When Banking Giants Fall – Investors Accounts Get Cut in Half

Something is seriously wrong.

No… I’m not talking Trump or Kim Jong-Un or the price to earnings ratios or even the yield curve.

The problem is more nuanced than elected officials or valuations or even interest rate data.  

And here it is.

It’s the 15th largest bank in the world… and its dying.

I know… so what. Who even knows what the top 14 banks are let alone the 15th biggest.

Banks Matter Because They’re Holding A lot Of The Bad Debt on the planet

The 15th largest bank is also the 3rd largest bank in Europe. And the largest bank in Germany, which also happens to be the engine of all of Europe. Which if you haven’t been counting is the largest economic bloc in the world.

To say Deutsche Bank (#15) matters is an understatement.  

An investor can look at stacks of economic and fundamental data, but at the end of the day. All of that information gets put into one number.

Price Exposes All Secrets

Below is the price chart of Deutsche Bank.

DEUTSCHE BANK

Deutsche Bank price chart

Not good. Down and to the right on a price charts means something is going wrong. And the above price chart is showing 10 years of falling prices. So whatever is not working at Deutsche Bank hasn’t been working for a long time.

And it gets worse.

When compared to other large banks on the planet, things look even worse for Deutsche Bank.
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Since the 2009 stock market bottom Deutsche Bank is down 35%!

To put this into perspective, JP Morgan, which is the largest bank in the North America and 6th in the world is up 760% during the same time frame. The price chart is below.

JP MORGAN

JP Morgan

Below you can see the Hong Kong Shanghai Bank price history. HSBC is the largest bank in Europe and the seventh in the world. They’re up 216% during the same time period of Deutsche Banks negative 35%.

HSBC

HSBC

And finally the largest bank in the world.  

That would be The Industrial & Commercial Bank of China. It’s up 96%. (Note: the next three largest banks in the world are all Chinese. You can see the full list here.)

INDUSTRIAL & COMMERCIAL BANK OF CHINA

Industrial Bank of China

So while other major banks around the planet of similar size are up 96% to 760%, the world’s got Deutsche Bank down 35%!

Deutsche Bank has become the World’s Problem

And Deutsche Bank is accelerating downward. Is this why the stock market and the world markets have been moving sideways for six months?

Earnings were great. Tech is still killing it. Record number buybacks. Lower taxes.  Small caps moving higher. But the stock markets of the world are still consolidating.

What are they waiting for?

Price reveals the truth.

Price revealed Enron’s lies in 2001. And please remember, analysts often get their numbers from the company they are covering. And then there’s GE. Most articles are talking about GE’s fall from grace like it just happened. It didn’t. Price has been revealing GE’s lies for over a decade. And now for the past 10 years, price is telling us something about Deutsche Bank and the problems of cheap debt world.

But an investor can only see the real problems if they are open to eliminating the noise. And this means being open to a whole new perspective of thinking.

So I have to ask…

Is your portfolio prepared for a Deutsche Bank collapse?

To find out let’s get on the phone and identify those potential weak points to see how a stock market correction might affect your portfolio.

In Your Corner,

RCPeck-Dig Signature.JPG     
RC Peck, CFP

P.S. Increased choices are paralyzing investors while increasing their dissatisfaction, stress and worry about their future. Not to mention a lower portfolio size. If you are worried about the move of the markets over the next six months, the next step might be easy. Book a call so we can see how battle-ready your strategy is.

 

 

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