Bank investors have suffered two lost decades

After an awful start to 2016, the S&P 500 bank index is at the same level as in the fall of 1996.

Not that it hasn't been a rocky road: The banks doubled over the next 10 years, then crashed amid the financial crisis, before running right back to where they started. And bank investors did enjoy dividends over the years.

But especially compared to an S&P 500 that is up some 170 percent in the same time period, the abject lack of price performance is striking.

"What investors need to understand is that even over the long term, a sector cannot do well," Eddy Elfenbein of the "Crossing Wall Street" blog commented in a Friday interview on CNBC's "Trading Nation."

Those who bought the banks back then have proven especially unlucky, however. Even the hammered energy sector has nearly doubled over the past two decades.

Some particular names have fared even worse. Bank of America shares, for instance, are down 42 percent since October 1996. Citi shares have fallen 65 percent in that time.

Recent concerns for bank investors have included exposure to energy loans, as well as interest rates that may continue to be low for the foreseeable future, pressuring margins. But more generally, the big banks haven't gotten back the mojo they lost in the financial crisis.

Thus far in 2016, the bank industry group has fallen 19 percent, making it the market's worst-performing group save for automotive stocks. The banks are shedding 3.5 percent of their value on Monday alone.

If there's a bright spot, says Elfenbein, it's that "valuations are really cheap" at present.

Small consolation, that, for those who haven't seen their stocks rise in the time since America was doing the "Macarena."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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