9 February 2016: Deutsche Bank insists it is rock-solid
With its shares at record lows and investors worried about its risky contingent convertible bonds, Deutsche Bank's chief executive told staff the bank remained absolutely rock-solid. German officials offered reassurance too. Markets were not convinced; when a bank has to declare its own solidity, investors tend to read it as a warning. Deutsche spent the following years shrinking, restructuring and paying fines.
The lesson: When a bank feels the need to announce it is safe, it is time to read the balance sheet.
What it meant for investors
$1,000 in Deutsche Bank at the start of 2018 → $1,684 today, vs $2,519 in the S&P 500.
We start the clock at the start of 2018, the first year in our price data after the event. That is 1.7 times the money, but $834 less than a plain index fund made over the same years.
What Deutsche Bank teaches: A stock that looks cheap after a big decline can keep getting cheaper when repeated capital raises dilute shareholders and fines keep arriving.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2015 | $30.00 | $1,067 | $3,301 |
| 2018 | $19.00 | $1,684 | $2,519 |
| 2020 | $8.00 | $4,000 | $2,092 |
green = beat the S&P 500 · red = lost money
What if you bought Deutsche Bank? Every starting year and the full story →
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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