A Pair of Names Worth Banking On
My late father had a lot of folksy sayings when I was growing up, including this favorite: "Life is like a pendulum. It swings too far to the left and it swings too far to the right, but it always ends up eventually in the middle." My dad also was a banker for 35 years -- back when banking was a noble, if boring, profession. Banks collected deposits and made loans and did little besides that. Bank stocks were mundane but consistent performers that paid a nice dividend and were frequently found in "widows and orphans" portfolios. In short, they functioned like utility stocks do today. Times certainly have changed.
I was reminded of this the other day when I took a look at the Financial Select Sector SPDR (XLF) over the past five years and compared it to the Utilities Select Sector SPDR (XLU) over the same time period (see the chart below). Bank stocks cratered during the financial crisis and have roughly followed the performance of the utility index since the nadir of March 2009. Overall, the utility index has outperformed the financial services index by some 50% over the last half decade....414 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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