Buying into a bank
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I will be buying into a bank sometime in the next 2 months- the most prominent institution in the U.S. financial system. I’m quite excited.
I found this video on youtube about how banks “create money”. How timely. I liked watching this cartoon explanation. Its actually good plus it makes me dream of my newly “created” wealth.
The 2nd video below describes my situation – a new bank. This is where it gets interesting.
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Adventures In Money Making said:
banks leverage your ’savings’ and lend out 9 or 10 times that amount.
so a simple 9% loan yields a 50%+ return on “your” savings.
the only problem is when too many people default. Then the bank
loses its principle too!!!!! Similar to hedge funds, except that banks
are more diversified and the FEDs will bail out a bank and not a hedge fund.but once the stock prices look like they’re trending up, buying into a large bank is a good idea.
August 28th, 2007 at 1:07 pm
