It's the top story nearly every day right now, and it has been a major story since August when wall street starting realizing just how bad the credit markets were. Subprime mortgages have taken the largest fall, and are taking many major financial institutions with them. Some mortgage companies that were just a few quarters ago seen as market darlings are now in severe financial troubles and other major banks that have always been seen as stalwarts are taking a substantial hit on their downlines. What will become of this credit crisis and when will financial stocks be a good buy?
The single most important thing that an investor must do is to make sure that you analyze financials on a case by case basis. There are certainly some companies who will not recover from the current credit problems. There are also some financial institutions that will recover just fine from current problems and will prove to be a steal at their current prices.
This crisis in the credit markets is something that will take some time to play out, and clearly investors do not like uncertainty. Because of this uncertainty in the financial sector, it is unlikely that there will be any huge money made in any financials in the near to intermediate term. The current period is that of the market waiting for the next shoe to drop and rumors running abound across the markets each day as to which company will be next to declare a massive writedown.
Keep a close eye on that RSS Feed from GrowYourFunds because in the next couple of days I will be posting a list of the financials that I believe have the best chance of recovering and showing investors a nice profit a few years from now.
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