Video: Bank Valuations And We're All Market Timers?

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Includes: BTO, FAS, FAZ, FAZZ, FINU, FINZ, FNCF, FNCL, FXO, IAK, IYF, IYG, JHMF, KBWP, KIE, RWW, RYF, SEF-OLD, UYG, VFH, XLF
by: Brian M. Nelson, CFA

Summary

President of Investment Research Brian Nelson dives into questions about why an enterprise free cash flow model is not used for banking and insurance entities.

He talks about how "cash flow" is somewhat arbitrary for financially-related entities, but how a focus on economic returns is still very valuable.

Nelson also introduces the idea that we all might be market timers.

Hi folks,

This is the 13th episode of a series that I have started called "Off the Cuff," where I get in front of the camera and talk for about 10 minutes in each episode. It's low-tech, I know - but it's "authen-tech." I like that. I'll do my best to incorporate feedback and questions going forward, so stay tuned. We have a number of the videos already filmed. We're now up to 18 content-packed videos!

In this episode (episode 13), I answer a question about why we use the residual income model to value banking (XLF) and insurance (KIE) entities. I talk more about enterprise free cash flow valuation and the arbitrary nature of "cash flow" with respect to finance-oriented entities. The idea that we all might be market timers is an interesting one, and I think pondering it may broaden perspectives with respect to conventional wisdom.

Give these videos and the discussions time to get warmed up. They're not made to be fancy. I don't like bells and whistles. They're made to be conversational. I hope you enjoy this 13th episode and those that follow. Let me know what you think. Don't forget to comment. Thanks!

This video and any content within are for information purposes only and should not be considered a solicitation to buy or sell any security. Valuentum and Brian Nelson are not responsible for any errors or omissions or for results obtained from the use of this video or any content and accept no liability for how readers may choose to utilize the content. Assumptions, opinions, and estimates are based on our judgment as of the date of the article and are subject to change without notice. There is substantial risk of loss associated with investing in any financial instrument. Valuentum Securities is a financial publisher.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.