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None of us should have our money in a regional bank. And certainly no more than $250,000 in any bank.

None of us should have our money in a regional bank.

There are three reasons:

+ You and I have no idea how shaky the bank is. And I mean no idea.

+ Your money is only insured to $250,000. After that you’re at the mercy of poorly-paid bureaucrats in Washington, who have qualms about bailing out rich people — i.e. those who have more than $250.000.

+ You can earn 5.32% on three month treasuries today. That is huge! Why give your money to a bank for free.

That’s it.

You don’t have to read the rest of this blog, though there is a great joke.


Why I never invest in banks

Banks are the easiest (and most boring) businesses to manage.

They get given free money, called deposits.

They lend money against 50% or 60% of the conservative value of an asset.

You have to be really stupid to lose money on that loan.

They hold some cash or bonds in case someone (God forbid) wants to take their money out.

There are 4300 banks in the U.S. all run by a variety of managements that stretch from ultra-greedy nut cases out for themselves (e.g. SVB) to conservative managements who actually care about the community they live in.

If you’re ultra-greedy you pay yourself a huge salary, award yourself mega-options  and pump up your publicly-traded shares with wild-eyed stories about how technology prints money.

Silicon Valley Bank (big technology hype) management paid themselves a huge bonus several days before the Fed took over the bank and management’s (and the public’s) shares became worthless. Coincidence?

What I don’t understand about banks

Why do they do research?

I know why. It’s too attract business to the bank.

Then why would one of the best analysts in the business — J.P. Morgan’s Michael Cembalest write in his Eye On the Market Outlook :2023

The End of the Affair.

…”The largest combined monetary and fiscal experiment in recorded history is ending now, and a major growth slowdown is coming to the US and Europe.”

He also wrote “US inflation will cool enough for the Fed to pause rate hikes at 5% in the spring.”

Wait there…the Fed funds rate is already at 5.25% and there’s little talk of “pausing.”

I am the world’s worst predictor. But I would never have written the Fed is going to pause, or when.

Think about this: The Fed wants inflation at 2%. It’s more than twice that and stubbornly staying high. Don’t believe me? Check out the prices on cheeseburgers at my local hamburger joint. They are reaching for the moon. They spend as much time apologizing for their higher prices as they do cooking their delicious cheeseburgers.

Look guys, America is booming and changing. Some dumb people who financed their office buildings with high-leverage variable rate loans are in big trouble. They deserve to be. Ditto for their bankers who gave them the money. They were all dumb. Just like the Silicon Valley Bank management were also ultra-dumb buying the lowest yielding, longest-dated treasuries they could find.

I love my 3-month treasuries. Today they’re paying 5.32%. That’s great money for sleeping out the present bear market.

Or, some other options to sleeping: tennis – playing or watching. The Madrid Open is on. Or walking, reading or seeing what you can coax ChatGPT into creating for you.

It happened at a New York Airport

A crowded United Airlines flight was canceled. A single agent was re-booking a long line of inconvenienced travelers.

Suddenly, an angry passenger pushed his way to the desk. He slapped his ticket on the counter and said, “I HAVE to be on this flight and it has to be FIRST CLASS.”

The agent replied, “I’m sorry, sir. I’ll be happy to try to help you, but I’ve got to help these folks first; and then I’m sure we’ll be able to work something out.”

The passenger was unimpressed. He asked loudly, so that the passengers behind him could hear, “DO YOU HAVE ANY IDEA WHO I AM?”

Without hesitating, the agent smiled and grabbed her public address microphone. “May I have your attention, please?”, she began, her voice heard clearly throughout the terminal. “We have a passenger here at Gate 14 WHO DOES NOT KNOW WHO HE IS. If anyone can help him with his identity, please come to Gate 14”.

With the folks behind him in line laughing hysterically, the man glared at the United Airlines agent, gritted his teeth, and said, “F*** You!”

Without flinching, she smiled and said, “I’m sorry sir, you’ll have to get in line for that, too.”

A wonderful world

I’ve seen more technology startups in the last month than ever. From agriculture crop enhancers to tiny hydrogen engines that make electricity to drive cars, from computer-designed pills to cure diseases, to DNA altering techniques that promise to make me smart.

Keep looking. It’s a really wonderful time to be alive and to invest.

I wish I were forty years younger.

— See you — Harry Newton