Who benefits from inflation?

[Telamelo]

Banks do ok no matter what happens.
He who sets the rules reaps the benefits.
Mick

After yesterday's interest rate rise.. the Big4 Banks share prices suffered today with Westpac tumbling -6.11%

Seems like investor's now somewhat concerned that interest rate rises may squeeze/hinder bank profits going forward.

 

[mullokintyre]

Hopefully the share prices will fall further, and I will buy into them.
Historically , Banks do better as the interest rates go up and their margins increase.
I guess there is a whole generation of investors who have never been through an interest rate tightening cycle.
Mick

 

[divs4ever]

After yesterday's interest rate rise.. the Big4 Banks share prices suffered today with Westpac tumbling -6.11%

Seems like investor's now somewhat concerned that interest rate rises may squeeze/hinder bank profits going forward.

go back to the GFC , the US wasn't doing too badly until AIG got into trouble , why was AIG so pivotal ?

AIG was the major mortgage INSURER is the US so when the US is awash with NINJA loans are going uninsured ... ( lenders with toxic loans get REALLY SCARED )

as long as someone else picks up the toxic debt , the banks don't give a rat's ( unless there is a Royal Commission later )

now also house mortgages tend to get bundled up in things called RMBS ( Residential Mortgage Banked Securities ) although the US also put lots of toxic loans into CDOs ( Collateralized Debt Securities ) and BOTH were rated AAA investment grade ( despite the toxic contents )

now for the ASX maybe GMA is worth watching , it could be the canary in the coal-mine

 

[divs4ever]

Hopefully the share prices will fall further, and I will buy into them.
Historically , Banks do better as the interest rates go up and their margins increase.
I guess there is a whole generation of investors who have never been through an interest rate tightening cycle.
Mick

am not a big fan of the BIG 4 , yes i might carefully buy more WBC , but am more likely to nibble on the second tier players ( BOQ is currently lower than my av. SP , but hopefully BEN will come down much lower as well , SUN , maybe not so enthusiastic , but would hope for extra cheap MYS . )

HOWEVER this might be a tightening cycle like no other ( that has come before )

 

[mullokintyre]

am not a big fan of the BIG 4 , yes i might carefully buy more WBC , but am more likely to nibble on the second tier players ( BOQ is currently lower than my av. SP , but hopefully BEN will come down much lower as well , SUN , maybe not so enthusiastic , but would hope for extra cheap MYS . )

HOWEVER this might be a tightening cycle like no other ( that has come before )

Its all about the risk/reward.
How risky are the big 4 banks compared to other sectors?
What sort of return/reward can I expect to get from them compared to other sectors?
NAB under 27.50 , WBC under 20.50 , ANZ under 22.50 and CBA anywhere within a buck of 80 are where I will be entering.
Mick

 

[divs4ever]

i went for the lesser banks mostly bought in 2011 and 2012 because i couldn't see a sensible path of growth in the BIG 4 , now with the 'bail-in ' laws and other changes to banking ( like Basel III ) the risk for the lesser banks is higher , but they still have room for sensible growth ( although BOQ isn't doing such a great job of it )

have an order in for WBC around $19.80 if i miss it i won't worry about it

 

[divs4ever]

considering the stress Credit Suisse is in which bank is 'safe '

 

[mullokintyre]

considering the stress Credit Suisse is in which bank is 'safe '

I think our banks have marginally better oversight than the big international commercials.
The Aus government via the RBA will provide some measure of support for our local banks.
Less risky from my perspective.
Mick