Bank stocks have been laggards of late. Maybe I shouldn't be surprised. The yield curve is inverted, Fed sentiment is tilting toward raising of rates, not easing them, and economic growth is moderating compared with last year's energetic pace.
The portfolio's bank holdings consist of:
Bank of America (BAC)
Citigroup (C)
Bank of Montreal (BMO)
Suntrust Banks (STI)
Bank of Nova Scotia (BNS)
Only Suntrust is showing a gain in our bank group. It didn't help that the timing of acquiring these positions was more than a bit late. These positions were all picked up in October 2006 or later. In the case of Citigroup and particularly Bank of Montreal, we missed a huge run-up, and just caught the downdraft.
It helps to think about the high quality of earnings these banks all have, and it really helps to imagine what dividends lie ahead. All of them have superior growth in dividends.
While waiting for banks to recover, it is reassuring that financials and insurance are all doing just fine. Diversification is a wonderful thing.
Citigroup will be posting earnings tomorrow. We'll see if they can jump start the group. It's due for some good news for a change.
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