Stan WongFinancial Select Sector SPDR FundXLFTOP PICKJan 08, 2025

This reset in financials is healthy. If you think we'll enter a recession, don't buy financials. The economy remains in good shape (jobless claims, GDP, capex all good) can power through Middle East concerns.

JPM raised their numbers last week and so will the group of banks. Buybacks are coming.

Still likes it. Over 3 years returned ~15% a year. Stalled a bit last year. Largest name in here is BRK.B, so a bit of a drag, as were MA and V. 

US financials should be a big beneficiary of the rotation away from US mega-cap. Trades at discount to market.

Has been a good medium-term holding. Financials in Canada are fairly, if not over-, priced. So an ETF with Canadian exposure probably has less upside. Doesn't see drivers to move Canadian banks and insurance companies higher right now. Probably more value on the US side. A bit of yield for income, but returns won't be as high as last year.

He's watching the US banking sector very closely right now. Believes there should be some positive momentum from deregulation, though we haven't seen it yet. A good ETF to take advantage of that.

Still likes US financials. Sees earnings recovery. Interest rate pressures are easing, and that should lead to better net interest margins. US will see more deregulation and a lower tax rate. Financials trade ~18x PE, still a discount to the S&P at 26x.

There is also a wall of money in the huge amount of M&A activity along with de-regulation in the US. There is appreciation for banks recently and the sector is reasonably priced at 16X compared to the market at 20X with a similar growth ratio. Canadian banks are improving too.

Financials will rise if the Fed cuts interest rates. Valuations in financials are good compared to the rest of the market. Plus, you need to diversify away from growth stocks.

Given his thesis on the overall market, this one is something you can build on. Broad exposure to the sector. MER is 8 bps, not expensive. Very liquid. The sector remains very good. Because of potential weakness in the USD, may see some losses due to currency exposure.

US financials have been one of the better places to be so far this year. Went down with the whole tariff thing in April, but rebounded nicely. Financials should be one of the top places to be by the end of this year. He likes it on deregulation and tax decrease themes. Starting to see technical signs that the sector is starting to make moves to be one of the leaders again. MER is only 8 bps.

Likes the financial sector in the US. In his opinion, it's one of the top sectors on a go-forward basis. 200-week MA has started to turn upwards, with 200-day trending higher as well. Looking beyond tariffs to deregulation and tax cuts, those moves will benefit some of the names in this ETF. MER is only 8 bps.

Great way to get exposure to all the major bank names as well as BRK.B.

Diversified exposure to US banks, investment firms, asset managers, and insurance. Economic activity in the US is improving. Financials are poised to benefit from higher trading volumes and more robust capital market activity. New US administration is pro-business, and that will boost the sector via de-regulation, corporate tax cuts, and business-friendly policies. All that will drive M&A, increasing profitability and fees.

Top names include JPM, GS, Visa, BRK.B. All well-positioned to benefit from these trends. During Trump's first year in 2017, financial sector went up by 22%. Yield from Canadian banks is better, but US names will give you more capital growth. Yield is 1.4%.

He's very bullish the market and financials. His fund has 28% exposure in financials, including insurance, private equity and regional banks.

Deregulation (under Trump as expected) and private equity in the areas of industrials, tech and consumer are two drivers. The banks enjoyed a major rally this week.