For the past year, many traders have repeatedly sought to find "the bottom" in financials and related stocks (i.e. homebuilders), but the reality is the sector is a long way from a true bottom. Beyond needing to further trim the fat, the financial sector is dealing with the double-whammy of stricter regulation and the 'deleveraging' process after years of massive credit extension.
That combination is going to result in slower earnings growth for the sector and a revaluation of brokerage stocks, which got well above their historic norms during the peak of the boom earlier this decade. Just like big-cap tech stocks like Cisco are still well below their bubble-era levels, it's going to be a long time before the Citis, Goldmans and Lehmans of the world revisit their recent peaks - if ever.