During the past month, investors have overreacted to the downside in their trading of the financial sector and now is the time to buy, says Robert Albertson, chief strategist at Sandler O'Neill.
On Tuesday, France's Nicholas Sarkozy and Germany's Angela Merkel announced they would consider a tax on financial transactions as banks and exchange stocks fell during the day.
"I don't get the point of it anymore," said Albertson, who does not think the tax will go through. "We've been blaming the financial sector for far too long, and it hasn't done any good."
He added that measures aimed at the financial sector hurt capital markets, as the cost of capital rises.
Although he said there is sovereign risk in European banks that needs to be marked down further, there is a grain of truth in most of the worries about Europe, Albertson said.
"That probably means they need to raise more capital," he said. "But the degree to which they've been damaged is too dramatic. It's like trying to do a re-run of what happened in 2008, and that's not going to happen."
Albertson advises looking at the fundamentals of the banking industry. He said banks with solid management and substantial capital without many legacy issues would show growth during the next two or three years.
"Can the banks get back to where they were on average? Yes," he said. "Will it happen quickly? No."
Some of the largest banks in the financial sector include Bank of America, Citigroup , JPMorgan Chase, Goldman Sachs and Wells Fargo.
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Disclosure information was not available for Robert Albertson or his company.