Banks will be lending soon

It looks like the retail banks will begin lending more in the near future. There are a few reasons for this idea. The banks' last quarter's earnings showed a lessening of loan losses. The banks' trading gains have also come back to earth now, eliminating that outlier. Companies also will be looking to expand their business as their balance sheets are cleaned up and their efficiencies are almost at an all time high.

The banks loan loss totals are getting smaller. This is obviously a positive for the banks in a couple of ways. Primarily, the banks can lessen the amount of money they hold back in order to cover loan losses. Last quarter, the banks used this money to pad earnings. But this is a bad long term strategy and can not be used for very long. The banks also have to replenish the amount of actual loans that were dramatically lessened in the last three to four years to their balance sheet. Consumer credit is increasing, allowing banks to feel more comfortable lending. Businesses have straightened out there balance sheets and set up their businesses to grow.

The ridiculous trading profits that were provided by the government funding through TARP is basically over. The market will not increase 50% like it did in the last two years. This will force the banks to find other forms of revenue in order to keep their shareholders happy. Lending is something that the banks are rumored to do from time to time.

Companies will have to expand their business in order to grow their profits. The ability to cut more is almost over. Production is quite high right now. Their balance sheets are set up to handle loans. They will be looking to the banks in order to provide loans to expand their business.

Chasing wealth

There is a trade I want to make but I would need to break away from my plan in order to get in now. This is where discipline is important. It is important to work the plan.

I thought I would be in the trade two weeks ago but the stock has moved up to a point where even if it stays at this price, it will still be a week or two before I can get in.

For information on the trade, you can go to my call selling blog.

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Use of tech to build wealth

For the first time today I used Optionsxpress' droid app to place a trade. I was able to do it during lunch since I was away from a computer.

Technology can be a great way to become a better investor/trader. But these tools should be used after plenty of background work has been done.

So take some time and get to know the tech tools out there. They might be able to help you become a better investor/trader.

Dell did WHAT?!!!

Take a look at what Dell did. That is scary and should be a red flag for any investor. There are probably safer investments out there. Management really screwed up.

New York Times article.

bank earnings and your safety

Hey

Earnings for the previous quarter revealed something very interesting and transparent about the big banks and how they continue to make their money. It is primarily through trading and not through banking activities such as lending. Overall, loan losses were down this quarter at the major banks which should provide a boost to their stocks. But the banks' slowdown in trading and other activities had them lowering earnings levels for the quarter.

The New York Times came out with an article stating how banks such as Citigroup and Bank of America took big hits because their trading desks made less money than desired. JP Morgan Chase released good earnings because they released funds meant for possible loan losses. And anyone who thinks Goldman Sachs is a retail bank needs to explain it to me. They are an Investment Bank that had to switch to retail when the crash occured.

As mentioned before, all of these banks were able to pad earnings this quarter with money previously designated for loan losses that didn't occur. This is not a good development. Why didn't they loan the money out instead? This type of action either shows a lack of confidence in the US economy and you as a possible loanee or they are worried about their stock price and put that above helping to drive the needed growth in the U. S. economy. Son't be surprised if it is the latter.

Where are the loans? We gave these firms 700 billion dollars not just to trade and make money for their shareholders but to be a partner in bringing the economy back by making loans to deserving Americans and their businesses that create jobs. The interest received from those loans is a mere pittance for the government and the country as a whole compared to the long term earnings the government would receive in payroll and other taxes had the banks loaned that money out to deserving businesses instead of trading it.

These activities by the mega banks has brought on a movement of going to local banks because people (myself partially included) know they will see their money in work in their communities creating jobs and revenue. This movement needs to continue to grow until the big banks get the message that not loaning money out to deserving businesses is not acceptable. You will hear the banks say their clients are afraid to expand and at the same time hear those same clients complain about a restiction in credit from banks. I believe the businesses, not the banks.

This post is not a desire to eliminate the big banks. They have some great financial products and an important role in the U.S. economy. It is to get them to realize that there is a public needing its partnership to expand our economy.

Paying off the big bills

Hey



Recently someone I know mentioned that they are finished paying off their car bill. This is a big step in wealth building. Now they will be able to put at least a percentage of that money towards savings or towards paying off another bill.

Congrats!

Commissions

Recently, one of my brokers lowered its commissions rates by . This is important as I use this account for trading and will plan to make 25+ trades in the coming year.

Commissions do affect how you invest. You must include those costs when figuring out your returns.