Understanding Bank Stocks Amid Economic Downturns: An In-Depth Analysis

In mid-March 2023, the collapse of Silicon Valley Bank and Signature Bank triggered a significant downturn in the financial markets, with most banking stocks and bank-based exchange-traded funds (ETFs) experiencing sharp declines in stock prices. This situation led to fears of a 2008 banking crisis-like scenario. Despite the risks, some investors are interested in bank stocks during downturns. This article provides a detailed examination of how to research and evaluate bank stocks during such challenging times, with a particular focus on key financial ratios.

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Gods of war

Source: Dreamstime

The shares of producers of weapons, missiles, rockets, fighter jets, ships, tanks, drones and all sorts of military equipment are considered a good investment in times of economic uncertainty. Even though they do not provide staggering profits, usually they are a constant source of income, since government expenses (mainly the U.S.) remain relatively constant. 

When, however, there are geopolitical tensions and wars, the shares of defence companies become very attractive. Then, government defence expenses soar and the orders for all sorts of weapons are literally pouring in. And this is quite logical. 

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