Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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Get Ready for the
Bounce: Financials Stocks Primed for Takeoff |
Published: June 9, 2008
You might call it brutal, punishing, or even devastating -- but
no matter how you describe it, the massive sell-off in the
financial sector has been one for the record books. Luckily, the
sharper the sell-off, the greater the buying opportunity.
I'm not here to examine the root causes of the turmoil in the
financials. In retrospect, it's
pretty easy to trace the carnage back to the collapse of the
subprime residential mortgage industry -- which in turn wiped
out tens of billions in assets and triggered a severe disruption
and near-freezing up of the credit markets.
Of course, we all know the end result: investors have dumped
shares of banks, brokerage firms, and other financial companies
almost indiscriminately, sending the Dow Jones U.S. Financial
Services Index tumbling.
But don't forget the cardinal rule for investing, it's not
what's in the past that counts -- it's what lies ahead. As this
story continues to unfold, there is still another chapter or two
left to write. And I have a feeling it will have a happy ending
for investors.
Bruised, but not Broken
I should make it clear that some of the pain
inflicted on the financial sector has been deserved. However,
Wall Street is notorious for overreacting, and the frenzied
panic selling that has rattled some of the world's most
venerable firms has gone overboard. Furthermore, many other
companies have been deemed guilty by association -- losing
billions in market capitalization even though they may only have
tangential exposure to the real problems.
For example, U.S. Bancorp (NYSE: USB) has negligible exposure
(just 2.8% of loans) to the toxic subprime mortgage business and
one of the highest quality portfolios in the industry -- with
charge-offs for bad debt of just 0.76% of total loans last
quarter. And while many are reporting steep losses, U.S. Bank
recently managed to post quarterly profits of $1.1 billion, virtually unchanged
from the same period last year. Nevertheless, investors punished
the stock along with the rest of the financial sector in early
January, sending
the shares down roughly -20% in just a few days.
In short, the punishment simply hasn't fit the crime. After all,
we're not talking about a collection of shaky tech companies
with uncertain business models and murky outlooks, but the very
backbone of the nation's economy.
Bank of America (NYSE: BAC), for example, has a coast-to-coast
network of over 6,000 retail bank branches and controls more
than $800 billion in deposits, or about 10% of the nation's
total. And Citigroup (NYSE: C), one of the hardest-hit firms,
has over 200 million customers and $1 trillion in assets. Its
2006 profit of $21 billion is greater than the entire GDP of
more than 100 different countries.
However, entangled by a web of subprime mortgage defaults,
devalued derivatives contracts, and other related issues, these
mighty giants have tumbled, bringing down ratings agencies,
mortgage lenders, asset managers and other companies with them.
The Road to Recovery
Following what some have called the worst downturn in the
financial markets since the Great Depression, dozens of
blue-chip companies around the world are now trading at
fire-sale prices. Just a return to the average earnings
multiples (let alone a premium) these stocks have commanded over
the past five years would mean widespread gains of +40%, +50%,
or more. And the following ideas give you the best opportunity
to play this rebound...
Important Note: In the remainder of this article,
The ETF Authority editor Nathan Slaughter provides a
list of seven financial exchange-traded funds with holdings
trading well below historical levels. But even better, Nathan
sifts through this list and provides in-depth profiles on two of his favorite funds. However,
in order to view the remainder of this article, you'll need to
subscribe to our premium investing newsletter --
The ETF
Authority. After you subscribe, you'll
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Good investing!
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Nathan Slaughter
Editor
The ETF Authority, Half-Priced Stocks
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in-depth guidance on today's leading exchange-traded funds (ETFs), plus
a proprietary ranking system designed to uncover today's most
profitable funds, please subscribe to
Nathan Slaughter's premium ETF investing newsletter -- The
ETF Authority |
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Investing Doesn't Get Any Easier Than This |
Stock picker Amy
Calistri's strategy is as simple as investing gets -- just one idea
a month designed to make money in today's market. Invest this way
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what the Fed is up to -- because every "bad" economic development
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Go here to learn about Amy's simple investing strategy.
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