![]() Indeed, bank stocks remain "full on Monet" from the movie Clueless: "It's like a painting, see. I attribute the mistaken and almost universal optimism towards bank stocks as a singular reflection of the superficiality of investors today (the near universal mantra that "rates rise and so will bank stocks") and the mindless and wrong-footed logic and poor (company-specific and industry) analysis.Ĭitigroup ( C) shares, a favored "value play" among the banks, has dropped from $79 to $50.Īmong the better-performing large money banks, even Bank of America ( BAC) ($50 to $39) and Wells Fargo ( WFC) ($60 to $48) have performed poorly.īank stock investors have missed eight important headwinds to bank stock performance and banking industry profitability. Among the better-performing large money banks, even Bank of America ($50 to $39) and Wells Fargo ($60 to $48) have performed poorly. The share price of the largest and most popular money center bank extant, JPMorgan Chase, has fallen from $170 to $127. The share price of the largest and most popular money center bank extant, JPMorgan Chase ( JPM), has fallen from $170 to $127. Yet, the vast consensus view was that, in a rising interest rate environment, seen in the last three months, bank stocks would be among the leading market performers. Click “+Follow” next to my byline for this article.(TheStreet) - Travelling with the herd is often harmful to your investment well being.īanks stocks have been among the worst-performing sectors in the last six months. ![]() Receive an email alert every time I write an article for Real Money. Doug Kass’s Daily Diary and Paul Price, Get columns from Brett Jensen and others.) Click here to learn more about this dynamic market information service for active traders. (This commentary originally appeared on Real Money Pro on May 12 in Doug Kass’s Daily Diary. I am entering a Long (IWM) ($174)/Short (SPY) ($414) position with the intention of catching the gap between the advanced phase of the market in Common Stocks (QQQ) and the weakness in Military Stocks (IWM). It has crashed -28.6% from its cycle peak in NOV of 2021 /zHAyWRRaC2 US Stocks: After yesterday’s -0.8% decline, the Russell 2000 has fallen -12.8% since January Although business conditions may change, corporations and securities may change, and financial institutions and regulations may change, human nature remains essentially the same. …and Wally Deemer offers a new rule to add to Bob’s list:ġ1. Bull markets are more fun than bear markets. Something else is bound to happen when experts and forecasters agree.ġ0. There are three phases of a bear market – sharp down, reflexive rebound and drawn out fundamental downtrend.ĩ. Bull markets are strongest when they are widespread and weakest when they are confined to a handful of blue-chip names.Ĩ. Fear and greed are stronger than long term resolve.ħ. The public buys the lowest at the top and the lowest at the bottom.Ħ. ![]() Exponential bullish or falling markets usually go further than you think, but going sideways doesn’t correct them.ĥ. There is no new era – excess is never permanent.Ĥ. Excess in one direction will lead to the opposite excess in the otherģ. Here are Bob Farrell’s official 10 rules of belonging by Walt:Ģ. That said, it seems like a good time to consider the perspective of two veterans of history and investing, Bob Farrell and my Putnam colleague Wally Deemer: 10 Lessons from Bob Farrell on Investing (and One from Wally Deemer) Thursday’s rally from the low was another day of Russell weakness and poor overall market breadth - conditions that were present through most of the year:Īs I’ve mentioned repeatedly, the S&P’s overall growth has been the work of a handful of large-cap technology stocks. The S&P Index is about 1% higher than the top end of my expected trading range for 2023. * The federal funds rate was only 0.08% on 2/24/22 when the S&P 500 closed at 4117 and when the forecasted 2023 S&P EPS was estimated to be much higher at $244/share. * The federal funds rate stood at 5.08% on Friday, the S&P 500 closed at 4136, and the consensus 2023 S&P EPS is estimated at $224/share, which we think is very optimistic! On monday in my Daily Diary on Real Money Pro I will have two extended discussions, excerpted from a recent Seabreeze Capital Partners LP investor communication, that fully outline my concerns.įor many short and long term reasons – I don’t want to bury lead! – Compared to interest rates, including the correlation between the S&P and Nasdaq indexes, as highlighted below, Seabreeze went into net short exposure to equities: This is the most lopsided and top heavy equity market since 1974. Advances in equities have been remarkably narrow – and haven’t been seen since nifty fifty period that ended (miserably) 49 years ago.
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