51–60 of 180 posts
I am happy to be contradicted by better specialists than me of US banks. But aren’t the vast majority of loans in the US fixed rate with no or little prepayment penalties? If that’s the case the interest rate risk of these banks is not trivial and certainly not a simple pass-through of overnight rates.
The article isn't about loan interest rates but the interest rate banks offer on deposits.
The problem is that most people don't want to change banks. If changing your bank to get a better savings rate took 15 minutes and had no other consequences, banks would be updating their rates by the second to beat one another. But it doesn't. If your mortgage, credit cards, car loan, etc, are all with the same bank then switching your bank account only just to get 0.1% higher interest is a huge hassle for little be…
The problem is that most people don't want to change banks. If changing your bank to get a better savings rate took 15 minutes and had no other consequences, banks would be updating their rates by the second to beat one another. But it doesn't. If your mortgage, credit cards, car loan, etc, are all with the same bank then switching your bank account only just to get 0.1% higher interest is a huge hassle for little be…
In the UK this has got a lot better with banks being forced to offer an "account switching service", which makes it trivial to change your current (checking) account. Things like salaries, standing orders and direct debits (for utility bills etc.) are automatically transferred across. It doesn't work with savings accounts though as far as I know, so it doesn't help much with managing interest rates other than interes…
Earlier quoted context omitted.
I heard this story / explanation before: You own a gas station and you want to fill up your tanks so you call the distributor and pay $1 / gallon. You then sell that for $1.10 / gallon making a 10% profit. Now prices of crude doubles and you have 1000 gallons left to sell. It’s going to cost you $2 / gal to refill so you immediately raise your price to prevent a loss and cover the next fill. I don’t know how accurate…
Oh ... interesting take. But how did they order the first tanker? Surely there has to be credit involved in most cases.
Same with fuel prices. War in the middle East? Gas prices jump up overnight. Slump or excess? Consumer prices drop ridiculously slow. Middle men will always use any excuse to extract more from both sides.
I guess that’s true in most cases, a lot of people seem to be saying it, but a few months ago we had gas cheaper than $1 per gallon quite suddenly.
The other price increases/reductions being discussed are when the price of crude takes a dramatic swing, one sees the street prices swing asymmetrically. Crude goes up by $40/barrel today, for one day, street prices for gasoline goes up tomorrow and remains up. Crude drops by $50/barrel next week and stays down, it takes weeks before the street price of gas falls to reflect the reduced price of crude. For these scenarios, the local sales demand for gasoline at the local station would have remained relatively flat. The retailer might have seen sales swing from 1,000 gal/day to 950 gal/day after the increase (again, made up numbers), but not enough swing to impact his pricing choices.
Earlier quoted context omitted.
How can a product have > 100% margin? Were you getting paid by the supplier to stock their products?
Uhm, you buy an item for $1, sell it for $3, the margin is 200%, no?
Margin is "profit as percent of revenue". Markup is "profit as percent of COGS".
Earlier quoted context omitted.
There are a lot more people than you think that simply don't invest their money, instead they keep it in savings accounts. My aunt is one of those people. She got a large inheritance and basically kept it in a savings account for 20 years. My mom got the same inheritance and bought investment properties with it and now its worth 10x. I think it comes down to the fact that a lot of people are risk averse or feel that…
10x? I'm not familiar with real estate. How does one earn 10x in that time frame. Even with a price to rent ratio of 1 to 15 and assuming housing prices double over that period, you still aren't at 10x, and that doesn't include maintenance, taxes, closing fees, etc.
Earlier quoted context omitted.
Savings account rates are terrible compared with alternative investments though, even cash-storage investments.
I’m not aware of anything with that risk / liquidity profile which pays better? In fact theoretically there shouldn’t be anything.