I am a big believer in mean reversion. As of right now, the financial sector has NEVER been this overbought. This chart is as staggering now as it was in early March when the situation was the inverse. Anyone who thinks this is sustainable is in for a big surprise, but I am sticking to my thesis that the banks are not shortable until after the stress tests. Great stuff from bespoke.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
I actually wonder if after BAC and MS report, that banks will retrace in face of uncertainty from the stress tests. That is, of course, unless the government releases good news every day about the tests. So it would still be pretty risky.
Comments are closed.