Financial Sector hot picks

Bearing on the Bull
Expect Stan O'Neal, the beleaguered chief executive of Merrill Lynch & Co to step down in the next few days. In reality it is nothing that he did, as much as he was a victim of the success and failures of the financial sector. Unfortunately, when it comes to financials everyone expects them to consistently see double-digit growth; ML had warned of weaker earning, but in the weeks leading up to the report, they had done a wonderful job of downplaying their actual sub-prime exposure. All of this adds up to bad news for high-paid Execs and good news for investors. Merrill will bounce back, and now is the time to buy. As soon as the CEO is gone, the Market will respond, on speculation, that Merrill will turn things around.
Rating: Strong Buy

Bullish on Bear
Citic, Asia's largest securities firm, will pay $1 billion for the equivalent of 6 percent of New York-based Bear Stearns's shares, and the US brokerage will invest the same amount in Citic, the companies said yesterday. They agreed to team up to sell financial products and services in China, and plan a Hong Kong-based joint venture for other Asian markets.

Bear Stearns chief executive James "Jimmy" Cayne, 73, trails US rivals in China, where he has struggled to build a business since opening a Beijing office in 1992. His company has fallen as much as 37 percent this year in New York trading, beset by the collapse of the US sub-prime mortgage market. Surging defaults on loans to home buyers with poor credit histories pushed two of the firm's hedge funds into bankruptcy and eroded its fixed-income revenue.

Bear is still not as attractive as Goldman or Lehman on the short term, but in terms of value it is a cant miss stock. Almost every American bank lost money and/or brokerage house lost money this year. Why is that.

It seems that the Aussie's have the answer, just look at ANZ: they remained glued to their core competency and established a diverse mix of capital investments. Also known as good management. They have a 33% P/E ration, and expect 12% in growth over the next 12 months. Additionally, they are well placed in emerging markets, which tend to have high yields.
Rating: Buy

What goes Down will go back up

For any of our readers who viewed this blog yesterday you will see that we advised you to buy APPLE early this morning. Sometimes with the glut of raw data in our arena, and in a time when 24 hour financial news is available at the push of a remote control, sometimes it all come down to good old fashion common sense. In this case that is what happened.

Apple's stock frequently experiences high volatility, however that is not odd for the technology sector. When Steve Jobs announced that they would cut the price of the wildly popular, iPhone, the markets reacted unfavorably. How quickly we forget, Apple announced today that it has sold 1,000,000 iPhones, more than one month ahead of analyst predictions. Based on that news the bulls came out to run through Silicon Valley.

All signs indicate that Apple will continue to rise, the prices have fallen and customer demand is creeping upward, in spite of hard financial times for many. This is a stock that you can get in for the short term, but it will pay off in the long term as well.