Effort directed at a new post has been fleeting. It is a pleasure that the buyout of Achillion Pharmaceuticals closed so quickly. However, beyond that, pharmaceuticals are frequently the object of political ire. Also, because of all the work involved in understanding how they are intended to act, what their markets are, and a need to survey extensive competition, time can probably be better spent on other industries.
Great expertise on banking is not claimed here. (Frederick Douglass, the well-known abolitionist, publisher, marshal, and ambassador struggled as a banker. If anything, there might be a sardonic attitude toward banking stocks at this blog). Banks are generally thought to be better to own when interest rates are rising. At least for the time being, the US Federal Reserve indicates that it is not immediately about to cut rates again any time soon. However, other important world economies need to carry on with accomodative policies. Additionally, if there is some serious domestic downturn, it sounds like another round of quantitative easing would be in the works.
Not only that, but eventually all vibrant businesses go stale. Technology and innovation tend to augur the future. Tech stocks often outperform and can exhibit growth. Thus, unless there is reason for a sudden change of perception about a particular bank, it could be worth it to wait for its share price to drop so low that it is attractive on a balance sheet measure, such as book or tangible book value (Successful bank investor Warren Buffett probably advises as much, though a referenceable souce is not available at the moment).
Banks also can be political targets. In fact, just during the last election there were mantras such as “Too big to fail, big enough to jail”–or how did it go? Ongoing campaign processes are unlikely to support financial institutions, even if they should be in better favor than commercial medicines.
Recently, during a down day for the market, the share price of Jack Henry & Associates (JKHY), an S&P 500 company, was up. Upon preliminary research, it is involved in bill payment, mobile banking, credit and debit card processing–and cyber security is important. Additional time and effort are required to have a better understanding. The technology of banking could be relatively exciting though.
Which returns us to a bank that has been interesting for some time now–as its share price has simply remained approximately the same since 2016–Columbia Banking System (COLB). It not only pays a healthy dividend, but tends to declare special dividends on occasion. The payment one gets for being an investor, which compounds, is above average. It also has a consistently high Net Interest Margin (NIM) and is located in a solid economy of our Pacific Northwest.
Geographically, British Columbia, Canada is above our northern border. There is also the Columbia River, which is described as highly treacherous at its estuary or mouth in Northern Oregon. While the history and naming of the banking firm are unknown, it seems to be evoke a regional identify. There is also Washington Federal (WAFD) in the same region.
Looking at the stock chart since October 25th, there appears to perhaps soon be what is known as a “Head and shoulders pattern.” With the advent of this particular apparation, one might look for the share price to drop down to about 55% of the distance to the head, from the “Neck line.”
So, with arithmetic, $38.75 – $1.38 = $37.38 could be worth attention. At that share price, the stock’s yield would be $1.12 / $37.38 = 2.996%, not including any future special dividends. The S&P 500 index itself yields 1.81% currently.
The stock is not particularly volatile, having a Beta equal to about 1.
All of the above does not mean the bank’s equity is a buy, or a potential buy. However, there would be reasons to seriously consider it as a quality stock if it cheapens. It possibly could bounce back up to $42 in short order, amounting to a profit of about 12.35%–probably much better than anyone at the bank can do with interest rates remaining low.
Great expertise on banking is not claimed here. (Frederick Douglass, the well-known abolitionist, publisher, marshal, and ambassador struggled as a banker. If anything, there might be a sardonic attitude toward banking stocks at this blog). Banks are generally thought to be better to own when interest rates are rising. At least for the time being, the US Federal Reserve indicates that it is not immediately about to cut rates again any time soon. However, other important world economies need to carry on with accomodative policies. Additionally, if there is some serious domestic downturn, it sounds like another round of quantitative easing would be in the works.
Not only that, but eventually all vibrant businesses go stale. Technology and innovation tend to augur the future. Tech stocks often outperform and can exhibit growth. Thus, unless there is reason for a sudden change of perception about a particular bank, it could be worth it to wait for its share price to drop so low that it is attractive on a balance sheet measure, such as book or tangible book value (Successful bank investor Warren Buffett probably advises as much, though a referenceable souce is not available at the moment).
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| Chuck Prince, “Umbrella Model” |
Banks also can be political targets. In fact, just during the last election there were mantras such as “Too big to fail, big enough to jail”–or how did it go? Ongoing campaign processes are unlikely to support financial institutions, even if they should be in better favor than commercial medicines.
Recently, during a down day for the market, the share price of Jack Henry & Associates (JKHY), an S&P 500 company, was up. Upon preliminary research, it is involved in bill payment, mobile banking, credit and debit card processing–and cyber security is important. Additional time and effort are required to have a better understanding. The technology of banking could be relatively exciting though.
Which returns us to a bank that has been interesting for some time now–as its share price has simply remained approximately the same since 2016–Columbia Banking System (COLB). It not only pays a healthy dividend, but tends to declare special dividends on occasion. The payment one gets for being an investor, which compounds, is above average. It also has a consistently high Net Interest Margin (NIM) and is located in a solid economy of our Pacific Northwest.
Geographically, British Columbia, Canada is above our northern border. There is also the Columbia River, which is described as highly treacherous at its estuary or mouth in Northern Oregon. While the history and naming of the banking firm are unknown, it seems to be evoke a regional identify. There is also Washington Federal (WAFD) in the same region.
Looking at the stock chart since October 25th, there appears to perhaps soon be what is known as a “Head and shoulders pattern.” With the advent of this particular apparation, one might look for the share price to drop down to about 55% of the distance to the head, from the “Neck line.”
The stock is not particularly volatile, having a Beta equal to about 1.
All of the above does not mean the bank’s equity is a buy, or a potential buy. However, there would be reasons to seriously consider it as a quality stock if it cheapens. It possibly could bounce back up to $42 in short order, amounting to a profit of about 12.35%–probably much better than anyone at the bank can do with interest rates remaining low.