a more detailed look at the positives of buying the banks
the gain in share price over the last twelve months for the six banks that I am invested in varies from19% to 26%, the average gain is 22.5 %....... the dividends with franking credits would probably average another 7.5%, giving a total over twelve months of plus 28%...............2.5% interest rates have been with us for almost 12 months now, but even if you make a very generous discount for the effects that the lower interest rates have had on the market of say 50% , that still gives a gain for the year of 14% .... that's excellent income in anyone's language
I have spent some time taking a more detailed look at the likely earnings p/a for each of the six banks and to me they still look good......... my method is not exactly text book, but what I do is invert the current pe to give the eps as a percentage and then add to this the forecast eps growth (but discounted because it is not actual)......... from my very conservative calcuations I get a forcast average total gain over 12 moths for the banks of 11.5%....... that's not bad given that the forecast income has a very strong probability of being fact...... much better odds than trading in a short time frame.
the analysts rate two of the banks as moderate buys, and the remainder as hold....
not all banks are equal so I will be discarding a couple ......... on reflection it was a bit of a buying spree, it would have been smarter (since I was so keen to buy) to have bid up for only three bank stocks and place bids for the remaining three at a lower level........and it would have been even smarter again to have done some more thorough homework before bidding, and only bidding for say the four best.........
