From the WSJ:
David Ellison, one of the most respected financial-stock managers in the mutual-fund industry, has had it. While he is pleased with the run-up in financials in recent days, he still sees signs of Armageddon in the sector.
He recently pumped up the cash level in his two funds to as much as half his assets. His FBR Large Cap Financial fund stood at 50% cash at the end of June, up from 2% at the start of 2007, and his FBR Small Cap Financial is at 38% from 0%, according to Morningstar Inc. "I don't want to lose any more money," said Mr. Ellison, an intense fellow who speaks about the stocks with barely concealed anger.
Even if he's right, this is dumb. You give money to a small-cap financial manager to pick the darn best small-cap financial companies, not to time the market. There are plenty of nervous Nellys on CNBC giving you contradictory advice on timing the market, and they are right about 50% of the time. If the equity market has a premium, listening to these guys merely means you get half the premium you otherwise would have.
Plus, I'm bullish on financials. It's not that bad.