Magazine article American Banker

Stocks: Tech Selloff May Help Banks-But It Hasn't Yet

Magazine article American Banker

Stocks: Tech Selloff May Help Banks-But It Hasn't Yet

Article excerpt


Bank stocks could-at least for the short term-benefit from the current selloff in technology shares.

Investors searching for a haven would do well to put their dollars into shares of financial institutions, some industry observers said.

"This is a great time for sector rotation into bank stocks," said Mark Allen Davis, director of research at the Bank Stock Group. Investors would find bargain prices in the sector, some observers said.

Bank shares typically trade at a 20% or 25% discount to the Standard & Poor's 500 index. But that gap has widened to as much as 50%, Mr. Davis said. "Financial institution shares are a great place to put a significant portion of equity dollars," he said.

Technology investors might welcome the switch to a more subdued group.

"Banks are among the safest investments out there," Mr. Davis said. "Not only do they have much less volatility, but they are much better value investments."

One portfolio manager said: "Common sense is not what's steering the technology market right now."

The comments came as the technology group was falling hard Friday. Some observers said the Internet group had been especially hyped and was due for a fall.

Though bank shares might benefit from investors' seeking an alternative to tech stocks, such a rally might be short-lived, some observers said.

"On a short-term basis, maybe," said Kevin Timmons, banking analyst at First Albany Inc. "But you would need to have a major unraveling before you have a sector rotation out of the technology. …

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