One of the real success stories in this year’s
stock market has been the financial sector. Financials in the Standard &
Poor’s 500 stock index have risen by more than 25 percent in 2012, far outpacing the
total index’s 15 percent gains. That’s the first time that the financials have beaten the
wider index since 2006.
Last year, for example, the financial sector
declined 18 percent while the S&P 500 itself was flat. The biggest
winner in the financials this year has been Bank of America, which is up 104
percent. That’s right, the share price has more than doubled.
One of the key factors in the financials’
performance has been their cost-cutting. According to Bloomberg News, the nine
largest investment banks have eliminated, altogether, 30,000 jobs through the
first nine months of this year. Overall, total pay for the members of the
banking sector is now half of what it was in 2007.
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