PMs or Financials...Which is Best?

"The Federal Reserve on Wednesday greatly improved its economic forecasts in its March 2021 monetary policy decision but nonetheless indicated that [the FED] doesn’t expect to hike interest rates through 2023."



https://www.cnbc.com/2021/03/17/fed-meeting-live-updates-watch-jerome-powell-speech.html

 

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I see pm's being kind of dead in the water for a while going forward. I am not a big fan of bank stocks but some financials should do well. Big reason for my vote is the buy-sell spread in pm. The first 20% of gains eaten up by it. For stocks, it eats up 1 tenth of one percent at most.

 

I was thinking that both PMs and bank shares will do well in an environment of low Fed rates and rising real rates. I was wondering what everyone thinks will make the better investment over the next couple of years...Banks or PMs.

 

One is an investment (banks and equities)...the other is a SPECULATION (PM's).

They are not equal choices.

 

Bank stocks are still cheap.

PM's have the BitCoin pitbull to worry about.

 

Bitcoin (all cryptocurrencies) make me nervous from a tax (bookkeeping) perspective. The way I read it, each purchase you make with Bitcoin is a taxable event. Anyone spending cryptocurrency must report a gain/loss on their 1040. I suspect that crypto losses can only be used to offset crypto gains. This is a juicy, low-hanging apple for IRS auditors.

"Bitcoins held as capital assets are taxed as property
If Bitcoin is held as a capital asset, you must treat them as property for tax purposes. General tax principles applicable to property transactions apply. Like stocks or bonds, any gain or loss from the sale or exchange of the asset is taxed as a capital gain or loss. Otherwise, the investor realizes ordinary gain or loss on an exchange."

https://turbotax.intuit.com/tax-tip...ps-for-bitcoin-and-virtual-currency/L1ZOgU00q

"Regardless of how you interacted with any cryptocurrencies last year, you’re expected to include the information on your 2020 tax return. And for those who had income from virtual currency — whether due to selling at a profit or getting paid crypto for work performed — failure to report it may haunt you."

https://www.cnbc.com/2021/02/24/fai...tax-returns-can-lead-to-trouble-with-irs.html

 

Most bank stocks pay dividends, and most of those dividends are considered "Qualified Dividends" which means they are taxed at lower rates. Also stocks are traded on stock exchanges and thus are extremely liquid. And the trading commissions are low if you use a Discount Brokerage.

PM's on the other hand have higher sales commissions, and the spread between bid and ask can be steep. Owning PM mutual funds may be a better alternative than actually holding the physical metal.

I personally feel an investor needs to have adequate diversification across all asset classes. This spreads the risk, but can limited the "reward."

 

SILVER AND MORE GOLD jus like b-4... kinda opposite of some of you as I am spending some of my previous undertakings living the rest of my life spending instead of saving and enjoying the shit out of it.

 

Here's an interesting development. This could push real rates higher...putting downward pressure on PMs (at least in the short term).

"WASHINGTON—The Federal Reserve said Friday it would allow a yearlong reprieve for the way big banks account for ultrasafe assets such as Treasury securities to expire as scheduled at the end of the month, a loss for Wall Street firms that had pressed for an extension to the relief."

"Banks and their industry groups had pressed for an extension to the relief, saying that without it banks might pull back significantly from Treasury purchases, which would add to the upward pressure on bond yields that has rattled markets in recent weeks."

https://www.wsj.com/articles/federa...ency-capital-relief-for-big-banks-11616158811

 

The way I understand it, over the past year, banks were allowed to use U.S. Treasuries to fulfill their reserve requirements. By removing this temporary measure, banks will have to sell Treasuries to raise the necessary cash to meet their reserve requirements. This should put upward pressure on real interest rates since the Fed has already announced they won't increase their Treasury balance sheet.

Investments compete with each other for capital. As real interest rates increase, capital will likely flow out of PMs and into Treasuries. Once reserve equilibrium is achieved, capital flows should stabilize. It should be interesting to watch PM prices over the next few months.

I'm expecting a dip in PM prices (buying opportunity) over the next few months.

 

Real property and/or real estate.

 

I agree most of the time but all residential real estate is currently located in Bubble City, USA.

 

But...productive/revenue generating real estate with low/no debt is a winner almost regardless of cost of acquisition....over time.

 

...especially with the $5 Trillion kegger we're about to have!

 

I stick with 90% financials (stocks, bonds, etc.,)..and 10% precious metals.

 

Has anyone been following the latest hedge fund debacle?

 

Is this how the average person invests?

 

Not directly, but $30 Billion of rapid liquidation doesn't boost the banks that do.

 

I just started investing a little over 2 years ago and I like to stick with the lower risk, higher growth, kind of stocks like Amazon, Apple, Google, Microsoft etc.,

The odds of companies like those going bankrupt and the stocks losing all value is very low.

All of those companies have plenty of cash reserves.

 

Price to Free Cash Flow is a valuable metric...especially when accompanied by solid growth and good management.

https://www.investopedia.com/terms/p/pricetofreecashflow.asp