If there is one sector that has been perpetually cheap over the last decade or so, it has to be the financials. After the Great Recession, the banks, insurance firms, and brokerages have somewhat limped along, at least when it comes to share price. But all of that seems to be changing with the Fed’s recent rate cuts.
For investors, the sector may not stay cheap for long.
Yes, net interest margins are now coming down with the Fed’s cuts. However, the financials are now seeing some increased growth across other channels, which come with higher margins and better earnings. That has continued to push share prices and dividends higher. For investors, the window to buy the financials could be closing.
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