Saturday, May 25th 2019

What are Financials?

Financials are a sector of the economy that, of course, provides financing as their main method of income. The largest of these are the banks and brokerage firms, which tend to lend the greatest amount of money in the economy. The next largest group are the insurers who often lend and build up huge portfolios of investments in their reserves. Finally, a more recent group are the REITs or real estate investment trusts that have been popular choices since the late 1990s.

Until the crisis of 2008, financials were the largest segment of the major economies of the world. Since the average financial lost over 70% of its value during this period, they are much smaller now as measured  by market capitalization (the total value of their stock). For the health of the economy, though, banks need to be a large presence so that they can fund commerical activity in all areas.

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