Focus On Financials

Forbes magazine suggests that investors who buy financial stocks this year will probably be winners because they have figured out that things aren't quite as dire as the hyper-ventilating media experts and short sellers have led the markets to believe.

Mark-to-market accounting contributes to the gloom. The rules say that banks have to value derivitives like swaps and mortgage securities at their current market prices.

The rules make no provision for what to do when there is no market. Thus, banks write everything to such low valuations that smart money steps in to buy up the bargains.

NOTE: Savvy investors might include bonds and preferred stocks issued by major firms such as AIG, Citigroup, and JPMorganChase.

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