Wall Street's top ranked bank analyst, Tom Brown, says, "bank stocks have bottomed." "If you wait for the good news, you'll wait too long," says Brown of Bankstocks.com.
Brown believes many bank stocks are selling at rock bottom prices, calling them "extraordinarily undervalued." Brown thinks we are at the beginning of "the greatest financial stock bull market in our lifetime." He writes, "the bears have things all backwards. By the time their wish list happens, the stocks will be zooming"
With this sensible voice of reason, Brown fearlessly waded into a sea of bearish sentiment, and boldly stated his conviction. Brown first called the bottom in bank stocks on the 22nd of July, when he announced that bank stocks had bottomed on July 15, 2008. Jim Cramer followed Brown's lead with his own, tentative, "bottom's in" call on July 31st.
Yes, the bull market has arrived, but we are not completely out of the woods yet. The road upward runs through "Bear Town National Refuge" where we must endure bear propaganda and their exhausted clichés ad nauseam. Prepare for the CNBC short-selling guests as they reiterate "this is the first leg down," or, "we are waiting for the other shoe to drop." And let's not forget, "we are still in the early stages," and, "we are not quite halfway through the downside."
Regularly, short-selling bears appear on CNBC masquerading as pseudo experts, and proclaim the apparent end of the world. To a short selling bear, the downside of a contracting stock price is somewhere between infinity and the abyss. Nevertheless, the CNBC red carpet crew continues to court bearish short sellers for any morsel of negativity, false rumor, or half-truth.
Bank stocks are selling at huge discounts, but won't be for long. The smart money is accumulating bank stocks through "stealth buying." They will continue this until, and without warning, bank stocks rocket upward. If you're ready to jump in, you might want to look at Wachovia (WB-OLD) and Washington Mutual (NYSE:WM). The Ultra Financials ProShares (NYSEARCA:UYG) and Financial Select Sector (NYSEARCA:XLF) ETFs are on my recommended list as well.
Position: Long WM and WB.