To The Moon

My Thurs, 04 May 2023 post

In my yesterday post (click here to read ! and give a “like”) I have openly shared the dilemma that I face currently and how I need to find a way out.

One of the sectors that I have been monitoring that is in total disarray now (I strongly feel) is banking stocks.

The bank-run that started approx. 2 months ago with Silicon Valley Bank, then Signature Bank and most recently First Republic is showing no sign of slowing down.

I think US official bodies - the Federal Deposit Insurance Corp (FDIC), US Treasury dept and The Fed, US central bank are quite “unsure” what else could be done to effectively quell the contagion that is spreading like wildfire now.

US Regional banks performances on Thu, 04 May 2023

Just look (above table) at the 3 regional banks that are in most “dire” condition.

Yesterday alone, amongst the 3 of them, they have lost between -12.05% to -50.62%, in their stock price.

US Regional banks - YTD performance

Their YTD loss is as follows :

• Pacwest Bankcorp : -86.02%

• Western Alliance Bankcorp : -68.90%

• Zions Bancorp : -58.87%

The Troubling Questions I Have:

1. Is there room for the 3 regional banks to further free fall before they warrant a “rescue” by FDIC?

2. What are the repercussions if FDIC does not step in (in-time) to bail them out?

3. Will FDIC “expects” US international banks to buy these 3 banks - lock, stock & barrel?

4. Will this “isolated” US incident result in another ripple effect across world economies that will result in another similar “ $Credit Suisse Group AG(CS)$” like bank run?

Just so we’re clear, the top US International banks have not been spared of the price fall agony.

Yesterday alone, they have lost between -1.69% to -4.99%; that is still “tolerable” when it comes to the US market.

Looking at their tumbles, I had an “epiphany”.

That is, I will continue to monitor the US international banks stocks.

When the time is “right”, I will make a “bold” move.

This leads to the million-dollar question - “When will time be right?”.

For that, it is back to the drawing board to figure out the answer to the million-dollar question (for myself).

Certainly, that there is no right or wrong answer; so long as it fits one’s risk appetite - right?

Why The Sudden Change Of Heart?

Simply because when I go back to the roots of why I had been“bullish” about the banking sector, my notes helped me to recall how I arrived at this conviction.

I like to take this opportunity to share with those reading here:

1. Banks are essential to any economy and will continue to be so in the future.

2. Banks have a long history of being profitable and paying dividends.

3. Banks have been able to adapt to changing market conditions & regulations.

4. Banks have a large customer base that provides a stable source of revenue.

5. Banks have diversified businesses that includes other financial services such as wealth management, insurance, loans etc..

• Do you share the same belief ?

• Do you think US international banks will be able to weather this storm and come out from the other side ?

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