Portfolio Update
Time to Buy Banks
By
Elliott H. Gue, on Dec. 23, 2016
The two worst-performing sectors in the S&P 500 through the first three quarters of 2016 were financials and health care, each of which returned just 1.4 percent. Meanwhile, the S&P 500 as a whole gained 7.8 percent.
We expected this poor performance, and that’s why we’ve been negative on financials for more than a year. In October 2015, we sold our position in Morgan Stanley (NYSE: MS) for a 31.2 percent gain since it was added to the Wealth Builders Portfolio in 2013.
But times are different. The election of Donald Trump as president of the United States with a GOP majority in Congress is a game changer for the banks. In fact, rarely in financial history has the outlook for an industry changed so dramatically in such a short period. And the market is just beginning to price in the magnitude of this shift.
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