Broken Financials: Are Bank Stocks Going to Zero?

Broken Financials: Are Bank Stocks Going to Zero?

Posted Jan 22, 2009 03:39pm EST by Aaron Task in Investing, Banking, Housing
Related: XLF, BAC, JPM, FITB, NTRS, C, ^DJI


After hitting a 14-year low Tuesday, the financial sector enjoyed a reprieve Wednesday on news of some big purchases by insiders, namely JPMorgan CEO Jamie Dimon and Bank of America's Ken Lewis.
But the sector was back in the dregs Thursday on news of John Thain's ouster from Bank of America (and ridiculous spending spree), change at the very top of Citigroup and a big loss at Fifth Third Bancorp.
But with the financial sector now less than 10% of the S&P 500's market-cap (down from 22% at its peak) and so much bad news "priced in," there have to be bargains in the banks, right?
Wrong! says John Roque, technical analyst at Natixis Bleichroeder.
While he can find at least one bank stock worth investigating, Roque believes investors would be wise to avoid banks, homebuilders and other housing-related stocks for the foreseeable future.
"Those sectors have been broken and are not going to come back for a long time," he said, predicting it will be a very long time before these stocks return to their peaks, if ever.
Disclosure: Roque has no positions in any of the stocks mentioned in the accompanying video.



http://finance.yahoo.com/tech-ticker/article/162574/Broken-Financials-Are-Bank-Stocks-Going-to-Zero?tickers=XLF,BAC,JPM,FITB,NTRS,C,%5EDJI