Some good news for KBWB and friends is that the financial services sector is widely regarded as perhaps the only sector in the U.S. that is attractively valued relative to the broader market and its own long-term averages.
The financial sector valuations still look relatively cheap, compared to the broader market. The sector’s valuations are still about 25% below the average since the early 1990s.
There are “a few of the historical occurrences (e.g., 1999-2000, 2011) took place in close proximity to market tops of some magnitude. We know that the outstanding market research firm, Ned Davis Research, claims that financials are notoriously one of the weakest sectors leading up to significant market tops,” according to ETF Daily News.
Some strategists also argue that the financial sector may be a good area to look at this time around, given the potential for growth in a rising rate environment, along with potential tax and regulatory changes under the Donald Trump administration.
For more information on the banking sector, visit our financial category.