GOLDMAN’S EARNINGS ARE CONFIRMING THAT TIMES ARE A CHANGIN’
Remember several years ago, when everyone was in some way affiliated with the financial business? It wasn't stocks, mutual funds or annuities, mind you...it was real estate. A good percentage of the US population was either a real estate broker, mortgage broker, appraiser, assistant to appraiser...the list goes on and on. As with any good financial bubble, people found a way to slice the pie 10 different ways just from one illegal immigrant with no financial history and a moderate income buying a 3,000 square foot home in the burbs. Everyone was getting paid like P-Diddy.
At one point, financial services in one form or another made up a good percentage of the economic output of the western world. With the destruction of the financial bubble, this phenomenon is well into its reversion to the mean phase, forcing those who had illusionary jobs based off of illusionary wealth to actually become a contributing member towards economic output.
Last night, I went over a monthly chart of the financial sector, which shows that given the severity of the destruction that we faced following the financial bubble bursting, we have not nearly retraced the amount that any sector with intentions of returning to its former glory should.
Over-regulation of the financial sector is in its infant stages. Companies like Goldman Sachs will continue to be vilified, as Congress, in an effort to slay the demon in order to get votes, increasingly makes the collar around companies like Goldman's neck tighter and tighter.
Times are indeed changing. Financials, you can be sure, will not be the leaders of any market movement on the bull side for years to come. The economy is shifting...excesses are being absorbed into the system, for the benefit of all. We surely have some more shocks coming over the very long-term, but it's all part of this long process.
In the meantime, find another home for your capital away from the suit/tie/swindle segment of the market.
