Since the March lows in 2009, the financial sector has outperformed the markets as the best performing sector—soaring 100 percent while the market rose 60 percent. Are financials poised to continue gaining? David Katz, chief investment officer at Matrix Asset Advisors, shared his insights.
“We think financials will continue to do well—[though] clearly not as well as last year,” Katz told CNBC.
Last March, investors were worried about mass defaults, bankruptcies and nationalization of the banking system, said Katz.
“As that didn’t happen, [banks] started to be valued as normal, ongoing businesses and you’ve had this sharp gain,” he said.
“From here, we’re expecting improvements in their businesses over the next few years, we think the stocks are still undervalued and can do better—but more normal returns.”
Katz said he likes the financials, but does not favor the regionals.
“We’re wary of regional banks—we still think they have a lot of commercial real estate that has to be written down,” he explained.
“We think the big banks like Bank of America or JPMorgan have already taken their hits. So while we think the overall financial group does well, we’re more confident that the big banks, the trust banks or the brokers are poised to do better sooner.”
- Watch Katz's Previous Appearance on CNBC (Feb. 24, 2010)
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Katz, his firm and family members own and continue to buy shares of JPM and BAC.