Time to buy Financials?
While I am well aware of the risk involved in 'catching a falling knife', as an investor with long-term horizons, I feel like this could be a good investment in the long-run, accepting that there could still be a further downside in the short term.
However rather than trying to pick individual winners, I'm looking at a broader Financials ETF. Can anyone recommend a few good ones that focus on USA and/or UK banking stocks?
Best Answer
3963 points
MNSL answered one year ago …
First of all I want to tell you that I am not expert in ETF Because still I have not invested in a single ETF. I genrally like to invest in indivudual stocks with stong balance sheet , oustnading management, demand for their products and services, consistent and reliable future earnigs etc. But now I am learning and doing research on all type of fiancial insturments and in other areas as well.. Because it is better to learn and do research in everything before we invest. I think it is beter to invest in an asset where we know very well. I give below some Financial ETFs in USA.
• Financial Select Sector SPDR (AMEX: XLF), whose top holdings include Citibank (NYSE: C) and Bank of America (NYSE: BAC).
• IShares Dow Jones US Financial (ETF) Please see following website for further details: http://finance.google.com/finance
As Sundarkanmbam mentioned above if you go to above website you can select ETFs in UK and USA. There are some ETFs gives above average return. Only thing is we must try to select ETFS carefully to enable us to get good return.
Answers
1130 points
sundarkambam answered one year ago …
Look at the link http://finance.yahoo.com/etf/browser/mkt?c=etf_sf&f=0 and you can decide as to which is best for you.
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508 points
John answered one year ago …
Financials Financials!
First, the financial sector as a whole is undervalued. The S&P 500 is trading at an average P/E of 21.19. The Financial Industry is trading at 14.42 while the sector average is at 15.18. Financial stocks are trading on the average 5 times lower earnings then the rest of the S&P 500.
Be that as it may I still would not buy Citi-group here or Merrill .
For some undervalued yet attractive financial stocks I like:
JP Morgan Chase (JPM) P/E of 9.90
Bank of America (BAC) P/E 10.46
Wachovia Corp. (WB) 12.24
Wells Fargo (WFC) P/E 9.64
I still would wait a week or two and see a slight rise in the sector. There will be a long road to recovery and many opportunities. Don't try and predict the bottom just wait for momentum to enter the sector and then begin to plot your trades. Like Ethan said dont catch the falling knife.
825 points
Dragonsbane answered one year ago …
I agree that financials look cheap on a valuation basis. Unfortunately, valuations don't seem to be driving the markets at the moment. Even with a long term horizon, I think you may still be quite early in buying financials. Here are a few things I would want to see happen before I would think of buying a major US bank.
1) Bond insurers get bailed out or go belly up
2) Some US regional banks fail
These two factors will overhang the financial sector for quite a while and honestly, I can't see this sector bottoming without one or both of those happening.
3963 points
MNSL answered one year ago …
I agree with following points made by John and Dragonsbane:
• First, the financial sector as a whole is undervalued
• Like Ethan said dont catch the falling knife
• I agree that financials look cheap on a valuation basis
• I think you may still be quite early in buying financials
