OK! Let’s dive right in mixing some wit into this piece while retaining all its information and keeping it human. We’re going all Times New Roman here, with some cozy padding after headers and paragraphs. Get ready for a journey through the topsy-turvy world of banking stocks!
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You know those times when the market goes a bit bananas, leaving investors skidding about like ice skaters on their first outing? Well, we’ve been living it for some weeks now thanks to a banking crisis extraordinaire that has sent shockwaves across the globe. But hand on heart, isn’t turbulence a bit thrilling? And who’s to say it’s not the perfect opportunity to snap up some bank stocks, even if the thought of it has us quaking in our boots just a tad?
Well, Aswath Damodaran does. NYU Stern School of Business’s beacon of wisdom put this very conundrum under the spotlight during Public’s sparkling debut at Exchange conference [http://exchange.public.com/]. Guess who was the exclusive media partner? We were!
Damodaran stressed that scoring in the market has everything to do with pricing. Y’see, there’s a bit of a pitfall many investors tumble into: the misguided belief that just hitching a ride with “good” companies will bring home the bacon. Damn it, no! Clever investing is all about the price tag, something folks often give the cold shoulder.
He muses, “If a great company is already strutting about with the tag of a premium company, where’s the leftover pie for profits? I’d rather cozy up to a struggling company that’s being treated like it’s met its Waterloo.”
Does this mean all bank stocks have hit rock bottom? Hell no! Damodaran reckons investors should flirt with sectors that are cloaked in doom and gloom—and right now, regional bank stocks are the hot pick.
### WHY REGIONAL BANK STOCKS COULD BE WINNING PICKS
Remember that time when Silicon Valley Bank and Signature Bank had catastrophic face-plants, sliding into their ungracious positions as the second and third largest bank failures in U.S. history? It was like a cold slap in the face as economists, investors, and market watchers ran around like headless chickens, trying to make sense of the wreckage in the banking sector, financial markets, and the big ol’ economy.
In the wake of this chaos, bank stocks—particularly those poor, innocent regional banks—took a massive hit. Case in point: Charles Schwab. The shares plunged faster than my phone’s battery percentage right after Silicon Valley Bank was taken into custody, sinking by about 35% so far this year. Other regional banks found themselves in the same wretched boat, enduring [https://www.wsj.com/livecoverage/stock-market-news-today-03-10-2023/card/regional-banks-head-for-worst-week-in-decades-358OhjIyK40EOGtY1g7I] the most humiliating losses they’ve seen in years.
Sure, that first shockwave has calmed down a bit, but who wouldn’t be hesitant about sticking their life savings into bank stocks now? I mean, wouldn’t you feel like jumping ship?
Damodaran gets it. He sympathizes, “It’s completely natural to contemplate bungee jumping without a cord when everyone else seems to be jumping off the ship.” Yet he insists there are golden opportunities among regional banks that are being tossed around like hot potatoes because of the market’s fearful psyche.
Remember, though, wise financial gurus will always alert you to avoid metaphorically placing all your eggs in one basket. Don’t be that guy. Instead, they instruct us to weave a diversified portfolio [/how-to-diversify-your-stock-portfolio/]—sprinkling investments among various companies, sizes, and sectors, just to ensure your risk appetite, goals, and timeframe are satiated.
But if you’re tenacious enough to still eye individual stocks (like the lion part of your comprehensive portfolio), it’s paramount to scrutinize the current stock price cheek by jowl with its fundamentals.
Damodaran’s closing words of nuggety wisdom? “At the right valuation, I’ll consider any company. But let me tell you, a steep price for an otherwise fantastic company has me passing the buck.”
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