Guilt by association cuts both ways in financial markets. We all have seen some dog stock in a sector go up sharply in price for no other reason than a competitor just got bought out, and we all have seen a currency such as the Mexican peso get trashed because of, say, Argentina’s latest foray into fiscal irresponsibility. Most of us get to choose our friends, which we may do wisely or otherwise; financial assets are part of a group whether they like it or not.

This is especially true in the world of stocks. Take the financial sector, please, especially after its gruesome performance from mid-2007 onward. Just as all fish are shaped alike and all flying birds are shaped alike, all banks have to look the same. The same applies for all insurance companies, asset managers, investment banks, and so on down the line. This is true for one very simple reason: Customers demand it. Think about your expectations for a hardware store. You do not want to wander into some big-box retailer looking for a hammer and find everything but. No, you want the store to conform to your notion of what a hardware store should look like.

The downside to this, of course, is when the business environment changes, it affects all of the firms in one sector the same way, for better or for worse.