If you invest in the banks, what are your horizons: five years, five months or five days?
When you wake up one cold February morning in 2017 and glance at Barclays' (LSE: BARC) final results for the year 2016, what will the figures look like?
I predict that the weather will be cold, with a high degree of confidence in my ability to see the future. It will probably be a little warmer than it is today, according to long-term averages, but it will be at least fairly cold.
With Barclays, I similarly predict that the old bank's earnings will be up on Friday's earnings showing what the bank managed in 2011, as well the dividend and the net tangible asset figures. Okay, I don't make this prediction with as much certainty as I do the weather, but otherwise I think the analogy is a reasonably fair one. It very probably will be the case.
The final figures for 2011 show basic earnings per share of 25.1p, net tangible asset value of 391p and a full-year dividend of 6p, meaning the shares are yielding around 2.5% at their current price of 242p. But I'm far more concerned about what those figures will look like in 2017.
We're still in the trough
Look back not too far in Barclays' history and you'll see that earnings were coming in at over 50p, allowing the bank to comfortably pay a dividend north of 30p, with the shares around the £5-6 mark. That looks more realistic to me on a long-term basis. We're still in the trough.
There are a lot of people who are paid a lot of money to pore over the minutiae to try and decide what Barclays' prospects are over the immediate future. The best way for the private investor to fight back against this is to take a wider perspective, in my opinion.
Barclays has continually been one of the FTSE 100's cheapest shares on the simple prospective price-to-earnings (P/E) measure for quite a while now. I don't think it deserves to be. Last June, I explained why I thought Barclays' shares were a contrarian buy at 246p. How wrong I was! The shares have visited 138p since then, but have since rallied very sharply along with the market since late November.
I hope you were feeling confident enough to take advantage of such volatility; not only with Barclays, but with other FTSE 100 financials.
For the record, the current price places the shares of a prospective P/E for this year of 7.7 with a slightly improved yield.
The big picture
Barclays is the first of the big UK banks to report its 2011 results. The overall picture is something of a mixed bag, but most definitely of a bank heading in the right overall direction.
On the downside, income at the investment bank arm Barclays Capital fell to £1.8bn in the fourth quarter, reflecting the level of confidence the investing world was feeling as the eurozone crisis weighed on bond trading. But this looks like it won't be the case for the first quarter of this year.
There are clues we're emerging from the doldrums. Barclays' losses on bad loans fell significantly from the previous year, and lending to UK businesses under the Project Merlin programme is reportedly going well. Meanwhile, Barclays has upped its Tier 1 capital ratio to 11%.
A lot of the media focus is not on the bank's underlying results, but on whether or not CEO Bob Diamond will take a bonus in light of all the fuss around Royal Bank of Scotland (LSE: RBS) CEO, Stephen Hester, who turned down his bonus after so much public and political pressure to do so.
But then Barclays didn't need the state taking a stake. Barclays' total bonus kitty will now be £2.15bn, down 25%, with cash bonuses capped at £65k. This feels like political expediency and shouldn't concern investors as part of the bigger picture.
And the bigger and longer-term picture is what I'm interested in. On that basis, I'm happy to be patient.
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> David owns shares in Barclays.