounded from the recession and are back at pre-recession levels. I don’t know if that is a good idea, if there is another downturn they’ll go down again, then rebound.
A real estate investment trust may be something, with real estate prices down and more people renting maybe that is a place to park money for the long term. Plus if the housing market rebounds wouldn’t the share price go up?
Buy some stock in a long-term high-yielder. I hold shares of a natural gas pipeline company that pays over 6% dividend, and is still worth what I paid for it. Can’t say that for my other stocks.
There are increasing reports that gold sellers are selling stuff they don’t have. I’ve heard multiple times that gold brokers actually only hold 1 ounce of gold for every 100 ounces of gold they sell on paper.
If you’re going to invest in PM I suggest only buying what you can physically hold.
I said it in another investing thread, but Bank of America is trading @ $6.50, not too far from its 2008 low of $4/share and way off its post-2008 high of $15 (share prices are rounded to nearest .50, cause I’m too lazy to look at anything other than a chart). The stocks market cap is $65 billion, but it has a enterprise value of $200 billion and a book value of $20.29/share.
Compare that to some other bank stocks:
Wells Fargo: Price of $22.89/share, book value of $23.86, market cap of $120 billion and an enterprise value of $154 billion.
JP Morgan: Price of $33.41/share, book value of $44.79, market cap of $130 billion and an enterprise value of $6 billion.
So while BAC has been taking it on the chin over the past few months, that’s a good time to buy in my book. The damned thing is, imho, way undervalued for a Too Big To Fail bank. Wells Fargo looks to be fairly valued, and I’m not going to go digging into JPM’s financial statements in order to figure out why its enterprise value is $6 billion compared to its market cap of $130 billion.
And I’m sure there will be people who chime in to say I’m crazy to put $ into BAC, but you gotta ask yourself: Is JohnT crazy enough?
If you want low risk, there’s nothing wrong with keeping your money as cash.
2% interest in a bank deposit is better than a high yielding stock that goes backwards by 10%.
Decide your view on the USD. If you are bullish keep your dosh stateside in the investment class that fits your risk profile and you know most about. Elsewise go offshore in the same investment class.
I wouldn’t touch gold at all, imho. Too many people in that market who don’t have the slightest idea what they’re doing.
One of the classic signs of an economic bubble is the quality of the investor/purchaser. As the investor quality drops, the more likely you’re in a bubble. Gold, being advertised on TV by people who weren’t in the business just a few years prior, has a lot of the hallmarks that the housing bubble showed in 2005-2007 in terms of investor quality. When you see ads selling the “secrets” of having a “gold party”, that’s a good sign that the investor quality has pretty much hit rock bottom.
Is there a standard formula for valuing bank stocks against book value or is there another measure used for such stocks? (For example, that they typically sell for five times book value or whatever.)
BAC is trading at .3 of book value, way below the above quotes statement of “trading below two times tangible book value”.
Of course, book value is but one metric. I just used it in this thread to compare it to other like-sized (TBTF) banks to show just how below industry valuation norms BAC is.
What do people think about real estate? Has the real estate market bottomed out and gotten lower than it should be, or has it just returned to the level it would’ve been without a bubble? Or is it still going down?
US population is set to grow to 400 million by 2050, and supposedly become more urban. Would now be the time to start investing in real estate in urban areas hit hard by the housing bubble? The SF Bay Area is landlocked and real estate prices have been cut 30-50%
