Everything is going right for financials. Every corner. Every single one. The banks are printing. The insurers are thriving. The asset managers are managing assets, apparently. This is what passes for news now.
Here's what happened. Someone looked at a chart. Saw a line going up. Called it compelling. Then checked every other chart in the sector. Also up. Revolutionary stuff. The kind of analysis that requires three monitors and a Bloomberg terminal you don't know how to use.
Retail traders are losing their minds. They're buying regional banks at all-time highs because some guy on Twitter with 47 followers said momentum is a strategy. It's not. Momentum is what happens right before you become exit liquidity for people who actually read footnotes.
The headline says financials are running away as a group. Running from what? Valuation metrics? Historical mean reversion? The concept that things go down sometimes? Nobody knows. Nobody asked.
You know what's compelling? A sector that went up. That's the whole thesis. It moved in one direction. Therefore it will continue moving in that direction. This is the same logic my nephew used when he put his college fund into GameStop at $340. He's studying at community college now. Great kid. Terrible pattern recognition.
Every corner of the sector is offering something compelling. Translation: everything is expensive, but in different ways. The insurance stocks are overvalued. The banks are overvalued. The payment processors are overvalued. But they're all overvalued together, which apparently makes it fine.
The best part? Not one person quoted in the original piece mentioned a single financial metric. No P/E ratios. No book values. No loan loss provisions. Just vibes and price action. The technical term for this is a top.
Your portfolio thanks you for your service.
Photo by Markus Spiske on Unsplash
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