Bank Stocks Outperform Market in The Long Run
Bob Wright wrote in a recent comment "If you look at financial stocks over any meaningful period - like 10 years or more, they kill the DJIA and the S&P 500. They even out-performed over the last 5 years until this recent bit of turmoil."
The chart above (click to enlarge) shows the performance of NASDAQ Bank Stocks (blue line) vs. the NASDAQ Composite (green) and the S&P500 (red) from 1990 to 2007. Consider that $100,000 invested in the NASDAQ Banks stocks in 1990 would have grown to $1,137,000 today, vs. $782,292 today if you had invested $100,000 in 1990 in the NASDAQ Composite, and only $469,812 if you had invested in the S&P500. In other words, you would have almost $700,000 more today from your $100,000 investment in NASDAQ Bank Stocks in 1990 compared to the same initial investment in the S&P500.
Bob is right.