Fisher Investments on Financials 
Characteristics of financial industry:
1. A relatively volatile sectors that is highly correlated with broader markets 
high beta that is second only to IT industry 
2. Sensitive to interest rates 
– financial firms are heavily exposed to financial assets and they are typically leveraged 
– highly negatively correlated with 10 year yield except certain periods like financial crisis 
– tend to underperform in rising interest rates 
3. Neither cyclical nor defensive
– relative performance in both bull and bear market tend to be similar 
– best not to allow market cycle to dictate financial stocks unless it’s a financial crisis   
4. Heavily regulated 
– decisions made by regulators can greatly impact the sector
5. Highly leveraged and reliant on other people’s money 
– have a lot of liabilities relative to equity (gearing)… Asset to equity …