Banking On A Reversal

A healthy banking sector is a requirement for a healthily functioning economy. We saw back in 2008 what can happen when banks gorge on debt and lend recklessly to highly geared market participants. It never ends well. Banking stocks also have a tendency to lead the broader stock market, both higher and lower. Bank shares tend to discount future economic prospects faster than almost any other sector of the market. So, it is with interest that I note the recent turn lower in the financial sector. The KBW Bank Index of US financial shares started making a series of lower highs earlier this year, while the S&P 500 continued its bull market trend. The bank shares were sensing something not quite right with the prospects for the US economy. This month, the banks broke sharply lower and have now dropped -18% from their January 2018 highs. Their recent performance is disturbingly similar to their performance in late 2007 at the start of the financial crisis. Let’s hope we are not in for a repeat performance. I say it again. CAUTION. WARRANTED.

The Active Asset Allocator is defensively positioned with just 5% invested in equities (GDX) and the balance in cash, bonds and precious metals.

 
$BKX.jpg
 

At Secure Investments, I advise individual clients on their pension and non-pension fund investment portfolios. To learn more about my Active Asset Allocator and Gold Trader  investment strategies, please get in touch at brian@secureinvestments.ie or 086 821 5911. If you are reading this via LinkedIn, why not visit Secure Investments and subscribe to get exclusive content for free. No spam, ever. Just great stuff.

Disclaimer

The information contained herein should not be taken as an offer of investment advice or encourage the purchase or sale of of any particular security or investment. It is provided for information purposes only. Secure Investments and its content providers makes no representation or warranty of any kind with respect to the services described, analysis or information obtained arising from use of the pages on this website. Information provided is obtained from sources deemed to be reliable and is provided solely on a best efforts basis. Secure Investments and its content providers do not guarantee the completeness or accuracy of such information and do not accept any liability for any loss or damage arising out of negligence or otherwise as a result of use or reliance on this information, whether authorised or not. The use of the website is at the user's sole risk. Not all recommendations are necessarily suitable for all investors and investment policy must be tailored to suit the circumstances of the individual. We recommend that readers consult their professional adviser before acting on any advice or recommendation on this website. The value of any investment may fall as well as rise and you may not recover the full amount originally invested. Past performance or simulated performance is no guarantee of future investment returns. The value of your investment may be subject to exchange rate fluctuations which may have a positive or adverse effect on the price or income or the securities.