One Easy Trick to Predict the Next Bank to Fall

[Intelligent Income Daily]( Welcome to Intelligent Income Daily, the free daily newsletter from wealth and income expert Brad Thomas. Brad’s experience spans three decades of real estate and stock market booms and busts. Today, he and his team focus exclusively on the safest and most predictable ways to earn sustainable and growing income in any market condition. You can find all past issues [here](. And if you have any questions, please contact Brad and his team [here](mailto:memberservices@widemoatresearch.com). One Easy Trick to Predict the Next Bank to Fall By Stephen Hester, Analyst, Intelligent Income Daily [Stephen Hester] All eyes are on the banking sector, and everyone is wondering the same thing: Who’s next? First Republic Bank (FRC) was supposed to be the last domino. But this story isn’t over. Being an investor in times like these can feel scary. Speculating on the wrong stocks will cost you. Ignoring the banks altogether isn’t safe, either. And if too many fail, the economy will sink with their stock prices. [image]( At Intelligent Income Daily, we’re focused on guiding you to safe, reliable income-producing plays that’ll help you sleep well at night. That includes showing you how to avoid landmines that can blow a hole your in retirement. Today, I’ll tell you an unexpected way to detect a bank failure before it happens. I haven’t seen this secret mentioned by anyone else. But it’s indicated every bank failure this year – weeks or months before it happened. And best of all, you won’t need to dust off any old accounting textbooks or take out a calculator. You can easily apply this method with websites you already use. By familiarizing yourself with this tactic, you’ll be ahead of most investors… And can weather this ongoing banking crisis with ease while others fall victim to it. Recommended Link [Nomi Prins: My Last Energy Trade Returned 22X in 2023]( [image]( On January 20, 2023, my readers woke up to an email in their inbox: “There may be a little more juice to squeeze, but not much more. At the end of the day, there’s nothing wrong with taking a profit [of] more than 20 times your money.” Yes, during a raging bear market… my readers made out with 2,174% gains: I call my next trade “The Next Exxon.” But it doesn’t produce oil. This firm dominates an energy subsector called ‘SMR’... Forbes reports ‘SMR’ could “become the go-to energy source” for America. Tomorrow, May 10th, at 8 PM ET, I’m hosting an event where I’ll reveal an easy way to play ‘SMR’ for just $2. [Click here to register for Power Shift 2023 with Nomi Prins.]( -- The Secret to Seeing a Bank Failure Coming My secret is something I started developing 15 years ago, the last time we were in a banking crisis. Back then, I was a trader at a hedge fund. Yet, no one I worked with identified this “canary in the coal mine.” Let me tell you how it applies to what is going on today… Last week, the Federal Deposit Insurance Corporation (FDIC) took over First Republic Bank. That was on May 1. But what if I told you that I already knew First Republic Bank would likely fail… back in March? It all has to do with something called “preferred stocks.” Preferred stocks are a hybrid between a company’s common stock and bonds. Almost all preferred stocks, including the ones we’ll talk about today, have a par value of $25. If the company goes under, the bondholders typically get paid first, then the preferred shareholders, and lastly the common stock investors. In many ways, a preferred stock is like a fixed-rate bond that trades with a normal stock ticker. We don’t need to go into the weeds of preferred stocks as an investment. But for our purposes, you just need to understand that preferred stocks are something you can find in any brokerage account and their dividends – while fixed – are safer than common stock. Below is a price chart of First Republic Bank’s Series K preferred stock. Until May 1, anyone could buy shares using symbol FRC-K (or FRC-PK depending on your broker). [Image] FRC-K was trading at $6.85 back on March 20. Remember, most preferred stocks have a par value of $25. FRC-K paid a fixed dividend of $1.03125 per share, or 4.125% at par value. When it was down at $6.85, it yielded 15%. That means that if you bought the preferred stock at $6.85, not only would you earn a double-digit yield, but you could stand to make a 265% return when shares eventually returned to $25. If there was even a tiny chance the bank was going to survive, people would buy that preferred stock hand over fist. But that’s not what we saw. Remember, preferred stock and bond buyers are typically Wall Street heavyweights and industry insiders. When they head for the exits, we should pay attention. Seeing how far the preferred stock had fallen… and how the “smart” money wasn’t scooping up shares… told us the bank was a lost cause six weeks before First Republic Bank failed. This allowed us to steer clear of the bank and avoid losing our shirts trying to earn a quick buck. This is the same warning sign I saw before the collapse of other banks this year like Silicon Valley Bank and Signature Bank. Both times, the preferred stock sank weeks – or months – before the failure. And both times, we avoided the carnage as the common stock went to zero. The Telling Power of Preferred Stocks If a company has preferred stock, it’s easy to find right through your brokerage or a financial website. Type the common stock symbol into most of these websites, and you’ll see the company’s preferred stock. It’ll also be listed in all the company’s quarterly and annual filings. Here’s a good rule of thumb to follow: Any time you see a preferred stock trading at half or less of the $25 par value, you know to tread carefully. And if the preferred stock is trading well below $10, the risk of bankruptcy is high. Let’s look at one final example of a bank on the edge… Below is PacWest Bank’s (PACW) preferred stock that trades under symbol PACWP. [Image] Back in March 10, PACW common stock was still trading around $20. But PACWP sunk under $10 per share by March 13. Now, PACWP is trading just over $10 per share as the market tries to figure out if the bank is going to make it. If PacWest Bank’s stock begins trading below this point on a consistent basis soon, it will join the fate of First Republic. So keep an eye on this metric in the days to come. Conversely, preferred stock can also show us which companies are strong. Currently, my two favorite buys in the regional banking sector both have preferred stocks. And despite the overall volatility in the space, they’re trading between $17 and $23 per share. I plan on covering one of these banks in an upcoming article, so stay tuned. This is just one way we use alternative methods to find the best deals in the market. In fact, in our recently launched High-Yield Advisor service, we target undervalued preferred stocks to earn double-digit income safely. It’s just one of the three ways we generate above-average income outside the regular stock market. Just like this trick I shared with you today, few people outside of Wall Street know these strategies. But thanks to my years of experience, I share them with regular investors just like you. [Click here]( to learn more about High-Yield Advisor. Happy investing, Stephen Hester, CFA Analyst, Intelligent Income Daily IN CASE YOU MISSED IT… Millionaire Investor Reveals: [“How I Made My Second Fortune… By Avoiding 99% of Stocks”]( Buy this small group of unique stocks… never sell them… and make all the money you need… No matter what happens in the market. [Revealed here: the name and ticker of the #1 stock.]( [image]( [Wide Moat Research]( Wide Moat Research 55 NE 5th Avenue, Delray Beach, FL 33483 [www.widemoatresearch.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Wide Moat Research welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. 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