Not So Love-able Banks
It now seems we were premature in our December blog post about banks being well positioned and valued for the coming Fed rate hikes. Investors now seem to think our big banks are going to have trouble with energy loans and financial commitments in a slowing China, as well as predictions that the Fed may be “one and done” on rate hikes in 2016.
The Financial Select Sector Index, an index made up principally of large and medium size banks, is down 15.7% from its December 4 close. Definitely not good timing on our part. With several banks now trading at or even below their tangible book value we still feel their is a future of rising profits and dividends in store for bank investors but, as always, timing is key and our timing was certainly off.