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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Graham Osborn who wrote (57771)	8/14/2016 3:21:10 PM
From: Graham Osborn	Respond to of 78740

How do people on the thread value banks? I know the usual metrics that are used to say whether a bank is doing a "good" or "bad" job, but I am having trouble buying the proposition that since the cash flows are volatile the book value is a good proxy for value. For one thing, TBNC (and I assume other banks as well) does not truly use mark-to-market accounting. Rather, they are using an "other than temporary impairment" criterion which seems totally subjective to me. This was the convention that enabled the BLX fraud described in Einhorn's book. In the case of TBNC the assets appear OK but OTOH the stock is selling right about book (high end of historic range, whatever that means) so no margin of safety there. But if book value is subjective, how do you get a valuation from the operating metrics? And at a more basic level, why would you ever want to own a business with volatile cash flows when there are businesses with more stable cash flows (at least theoretically) to choose from? At the moment, since I can't value TBNC I can't buy it.

To: Graham Osborn who wrote (57771)	8/14/2016 6:21:40 PM
From: Lazarus	Read Replies (1) \| Respond to of 78740

You're looking at it a lot harder than I ever did. I have a nephew that graduated from Columbia University a few years ago and is now a dental surgeon. His loan payments are $2800 per month for 15 years (a little over $500k) but my sister tells me he's making around $1000 per day and paying more than the $2800 per month he owes.

To: Graham Osborn who wrote (57771)	8/15/2016 9:06:31 AM
From: Micah Lance	Read Replies (2) \| Respond to of 78740

I can't tell you how it will affect TBNC, however I live in the Dallas area and the stories in the Dallas Morning News regarding housing are a bit insane. My personal favorite: bizbeatblog.dallasnews.com - Multiple stories like this, people camp out for LOTS, not homes but the plot of land (WTF), also keep in mind McKinney is about 30-45 minutes from Dallas so this isn't for homes close to work. Near where I live, zero lot line townhomes are selling for $400-500k after being on the market for only days at a time. I've had at least three people tell me that their houses have gained 50% year over year in price. They live fairly close to business centers and those home prices are just skyrocketing. The cherry on top is that people are now cold calling offering cash for homes. My friends and I have experienced this multiple times, one even asked a realtor about it and apparently they're legit. Who knows? Either way the housing market is getting crazy, which is probably putting it mildly. Case Shiller is 50% higher than in 2007, while according to the Dallas Fed the economy appears to be slowing (essentially no job growth through 1H 2016, as Q1 and Q2 have essentially broke even). People have come up with a ton of excuses why it's different this time, but I think we all know how that goes. Hope my rant helped or offered some insight.