Preferred stocks preferred........

In general, I think it too early to buy in the financial and real estate (such as home builders) sectors, except for some of the preferred stocks available. For example, Sallie Mae, Fannie Mae, and Freddie Mac all have preferreds that yield at least 9%. Since these have the implicit guarantee of the federal gov't, and are senior to common stock, adding these to an IRA for example is worth considering.

Some mortgage REITs such as Annaly Mortgage, MFA, and Anworth also have preferred stocks, altho in these cases the common is attractive also. These REIT's invest in mortgages, but generally minimize credit risk in exchange for interest rate risk. They're all rallying because short term rates are dropping, increasing their rate spread. Annaly is considered the best, especially since their CEO correctly anticipated the problems seen last year in the 2006 annual report and in other communications.