This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Kass: Banking On a Bearish Future

This blog post originally appeared on RealMoney Silver on June 2 at 7:57 a.m. EDT.

I have been struck by the degree of group divergence over the last three months, 12 months and 24 months. It seems to this observer that, more than almost any market time frame in recent history, industry sector selection has never been more important in delivering superior investment returns.

The past repeats itself (almost constantly), momentum is your friend, don't fight the tape, buy strength, etc. are repeated slogans that, almost by definition, yield superior results. The temptation to go with the momentum remains strong in life and in markets, but, at some point, if the majority confidently knows something, that something is probably already reflected in the price.

History teaches us investment lessons, but it fails to tell us which lesson should be applied and when it should be adopted. The biggest problem I have as an investor is farsightedness (in expecting the unexpected), and I see the biggest problem with most investors as shortsightedness.

Keeping My Money in the Banks

The financial future may be imagined, but it can never be absolutely known, which brings me to the bank stocks.

Contrarian bets that ignore the trend (like shorting housing-related securities two or three years ago) often yield large rewards. Bank stocks have never been so cheap, and, in the fullness of time, long positions could be rewarded.

As lynx-eyed Dick Bove remarks in his research missive over the weekend, "the situation is simply not as bad as it appears." Dick, who I have known personally for over 30 years and who I admire, makes the following points in his piece, which is entitled, "Bank Stocks Are in Free Fall, but Banking Companies Are Not."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $118.03 -0.71%
FB $105.41 -0.31%
GOOG $748.15 -0.02%
TSLA $229.64 5.22%
YHOO $33.16 0.61%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs