The Financial Post
June 6th, 2000
William Hanley
whanley@nationalpost.com
Time to sell the bank stocks?
Bob Hoye's warning recalls big signal in
April, 1998
Just when you thought it was
safe to buy the surging bank stocks with confidence because the interest
rate environment suddenly looks much more accommodating, along comes Bob
Hoye to warn that could be very dangerous to your financial health.
You may remember that Hoye,
who publishes the Institutional Advisor newsletter out of
Vancouver, made an outstanding -- and, at the time, outrageous -- call on
the bank stocks in April of 1998, saying they were an ideal short sale
even for widows and orphans.
Now, he's back with another
call on the financials. He's stopped short of calling them shorts for
widows and orphans. But his model, which anticipated the disastrous
downturn in the bank stocks in 1998, indicates widows and orphans should
at least be selling the group.
The Toronto Stock Exchange
financial services subindex is up 25% from March 14 -- a move Hoye
and his colleagues also called correctly. But that's just about it, he
says, because the financials are ready to roll over any day now in the
face of "symptoms of mounting financial distress" that leave
those believing in interventionist economics "between a crock and a
hard place."
Hoye says the model he
uses to time buys and sells in the financials has also been back-tested to
1980 and works like a dream -- or a nightmare, depending which side of the
trade you're on. The model issued a sell signal for investors on May 26
and for traders on Friday.
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