Are Banks and Financial Institutions a Buy?

Steve Syre from the Boston Globe posted an interesting article asking whether bank stocks represented a buying opportunity. He interviews Gerard Cassidy from RBC Capital Markets, who thinks banks are still very risky. I tend to agree. I wrote an article several days ago disagreeing with Marketwatch columnist Doug Kass for suggesting financials were a good play.

As Syre writes:

"Bank stock analyst Gerard Cassidy of RBC Capital Markets thinks shares of many financial companies will begin to rebound soon for the reasons I've just mentioned. But he sees a short-term rally that ends badly as the banking business continues to deteriorate and those same stocks slump badly. "We think it's going to be a huge trap and a great time to sell into it," says Cassidy."

Analysts aren't know-it-alls and are often wrong, but Cassidy has made some correct calls before and I happen to agree with this position. I just don't see a lot of upside for banks and FIs right now and plenty of downside.

Of course, I thought bank stocks were great buys six months ago so hey, we all have our ups and downs.