Good News: Banks Are Boring Again

As a very general rule, it’s good for the banking sector to be boring. You don’t want your country’s banking sector to be making too many headlines. If they’re in the news, it’s probably not good.

Here’s a look at the one-year trailing standard deviation for the S&P 500 (red line) and the S&P 500 Financial Sector (blue line). The financial sector has generally been more volatile, but the distance between the two has gradually decreased.

During the Financial Crisis, bank stocks weren’t just more volatile, they were a lot more volatile. If anything, thanks to Brexit, banks got a little more volatile in the past year, but I expect that to subside. This Friday, the big three major banks will report earnings. The good news for investors is that the earnings won’t be a very big deal.

Posted by on January 9th, 2017 at 10:40 am

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