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Friday, June 22, 2012

Bank Stock


Now you are adding stocks in sectors that will add volatility to your portfolio.

Next industry I would look at is the Financial sector.  If you can’t beat them join them.  Buying a bank stock without a dividend is like riding a bicycle without a seat.  Painful at times.  Banks and Governments are joined at the hip; the big banks that were going to fail have failed already.  The Government is not going to let another one fail, due to the Volker rule.

Even though I think the managers of banks are not honest with their shareholders, I think you should buy a bank stock.  You could look at regional or local banks.  I like U.S. Bancorp (USB), it has a nice dividend yield of 2.5% as of the time I am writing this.  But you may have a bank you like better. 

The money center banks are interesting although no or little dividend yield in some cases.  I do believe the bankers will try to raise their dividends as a method to prop up their stock prices so they can give themselves options and big bonuses.  There is Bank of America (BAC), Goldman Sacks (GS), Morgan Stanley (MS), Citigroup, Inc. (C) the people who caused two depressions one in 1929 and one in 2007, Wells Fargo & Co (WFC).  I like BAC just because Karen Finerman on Fast Money bought it. 

The political cartoon below is what happened to collapse our banking system.  Bankers sat by our congressmen and rewrote the banking laws.  Remember Canada’s banks are still regulated.  Their banks did not collapse. 

If you would like to buy a bank but feel uncomfortable buying one of the US money center banks.  Buy a Canadian bank.  Canadian banks have a tail wind considering Canada is in a good long term position because it owns a lot of commodities.  It also believes in regulating banks, taxing the wealthy, and supporting the middle class.


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