One of my favorite war stories is “The Man Who Never Was,” about a British scheme to deceive the Nazis during World War II by planting misinformation about an upcoming invasion on a corpse made to appear to be a drowned naval officer, the non-existent Royal Marine Major William Martin. When the body washed ashore, that information was passed on to the Germans. German troops were then diverted to Greece, far away from the true site of the invasion.

In a similar vein, sometimes the financial markets send us false signals, causing investors to make bad decisions that leave their portfolios blind to the real threats. And given 2016’s horrendous start, it appears that 2015 may have been filled with Major Martins.  It convinced us that China’s economic situation wasn’t all that bad, and that the Federal Reserve’s decision to raise U.S. interest rates was a good idea.  It was “the year that never was.”

Let’s start with China. Only six months ago the market suffered a quick correction after China devalued its currency, but stocks recovered in the months that followed, suggesting China had its act together. Then last month China devalued its currency a second time and global stock prices plunged, revealing that China has serious issues. And December’s rate hike by the Fed was at first met with a mild spate of selling, but the hike didn’t look so smart when the high-yield credit market began to deteriorate in January.

In both cases the market’s initial response seemed to be telling investors that neither event was a problem—that markets were sound across the board. But in truth those shocks were serious, though at least they are serving a purpose: separating the wheat from the chaff. Companies that possess the financial strength to ride out these storms should come back stronger than ever, while those with flimsy balance sheets will get left behind.

Evidence for this has been borne out in the past couple of weeks as most major U.S. businesses have released quarterly and year-end financial results. Companies that exceeded expectations such as Alphabet (formerly Google) are seeing their stocks jump up several percentage points, while those that disappointed have been punished just as severely.

Of course, that’s the way markets are supposed to work, but during a true capitulation phase that’s not the way it happens. When investors have given up on the market they tend to view everything with a jaundiced eye where news is either bad or worse, but never good. Not so this time. Investors are cautious and less patient, but good companies are still being rewarded with more investor capital.

There is an exception: this week’s indiscriminate trashing of the financial sector. From its Monday intra-day high price of $81.25 to its Wednesday intra-day low of $76.91, the iShares US Financials ETF lost more than 5% of its value in less than 48 hours. An across-the-board decline of that magnitude would suggest the emergence of a previously unknown, serious risk to the entire industry.

Certainly the Fed’s recent pivot to apparently delay future rate hikes took away wider, profitable rate spreads for banks. But most banks long ago made the necessary adjustments to remain profitable with interest rates low. And some of them have enough direct and indirect exposure to the oil sector to warrant concern over future default levels, but most of those are regional banks that are easy to identify.

For the entire sector to take such a large hit at the same time strikes us something more than the combined result of individual investors all arriving at the same dire conclusion, and acting on it, simultaneously. That’s highly unlikely, so this particular event has the distinct whiff of institutional investors, hedge funds and short sellers working in concert to push the entire sector down.

If so, then this too may be a false signal intended to cause investors to take the wrong course of action, bailing out of financially sound companies at artificially low prices. So far quarterly and year-end earnings reports from most of the major companies in the financial sector have come in near expectations, while guidance has been understandably opaque. For that reason we advise caution in reading too much into this singular event, as so far there is little empirical evidence to support a move of this magnitude.

Of the six financial sector companies we hold in the PF Growth Portfolio, not one them has seen its IDEAL score drop over the past two weeks, with all of them still scoring 7 or higher (on a scale of 0 – 10). That’s no guarantee of future performance, but until those scores being to drop we see no reason to begin abandoning the sector now.