Banking Sector Still as Moody As Ever

It seems like every month or so we receive yet more evidence on why it pays to steer clear of the banking sector.

This time, Moody’s downgraded 15 financial due to “significant exposure to the volatility and risk of outsized losses inherent to capital markets activities.” Some of the banking world’s biggest players were downgraded by as much as two notches, including Barclays Plc. (BCS), Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM)., Goldman Sachs Group Inc. (GS) and Citigroup Inc. (C).

In what looks like a moment of defiance, investors bid many of these stocks higher today. In fact, Financials was the best performing sector today. But I would not recommend that you get caught up in this. I think this run up has more to say about the discontent with rating agencies than actual faith in the financial sector. These stocks just don’t have the fundamentals to back up the investors hype and it’s just going to cause these investors more pain in the long run.

Case in point, when you run these big banks through my free stock rating tool, all you see are shaky fundamentals and failing grades:

Ticker

Company

Fundamental

Quantitative

Total

BCS

Barclays PLC ADS

D

D

D

BAC

Bank of America Corp.

D

D

D

GS

Goldman Sachs Group Inc.

C

F

D

JPM

JPMorgan Chase & Co.

C

D

D

C

Citigroup Inc.

C

D

D

So please stay away from the financial sector—as an ex-banking analyst I can tell you that these banks are still very troubled. Feel free to use my Portfolio Grader tool to get a sense of which companies are truly in growth mode and are deserving of your attention.

Sincerely,

Louis Navellier

Louis Navellier

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