We've heard lots of talk about how the banks have run, how they are too expensive and how they have to give back those spectacular returns. I have seen the argument on this site that things are rapidly deteriorating and the banks need to raise more capital.
And I wrote yesterday that I heard it all before.
The history never seems to matter among the bank bears. Even when I say that I owned big stakes in banks and every one of them worked out, no one seems to care. The pattern, the nay-chorus says, is rally, which we definitively have had, then severe selloff and then oblivion.
What you need to know is that path is the exact opposite of what occurred during the 1990 to 1992 run of banks when they outperformed every other cohort. First, they had a monster rally, in many cases doubling or even tripling. Then, they pulled back, sometimes giving up as much as 20% to 25% of their gains.
Then?
They doubled again -- almost uniformly. I am talking about major banks: JPMorgan Chase (NYSE: JPM) (Cramer's Take), Bank of America (NYSE: BAC) (Cramer's Take), Citigroup (NYSE: C) (Cramer's Take), PNC Financial Services (NYSE: PNC) (Cramer's Take) -- the latter of which went up huge from there.
I think that we are having the pullback. I think that the pullback is more mild than I thought would happen.
In the meantime, what has changed?
The yield curve is better. This time, they pay you nothing. The fees are much much better -- and risk-free, mind you. And the market share is far more concentrated, therefore marketing dollars go much further.
I know that history has no resonance here, but it should, if you don't want to repeat its mistakes, and one of the biggest was to say "it is over" in 1991, before the next big rally in the group began.
Random musings: I see where Elizabeth Warren, the chairman of the Congressional Oversight Panel on banking, attacks Citigroup for no bailout plan. Why doesn't the government then bail out of its Citigroup investment as it is free to trade in six days?
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long JPMorgan Chase and Bank of America.
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