The Dow Jones Industrials Average
It makes sense, then, that real-estate sensitive stocks JPMorgan Chase
Both of these stocks lead the Dow for year-to-date return as well. While the Dow has posted a paltry 3.4% gain so far, JPMorgan is up 10.6% and Bank of America is far and away the biggest gainer on the index with a 39.8% run.
There's no doubt that these companies have had their fair share of missteps and bad press. The irresponsible lending and risk taking in high finance is largely credited as the impetus for our economic slowdown. Bank of America's balance sheet could still contain more landmines, and JPMorgan had an embarrassing fall recently with its $2 billion trading loss. Both are considerably larger and less maneuverable banks than in the past and will face heightened capital requirements in the future.
Why, then, are these stocks still great buys, even after outpacing their home index by so much this year? They're cheap, and the risk/reward profile favors a bit of a dice roll if you can stomach the uncertainty. Take a look at their current price-to-tangible book value compared with historical norms.
JPM Price / Tangible Book Value data by YCharts
Even if these companies don't return to their historical averages, just a moderate move in that direction could result in sharply rebounding shares. This is a trend that's repeated to varying degrees all across the finance sector as well, not just with these few winners. US Bancorp
I think the finance sector houses some of the most promising buy-and-hold stocks on the market today. It's certainly not a sector for the faint of heart, but it is where you'll find The Stocks Only the Smartest Investors Are Buying. Legendary investors like Warren Buffet have put their personal money behind some of these stocks, and when it comes to long-term outperformance, that's a guy I trust. Read about why you should own some of these companies.