Banks

Everyone knows about the financial crisis that hit America’s banks.  A perfect storm of bad mortgages and off balance sheet transactions nearly sent America’s economy into chaos.  Luckily for us investors,  the banks got bailed out by Uncle Sam.  Lehman Brothers, more of a broker-dealer than a bank, went down.  Other than Lehman, no banks were allowed to fail, because that would mean economic economic failure.  Today, foreclosures have skyrocketed and the fast, efficient world of finance is colliding with the slow moving judicial process that must guarantee due process.  Bank stocks are taking a hit because of this.  Citi Group is trading at $4.11, Bank of America is trading at $11.44.  People are ditching bank stocks because the near future does not look very promising.  But like Warren Buffet says be fearless when everyone else is scared and be scared when everyone else is fearless.  Short term banks do not look that great, but the recession will end banking will resume as normal and banks will be back to their old profitable selfs.  

So where is the investment here? An ETF of course.  KBE is the SPDR KBW BANK ETF and allows you to make a straight bullish bet on the banking sector.  Yes the banking sector has taken a big hit but it will bounce back in the long run and Uncle Sam will not let it fail.  I have attached the charts of KBE, Citi Group (C) and Bank of America (BAC) to show where there prices currently are.  Sure they are low, but get in now while they are cheap.  Out.