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Are Financials Ready to Roll ?

What a week with Bear Sterns getting sold for $2 to JP Morgan and within a week, the bid raises 5-fold to $10. Only in America, this can happen. With big banks like JP Morgan taking the plunge, Fed reducing rate by another 75 basis points and finally home sales starting to move (which was expected now that we are in spring season), I think we had seen the bottom. What are the best places to invest ?

If you are willing to tolerate risk and bumpy ride, I would recommend following sectors (and related mutual funds) to invest:

  • Financials - they got beaten down so much, I think only way is to go up. You can wait a little bit and slowly build position in FIDSX or BKPIX
  • Real Estate - one can get big returns when one is willing is take a bet and invest where no one wants to invest. Real estate would fit this definition. Already mutual funds in this sector have started showing good signs and they are up for the year. My recommendations would be VGSIX or REPIX
  • Emerging markets: As you must have guessed, this is my favourite sector and with recent plunge in markets across the world, offers very good entry points. There are quite a few options available to get exposure to this sector. UUPIX, TABRX, MINDX or MCHFX give various options. Even new country focused ETFs like FXI or EPI are good way to get exposure to countries like China or India
While are are discussing various emerging markets, check out this cool mashup developed by couple of us. It gives a snapshot of world indices info

World Indices and Google Earth Mashup

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