I suggest you separate the category "financial stocks" into components. For me, I use different metrics for making evaluations about bank stocks, about brokerage stocks, insurance stocks, asset managers, business development companies, "financial reits", and so on.
For example, for insurance stocks I like p/bk and growth in bk. For banks I key on roa vs p/e and p/bk. (There's something called "efficiency ratio" that pro analysts like for comparing banks, but I generally don't use that one.) For asset managers I like assets-under-management to market cap. For reits, relative dividend yield and p/bk and d/e.
I just want to show here some of the differences and choices that I use. I don't just use these measures exclusively. It's a combination of several quantitative and sometimes judgmental guesses.
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As I look through my holdings, at this time it seems I'm not able to avoid blowups: I certainly have them with some of these financial stocks. I am hoping and betting that time and diversification will mitigate how much they ultimately affect the portfolios.
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Yes, I have found it satisfactory to buy (financial) stocks that Warren Buffett or surrogate have bought when their buys have been first reported by the media. Especially if some of the stocks were then able to be bought at prices below what Mr. Buffett/surrogate paid for them.
Jmo, and from my experience. Others will vary. |
