OCEAN CITY – As the U.S. continues its slow but steady economic recovery, one sector showing strong improvement is the financial industry.
In fact, BofA Merrill Lynch Global Research recently recommended that investors overweight financials as one way to invest in the recovery and take advantage of what appears to be a broadly undervalued market.
In a video segment available at totalmerrill.com, Guy Moszkowski, Capital Markets and Money Center Banks Analyst, BofA Merrill Lynch Global Research — who was ranked No. 1 in 2009 for his coverage of the brokerage industry by Institutional Investor — discussed the sector’s opportunities and risks with Joe Zidle, Global Wealth Management Investment Strategist.
Noting one major area of progress, Moszkowski says, "We’ve seen the capital markets industry go from tremendous losses in the fourth quarter of last year to almost stunning profitability in the first half of this year." He expects the trend to continue.
But he cautions that continuing exposure to mortgage and credit card losses could prove a drag on the industry through 2010. And "the next shoe to drop" — commercial real estate losses — might slow the sector’s performance into 2011.
Still, he believes that loan growth will return as corporate and consumer confidence build and lending demand increases.
As always, before you make any investment decisions, discuss them with your financial advisor.
(A Merrill Lynch Senior Financial Advisor. She can be reached at 410-213-8520.)