credit: Toni Birrer

Stock market investors have been enjoying the biggest rally in five years – except for investors in banks. Bank stock prices – already stuck at 2009 levels – took hits as reported earnings from last year for big banks like Citi and Goldman Sachs failed to wow.

• Each quarter, publicly-traded companies are required to report their earnings to investors. This is the time of year when we get an inside look at how different companies, industries, and economies are really doing.
• Though banks reported big profit increases, it wasn’t enough to wow (or woo) investors.
• While some investors see an opportunity, others are waiting-and-seeing.

Facts & Figures

• The last time investors could buy bank stocks at these prices was March 2009
• Back then the economy had been in a recession for about 14 months, and the S&P 500 was at a 12-year low
• But all that has changed: the 500 companies tracked by the S&P500 index gained an average of 30% in 2010

Best Quote

“What everyone is waiting for is a sign that the companies are really back, that they’re really on their feet again and can survive without continued government support and subsidy.” – John Carey, Money Manager at Pioneer Investments

What do you think?

Do these low prices make you want to invest in a bank right now? What would you need to find out before deciding? Answering these questions can help you figure out your risk tolerance, which is essential for any young investor. This will help, too.

Tags: earnings, financial industry, recession, risk