Reply #38: Banking is doing ok as a sector - there are always exceptions.

[Frodo]

Rates are expected to move up - though there is disagreement with "how fast" it will happen. This is not necessarily a problem for banks (it all depends on how they handle their A/L management). In fact some will be helped, but if things get ugly you will eventually see banks have credit troubles. It's a mistake to pay SOOO much attention to the Fed... the market moves in the Treasury securities arena have had FAR more effect than the Fed Funds rate (who borrows from the Fed anymore? We depositors have been "happy" earning .25%!)

In general, the financial sector starts to under-perform at this point in a recovery. Of course, if you believe we've only JUST started the recovery they'll do ok. But this is not a place where I suggest putting your money where your mouth is. My guess is that the banks that will do well (stock price wise) over the next several months are the ones anticipated to be takeover targets.