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The rally in financials is going to last, expert predicts

Investors have been betting on financial stocks since Donald Trump won the presidential election this week, and one expert believes that rally is going to last.

For one, monetary policy is "pretty much over," and there will be a lot of fiscal stimulus ahead, said Fred Lane, founder and managing partner of Lane Generational of Raymond James.

"Fiscal stimulus is going to drive our economy in a positive way. That's going to create more demand. We're also going to have an increase in interest rates and greater spread and that's always going to benefit the financials," he told CNBC's "Closing Bell" on Friday.

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York.
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Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York.

Investors have been reallocating assets since Trump's surprising victory, with money pouring into sectors like financials and industrials. The Financial Select Sector SPDR (XLF) is up about 11 percent in the last five days of trading.

Jeffery Harte, principal at Sandler O'Neill, told "Closing Bell" circumstances have now improved for banks, brokers and business in general.

He believes there will be progress in the yield curve steepening, possibly more economic growth and the easing of some regulatory burden. The question is how much of that is already priced in and whether it's too late to be getting in, he said.

"This isn't going to go up in a linear line. It's going to move around. So I'd be hesitant to say you need to run out and buy tomorrow," Harte noted.

That said, when looking at the possibilities that will occur during the Trump administration, he believes the outlook is positive.

"If you figure the tax rate goes down, and regulation gets dialed back a little bit, and the yield curve steepens a little bit, we start looking at bank stocks as growing earnings — you can pencil in 30, 40 percent earnings growth," said Harte.

So while he's a little cautious right now because of the recent move higher, he said he thinks bank stocks can do well in the next year.

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