Investors should get out of bank stocks right now, closely followed financials analyst Dick Bove said Wednesday.
Bove, vice president of equity research and financial sector analyst at Rafferty Capital, said banks are a "very treacherous area" to invest in, and the reasons people are investing are "simply wacko."
"What's happening now is if the yield on the 10-year goes down, which mean that the value of the assets of the banks go up, bank stocks go down," Bove said on "Squawk Box." "If the yield on the 10-year goes up, which means the value of bank assets go down, bank stocks go up." Bond prices typically go down as yield rises.
Bove said that investors in essence have an "incorrect" theory that bank stocks are not really companies but bond-market surrogates.
Bank stocks, which rallied after the U.S. election, have retreated recently as investors questioned lofty valuations and President Donald Trump's ability to introduce simpler regulations and took note of the failure to repeal and replace Obamacare.
The SPDR S&P Bank ETF (KBE) is down 5.7 percent over the past month, according to FactSet.
JPMorgan is scheduled to report earnings Thursday at 6:45 a.m. ET, followed by Citigroup and Wells Fargo at 8 a.m. ET.
—Reuters contributed to this report.
Watch: Mayo's outlook on financials