I have always taken Warren Buffets advice with respect to bank stocks. If you don’t understand the business don’t buy the stock. I don’t understand what banks are doing.
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Yeah, you don’t want a major bank reporting “material weaknesses” in internal controls over financial reporting.
I’m guessing this is directly related to the SEC calling on them, and why their annual report was delayed to include this new statement.
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I would agree with Buffet in respect of US bank stocks as they are engaged in more exotic activities than Canadian banks. I would not invest in US bank stocks. Canadian banks however operate in a highly regulated, conservative environment. That, combined with their large size and reserves, make them a pretty good investment for pensioners.
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If you’re saying that you feel you understand Canadian banks well enough to invest in them but not US banks then it sounds like you are in perfect alignment with Buffet’s advice.
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Most of the posters on this thread could run a Canadian bank. One of the best paid jobs on the planet relative to the expertise required.
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I appreciate that asset size is not the determinant to be considered a globally systemic important bank but I was surprised at how small Credit Suisse had become by the end of 2022: only $548 million in assets. It was smaller than any of the five largest Canadian banks. I had not appreciated how small it had become.
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I think you might be reading something wrong.
According to this (https://www.credit-suisse.com/media/assets/corporate/docs/about-us/media/media-release/2023/02/q4-22-press-release-en.pdf), they had $1.3 TRILLION in swiss francs as assets under management at end of Q4 2022.
Or, in other words, about 3,000x of the size you implied at $0.5 Billion (548 Million).
We are both right: just looking at different metrics. You are using AUM rather than bank assets to get the larger number. AUM includes mutual funds, etc., which they manage and are not bank assets as such.
I am only looking at actual bank assets when comparing to the Canadian banks.
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First Republic is now in more serious trouble.
They likely have huge unrealised losses in their book.
Looks like we could see regional banks being swallowed up by larger banks at firesale prices.
WSJ reporting that their execs dumped $12M in stock over the past couple of months.
I need Chat GPT to alert me when execs rapidly increase selling shares of their company stock.
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Is everyone now getting notices from their banks and credit unions re how conservative they are and not in danger of failing, or is that just me?
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It’s Chat GPT-4 now.
We are likely to see AI used now to catch fraud and criminal activity.
Feels a bit like minority report now.
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Seems like a pretty standard response?
Vast majority of folks have no idea as to what is going on.
Yeah I was just thinking, OK Thanks. It’s not like I have more than $250k in the bank nor the credit union. I doubt anyone has that much in the CU but the bank might have some larger customers.
The CU specifically explained the deposit insurance but the bank did not.
I mean, it’s probably good that they did. I doubt my parents and siblings understand that their deposits are insured.
Small bank failures have been pretty frequent in the US over the past 50 years. Probably a non-event for most depositors because of the high FDIC insurance.
Canada’s last bank failure was a small bank in 1923 so folks don’t think about bank failures here. We have a ridiculously low insured amount (C$100,000) but the Federal government would probably make the depositors whole if one of our big six banks went under.
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Wow, today I learned.
ETA: I googled it and Wiki says two small banks have failed since 1923. Still, the US has a much, much higher rate. We’ve had 563 banks fail in the US just since 2000.
I stand corrected: I blindly used that statistic from another source. Reading your Wikipedia blurb reminded me of the two bankruptcies in 1985 which were big news at the time.
We did have several insurers fail in recent years including a very large one, Confederation Life, in 1994. The Canadian insurance industry compensation fund was able to make all Canadian policyholders whole without taxpayer money.
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Buffett made an exception for bank investing 5 years ago as he saved a struggling Canadian bank and made a very nice return on his investment. I watched the bank’s problems with great interest as I had a deposit with them at the time that was only partially insured. Eternally grateful to Buffett for bailing them out.
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Didn’t he go big on banks in the run up to and into the 2008 crisis?
I don’t think that’s an exception to his advice though.
If you don’t understand ABC Corporation then you shouldn’t invest in them. However, if Warren Buffet DOES understand ABC Corporation and still thinks it’s a good investment then it’s ok for Warren Buffet to invest in them even though it is not ok for you to invest in the very same company.
Why? Because Warren Buffet understands the risks and the reward potential and is going in with his eyes open whereas you have no idea if the risk matches your risk profile.