Contrary to popular opinion, I’m not an infallible predictor of investment opportunities. Having made that courageous admission, let me now offer you this interesting tip:
A rare opportunity may be shaping up with bank stocks.
No, the economy didn’t suddenly stage a comeback while you were having a good night’s sleep. Bank stocks may soon become hot due to an anticipated change in how they may be able to value their “assets.”
Blame is big these days, and banks have blamed our current economic mess on the “mark-to-market” rules they were bound by. Mark-to-market means banks have been obliged to value their collapsed assets according to current market value…kind of like how we common folk have only the current appraisals of our homes to go by, not what they were worth a year or two ago.
Needless to say, the current value of banks assets have made these institutions’ balance sheets look like crap. Hence, the banking crisis. But all that may be about to change.
If you can’t change your bottom-line statistics, change how those statistics are recorded. Should mark-to-market be abolished, as is expected, banks would be able to re-inflate the value of their toxic assets to something far more inspiring.
And that should immediately give bank stocks a good bump.
Theoretically.
Hey…maybe they’ll do something like that for us everyday people, too, huh?
Yeah…right.
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WHAT TO DO ABOUT IT
FIRST: Now, as I said, I’m not the best short-term forecaster in the world. Nor do I want to be. The short-term often varies wildly from the long-term outcome and takes a special kind of temperament.
Even so, if you want to get in on this one, buy bank stocks now while they’re very cheap. That will obviously reduce your risk on the downside and increase your profit on the upside.
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