United Kingdom  

Celebrating 10 Years of Trusted News Discovery
One News Page
> >

Banks Stocks a Better Long-Term Bet Than Short-Term, One Expert Says

Video Credit: The Street - Duration: 02:22s - Published < > Embed
Banks Stocks a Better Long-Term Bet Than Short-Term, One Expert Says

Banks Stocks a Better Long-Term Bet Than Short-Term, One Expert Says

Banks have not outperformed the market in a long time, and for good reason.

This year, large cap bank etf has risen 7% year-to-date, against the S&P 500's gain of 17%.

Small cap bank etf has risen 3% year-to-date.

With the yield curve currently inverted -- the 3 month treasury yields 1.97% while the 10 year yields 1.46% -- banks are not exactly seeing the net interest margins they'd like to see.

But most banks are attractively valued, many think.

Both large and small cap banks trade roughly in line with their book values, making them potentially good buys at present, if an investor can stomach near-term pressure relating to the yield curve inversion and the evident macro economic slowdown.

"More diversified banks with more diversified revenue streams certainly would be a more balanced approach for the current environment, but with valuations and exposure to consumers, they [consumer weighted banks] could be the attractive play longer-term," said Mike Loewengart, vp of investment strategy at E*Trade.

"Banks should do well in the years ahead." Investors may be wise, to Lowengart's point, to tilt away from consumer lending oriented banks like Wells Fargo , whose earnings are more sensitive to the yield curve, and into diversified investment banks like Goldman Sachs for the short-term.

On the yield curve, "we may not have seen the worst yet, but it also could be improving, depending on moves we see from the Federal Reserve," Loewengart said.

But longer-term investors may want to get into banks sooner rather than later, as "valuations are reasonable." Positively for all banks, more rate cuts from the Federal Reserve would likely steepen the yield curve.

Goldman Sachs is a holding in Jim Cramer's Action Alerts PLUS member club.

Want to be alerted before Jim Cramer buys or sells GS?

Learn more now.

0
shares
ShareTweetSavePostSend
 

You Might Like


Recent related videos from verified sources

What's the Difference Between a Commercial Bank and an Investment Bank? [Video]What's the Difference Between a Commercial Bank and an Investment Bank?

What's the difference between commercial banking and investment banking? When you hear commercial banking, think about your bank. But here's the main difference: Commercial banks lend to..

Credit: The Street     Duration: 01:47Published

How the Cloud Kings Have Fallen From Grace [Video]How the Cloud Kings Have Fallen From Grace

Cramer penned a piece on the pain the Cloud Kings are feeling over on Real Money Friday morning. "Unfortunately, because of their size and their long-term leadership positions, the damage might be..

Credit: The Street     Duration: 01:11Published

Environmentally friendly: One News Page is hosted on servers powered solely by renewable energy
© 2019 One News Page Ltd. All Rights Reserved.
About us  |  Contact us  |  Disclaimer  |  Press Room  |  Terms & Conditions  |  Content Accreditation
 RSS  |  News for my Website  |  Free news search widget  |  In the News  |  DMCA / Content Removal  |  Privacy & Data Protection Policy
How are we doing? FeedbackSend us your feedback  |   LIKE us on Facebook   FOLLOW us on Twitter  •  FOLLOW us on Pinterest
One News® is a registered trademark of One News Page Ltd.