Investing Themes - As investors, from time to time we have to change our thinking about what is good as opposed to what was good.

Below is an exerpt of an article written in 2004. The timing may have been off...but when compared to say gold, commodities, even real estate...the banks have been a poor relative investment...I missed the explosion in credit would give them a "last hurrah" - it did. I suspect their glory days are over!...Utilities anyone?

The past is certain, the future obscure.

Thales (640 AD - 546 AD)

...(edit).

The banks are a case in point. You would be in the majority to think that investing in Banks has been a good investment over the last 10 years - and you would be correct! But if we look more closely at the performance of banks over the last 2 years we see things may have changed. We all know that lending has grown at tremendous rates and over the last few years, banks have continued to lend an ever increasing amount, as the growth in residential property borrowing verifies.

On this basis you would assume that all Bank share prices would be well in excess of that achieved 2 years ago. Not so. The “Big 4” banks are all under their record highs and their recent performance is nothing to get excited about – especially if you consider the high volatility they have shown. ...

Could the bull market in “debt” be coming to an end and could this lead to lower profits (or lower growth in profits) for the banks? It is possible.  (comment: years early CT! :-))

2011:
- higher capital adequacy
- higher wholesale funding
- lower debt demand/growth
- governments demanding their pound of flesh
headwinds!!