Investors often view the financial sector is as a black hole of
sorts. Banks, mortgage lenders, insurers, and hedge funds are
constantly lumped together and referred to as if they were one overly
complex and unintelligible mass.
While many of these entities are interconnected and dabble in similar
areas, it's important to investors to understand the vast differences
and the quick changes that can occur, seemingly in the blink of an eye.
With that in mind, here are 10 graphical representations of some
astonishing and overlooked comparisons involving banks, insurers, real
estate, and more.
1. Unforeseen circumstances
Source: Bank of America annual reports.
In 2006, pre-Countrywide acquisition,
Bank of America (
NYSE: BAC )
was considered one of nation's strongest financial institutions.
Little did management and shareholders know that the Countrywide
acquisition would ultimately lead to massive legal settlements and
liquidity uncertainty as a result of "representations and warranties"
made on the droves of questionable mortgages Countrywide had written for
years.
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