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Strategies & Market Trends : Buffettology

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To: WogofWallStreet who wrote (4617)	4/21/2018 8:37:12 AM
From: Spekulatius	Read Replies (2) of 4690

Right don’t think that banking is that great of a business. There are few banks that can do more than 15% ROE and there is something inherently risky about running a business with a 15x leverage. Besides that, Australia seems to be in a real estate bubble that is appears to be much more exaggerated than makes the bubble in the US in 2005, although I don’t think you have the same loose lending practices. It still could be a major headache for the banks, if this bubble pops, due to a recession and/or higher intererest rates or just exhaustion. It is not unheard of for banks to lose a lot of money in recessions, which is something they most industrial companies can avoid (just to name one example). Because of the above, I don’t think that banks generally deserve a market multiple. I rather prefer owning I insurance companies over banks for example and valuations are typically in the same ballpark, if not cheaper for insurance companies. There sure must be other interesting business in Australia. If you present something here, I would be happy o their a look at it.

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