In this episode of the Investing for Beginners podcast, hosts Dave and Andrew explore the intricacies of investing in banks, discussing their economic significance, profitability, and the complexities of bank terminology and financial statements.
[00:00:50] Why Invest in Banks?
- Discussion on the profitability of investing in banks and their substantial role in the economy, comprising a significant portion of the S&P 500.
[00:01:13] Understanding Bank Terminology
- Introduction to the unique language of banking and the goal to simplify it for listeners.
[00:01:35] Types of Banks
- Overview of different types of banks, including “too big to fail” institutions and regional banks, with examples like JP Morgan Chase and Fifth Third Bank.
[00:03:07] Analyzing Banks
- Discussion on starting with simpler, regional banks to build a foundation before tackling more complex institutions.
[00:03:50] How Banks Make Money
- Explanation of the basic banking model: taking deposits and making loans, and the concept of interest spread.
[00:06:06] Bank Balance Sheets
- Insight into how banks’ balance sheets differ from other companies, focusing on deposits as liabilities and loans as assets.
[00:07:57] Income Statements
- Breakdown of bank income statements, including interest and non-interest income, and how they differ from companies like Microsoft.
[00:14:05] Loan Books
- Importance of understanding a bank’s loan book, including types of loans and credit quality.
[00:19:41] Risk Management
- Discussion on the risks banks face, such as loan defaults, and how they manage these through provisions.
[00:23:40] Key Metrics
- Introduction to important metrics like loan-to-deposit ratio and CET1 for evaluating bank stability and performance.
Today’s show is sponsored by:
Go to shipstation.com and use code INVESTING to sign up for your FREE 60-day trial.
Go to monarchmoney.com/BEGINNERS for an extended 30 day free trial!
Find great investments at Value Spotlight
Have questions? Send them to [email protected]
Start learning how to value companies here: DCF Demystified Link
SUBSCRIBE TO THE SHOW
Apple | Spotify | Google | Amazon | Tunein
You can find the transcript of today’s show below:
Related posts:
- IFB25: Tulip Mania, Intrinsic Value, and the Student Loan Bubble Welcome to session 25 of the Investing for Beginners podcast. In today’s show, we will discuss bubbles and how they pertain to student loans...
- IFB97: A List of Really Unwise Financial Decisions Announcer: 00:00 You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginning led by Andrew Sather and...
- IFB139: Beginners Guide to Investing in Bonds Announcer (00:00): You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and...
- IFB150: Economy Basics Pt2 – Inflation, Deflation, and Currency Announcer (00:00): You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and...