Just because banks control a lot of money doesn't mean that they earn much for their shareholders. According to my colleague Morgan Housel:
In 100 years, the banking industry, as a group in aggregate, did not make a single dollar of profits. During the boom times, they make all this money, and then you come to a bust, and they lose all of that and more.
We've seen this over and over again.
Since the founding of the country, the United States has experienced 17 banking panics. That equates to one every 13 years.
Over the past three decades alone, we've seen two massive ones: the S&L crisis of the late 1980s and the financial crisis of 2008-09. In a single quarter during the latter, Merrill Lynch lost more money than it made in the previous eight years.
Given this, should investors tread into the sector? And, if so, what should they be on the lookout for? Motley Fool analysts Michael Douglass and John Maxfield tackle these questions in the following video.
