Keep Money in the Banks

The stock market lately has been rocky and extremely volatile. A lot of investors are panicking and realizing that the market cannot continue an upward trend forever. In the last month, investors have experienced a 10% correction in the Dow Jones from a July 19th high of 14,000 to the current value of 12,845.78. Today, the Dow Jones spiked down more than 300-points midday, only to close down about 15 points. Worries about the subprime mortgage’s economic effect, Countrywide Financial’s (CFC) credit crunch, and a slowdown of consumer spending have affected the mind set of those on Wall Street.

For those investors that can’t handle the financial roller coaster ride with plenty of bumps, the best thing to do would be to put your money in the bank and collect some interest. On the other hand, I believe that instead of putting your money into an actual bank down the street from wherever you live, invest it in bank stocks. Some bank stocks that pay handsome dividends include Bank of America (BAC) at 5.14%, Citigroup (C) at 4.54%, Wachovia (WB) at 4.69%, JP Morgan (JPM) at 3.34%, and Wells Fargo (WFC) @ 3.50%. On top of their dividends, a few of these stocks are at the lower end of their 52 week range. I personally own Wachovia and am a big fan of both Wachovia and Bank of America. These are stable companies that will pay off a dividend, will not fluctuate as much as other sectors, and may be able to weather another 5-10% downward correction in the market. If the economy/market turns sour sooner than later, you may likely see the Fed take decisive action and trim interest rates which will be a big boost for the banking sector.

Don’t be surprised with another 600-800 point drop in the market, but these bank stocks would be a good outlet to invest your money until you see more attractive prices in the market later this year.


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