Over the last several years financial stocks have gone through a roller coaster, experiencing both periods where investors are looking to buy and to sell. We are currently in one of the upswings in the sector. Financial institutions, both large and small, have benefited from the current interest rate environment.
The U.S. Federal Reserve’s conquest against inflation began towards the end of the first quarter of 2022, and since then, the target federal funds rate has reached between 5.
25% and 5.50%. If you look at the financial statements of the large U.
S. banks, many of them have been able to widen their net interest margin, the arithmetic difference between the interest they charge on lending products and the interest they pay to depositors. The Vanguard Financial ETF (NYSEARCA: VFH ), a good indicator for the performance of the financial sector related equities, enjoyed a good rally over the past twelve months, increasing 23% over that period, which is above the performance of the vaunted S&P500 .
However, a high interest rate environment is a double-edged sword, especially for financial stocks largely selling products to consumers. With that said, below are 3 financial stocks to sell before they crash and burn in July. Affirm (AFRM) Affirm (NASDAQ: AFRM ) is a financial stock that has made several of my prior sell lists.
In essence, the company enables buy-now-pay-later (BNPL) transactions wherein consumers can purchase a product via a participating merchant’s website .
