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Marin Wealth Advisors

Marin Wealth Advisors, LLC.

Registered investment Advisor

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Blog

December 4, 2015

2016: Learn to Love Your Banks

The Fed is going to start raising short term interest rates very soon. Even though the Fed will continue to raise rates at a very modest rate over the next couple of years, this will be the first in a series of rate hikes unless our economy does a U turn.

Although rising interest rates can be hard on stocks in many industry sectors, one of the clear winners of rising rates should be large U.S. banks. The reason is simple; banks make more money on their new loans as interest rates rise. (They know how to raise rates on loans faster than their cost of money rises.)

Since the financial crisis of 2008-2009 big U.S. banks have, for the most part, cleaned up their loan portfolios, paid the lions share of their fines and adapted to their new regulatory requirements. As well, their stocks are trading at low historic valuations and they’ve started to rebuild their dividend programs. (Pre-crisis banks were one of the most dependable payers of substantial dividends.)

So, we see a bright future for banks’ business and a good entry point for investors who appreciate reasonable valuations and rising income from dividends.

Category iconInvestment Management Tag iconETFs,  Mutual Funds,  Stocks

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    Marin Wealth Advisors LLC

    899 Northgate Drive, Suite 300
    San Rafael, CA 94903
    415-458-5880
    Toll-Free: 800-758-3768

    315 Montgomery Street, 10th Floor
    San Francisco, CA 94104
    415-472-5885
    Toll-Free: 800-758-3768

    1901 Harrison Street, Suite 1100
    Oakland, CA 94612
    510-217-8100
    Toll-Free: 800-758-3768

    2121 California Blvd, Suite 290
    Walnut Creek CA 94596
    925-374-4899
    Toll-Free: 800-758-3768

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