Once again, the financials lead the market higher. Ever since the market lows in early March, the financials have been roaring. And now people are asking whether famously bearish analyst Meredith Whitney might be a contrary indicator.
You see, at the end of February, Whitney launched her own advisory firm, Meredith Whitney Advisory Group, LLC. She had risen to fame and acclaim on the strength of her bearish calls on financials, and launching her own firm was clearly an attempt to cash in. Unfortunately, just two weeks later the market turned against her analysis, sending bank stocks far higher.
We’re not so sure that we’d bet against Whitney. Despite the infusions of government cash and huge write-downs, the basic business model of many of the large financial firms remains broken and the balance sheets are loaded down with trash assets valued at unrealistic levels. We expect that, at least for some of the rallying banks, this will end in tears for investors who don’t get out soon enough.