March 2021
Intermediate to advanced
368 pages
9h 10m
English
Content preview from Bank Investing
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CHAPTER 1Introduction
“The judicious operations of banking enable him to convert this dead stock into active and productive stock; into materials to work upon, into tools to work with, and into provision and subsistence to work for; into stock which produces something both to himself and to his country.”
– The Wealth of Nations Book II: Of the Nature, Accumulation, and Employment of Stock, Adam Smith
WHY A BOOK ON BANK INVESTING?
We believe that bank investing can be a fruitful pursuit. As authors of a book on the topic we have a vested interest, but we ask the reader to consider the following:
- The most successful investor of our times, Warren Buffett, has had a sizeable investment in banks over time (close to a third of his portfolio weight used to be in banks). This is based on the minority investments in publicly listed entities, and we do not include Berkshire's operating subsidiaries.
- Banks allow you to make macroeconomic bets since they are highly levered to business cycles.
- Bank investing allows you to scale your knowledge, as they have relatively homogenized business models.
- At the same time, banks are diverse enough to drive meaningful dispersion in price performance. This divergence of performance can be taken advantage of by an astute and prepared security analyst.
- Banks are great vehicles to make specific investment plays on geographic regions, demographic trends (suburban to urban migration, aging), industries (agriculture, tech, energy), news flow (trade/tariffs, ...
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I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.