Not necessarily, says Peter Atwater, president of consulting firm Financial Insyghts and a former executive at JPMorgan.
In an interview with The Daily Ticker, Atwater says the time to be bullish on financials was in October of 2011, a period of enormous uncertainty surrounding financial regulation. The U.S. banks most exposed to government policy actions – such as Bank of America – experienced a bounce in their stocks as investors priced in public policy decisions (Atwater likens these stocks to "options" on public policy decisions).
Big bank stocks may have a little more room to run, according to Atwater, but that has not stopped him from advising clients to take profits.
It may be too soon to short the sector but there are several headwinds that could impact the financial services industry to the downside later in the year. New leadership at the FDIC and the resignation of Treasury Secretary Tim Geithner are just two potential events that may be unfavorable to banks, Atwater says.
He recommends buying shares of banks that are less interconnected in U.S. federal policy, such as Barclays (BCS), HSBC (HBC) or UBS (UBS). (Atwater has a position in JPM).
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