What to Do With Banks

Article Excerpt

At times like this, when deciding what to do with your portfolio, you should resist the urge to dump high-quality investments just because you think they may get dragged down by a further decline in the market. After all, when things look bleakest (as they do today), the market often turns around and begins rising. That’s especially true of high-quality stocks that offer lots of hidden value and high yields. Keep this in mind when contemplating the unsettling outlook for Canadian bank stocks. The banks are a mainstay of the Canadian economy. Their slide since mid-2007 provides a powerful buying opportunity. But fed-up investors may wind up dumping these stocks just when prices and risk are near a low. Banks have gone through wild swings in investor sentiment in the past. Following the early 1970s stock-market plunge and the associated recession, investors underestimated the banks and downplayed them in their portfolios. Yet during those years, bank-stock investors enjoyed high yields plus a gradual rise…

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