Financial stocks will react even more exuberantly. So I think it's time to stuff a financial stock or two into Jubak's Picks in time for a possible early Christmas present from the Federal Reserve. Analysts expect margins to increase every quarter for the next year even without an interest rate cut. So declining rates should absolutely supercharge earnings at Washington Mutual. Credit quality looks great, too, and the bank has been very conservative about taking on risk in its commercial loan portfolio.
Branches are open seven days a week and late at night, for example.
Like Washington Mutual, Commerce has a very strong loan portfolio with modest credit risk. We'll know in about two weeks whether or not Alan Greenspan has decided to play Santa or Grinch. If the Federal Reserve does move toward neutral, I'd expect both these stocks to move up strongly with their sector. My shopping trip convinced me that I'll hear that sooner or later. It's now a matter of when and not if.