Mark-to-Market accounting, bank stocks and you...

Here are a few links that explain mark-to-market accounting and what it could mean for investors...

http://www.newsweek.com/id/192562

http://www.bloomberg.com/apps/news?pid=20601039&sid=ajc25z7IOrTk&refer=home

http://online.wsj.com/article/SB123880085634588515.html

http://uk.reuters.com/article/bankingfinancial-SP/idUKBNG40992520090403


So, what does all this mean? Well, to most people, not much. However, if you're savvy and can keep a portion of your portfolio liquid and an eye on these stocks, you could potentially make some money with these changes. Most traders probably aren't that plugged in, so my plan is to continue to trade bank stocks under the assumptions that they are so beaten down there's a ton of upside potential, there's very little downside since the government has shown they aren't going to let the big banks fail, and since the banks hold all the money that drives our economy, they have to improve before the rest of the market does.

So when is the time to get in, and where do you place your bet? My plan is to play a mix of banks I'm expecting to turn a profit and those who may be returning TARP funds to the government. As you may have seen in the blog post on my personal portfolio, I've already been in and out of Citigroup (NYSE: C) in a small, but highly profitable trade, and now I'm into Bank of America (NYSE: BAC). If BAC can show a profit when they announce their Q1 results on April 2oth look for this one to skyrocket. Their CEO, Ken Lewis, said a month or more ago he was expecting a profit and the stock promptly took off.

http://www.usatoday.com/money/industries/banking/2009-03-12-bank-of-america_N.htm

What I'm looking for from BAC is a quick jump in price, then I'll set my following stop and see what happens. If it quickly spikes, then retreats a bit and the stock sells, I'm happy with the profit and will move on. If it goes on a long term climb, all the better. Either way, I'm looking to turn a profit then move on to something else. The nice thing about BAC is they'll be announcing their earnings a couple days later than JP Morgan (4/16) and Citigroup (4/17), so if things turn south in those announcements, there's still time to bail. Wells Fargo announces earnings on 4/22, so if you wanted to trade without any insulation, you may want to play Citigroup then Wells Fargo due to the spread between announcements being greater than three trading days.