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Four Ways the Fiscal Cliff Could Play Out

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Your investor guide to the financial opportunity presented.

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No. 4: Financials may be a buying opportunity.

Financial reform is not part of the fiscal cliff. But the day after Obama won, financials took the hardest hits. The expectation is that taxing the wealthy will hurt the sector and that reform is coming.

I think this is a buying opportunity. The sector is already showing healthier balance sheets and improved earnings. I think that trend continues. However, I think the negotiation in Washington on bigger issues will distract Washington from financial industry reform.

In addition, I think a lot of the financial industry attacks on the campaign trail were meant to get Obama elected because they are consistent with the populist outrage. But in reality, it was mostly talk and there won't be much follow-up.

Market Impact: I think financials look good here on the 'misplaced' dip.

(See also: Fun With the Fiscal Cliff.)
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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