Yesterday the Dow Jones Industrial Average was down 225, so I decided to peg the financial stocks I wrote about investing in as a pool. We are often accused of bragging on the good days and having memory loss on the bad so I wanted to be transparent and forthright on the downside.

The market is rebounding as I write so I expect the news is even better. Although, this pool of stocks beat the market so far in the short run, I hope to track this group for a year, or at least until Major League Baseball's spring training opens in 2009.

If you want to track the story with me the first post was Serious Money: 10 finance stocks as the market bounces. I remain stubbornly optimistic that this is a buying opportunity and investors will be sorry they did not have the courage to buy stocks when they were hated. The follow-up was Serious Money: Tempting fate with 10 financials

The initial prices are as of July 29, 2008.

• Citigroup Inc. (NYSE: C) -- Starting at $18.45 down 63% from its 52 week high of $49.90. Now $18.47 (even)
  
• E*TRADE (NASDAQ: ETFC) -- Starting at $3.06 down 84% from its 52 week high of $19.39. Now $2.95 (-3.6%)
  
• East West Bancorp (NASDAQ: EWBC) -- Starting at $12.46 down 67% from its 52 week high of $20.88. Now $13.46 (+8%)
  
• Gramercy Capital (NYSE: GKK) -- Starting at $6.72 down 77% from its 52 week high of $29.45. Now $6.26 (-6.84%)
  
• Lehman Br Holdings (NYSE: LEH) -- Starting at $16.88 down 75% from its 52 week high of $67.73. Now $17.67 (+4.68%)
  
• Merrill Lynch (NYSE: MER) -- Starting at $26.25 down 67% from its 52 week high of $79.72. Now $26.10 (even)
  
• MBIA Inc (NYSE: MBI) -- Starting at $4.92 down 93% from its 52 week high of $68.98. Now $8.28 (+68.3%)
  
• Newcastle Investment (NYSE: NCT) -- Starting at $5.88 down 72% from its 52 week high of $20.88. Now $6.02 (+2.38%)
  
• Wachovia Corp. (NYSE: WB) -- Starting at $15.70 down 70% from its 52 week high of $53.10. Now $17.12 (+9%)
  
• Washington Mutual (NYSE: WM) -- Starting at $4.43 down 89% from its 52 week high of $39.48. Now $4.97 (+12.18%)
  

It bears repeating that I do not see any quick fixes or rapid business turnarounds, just a slow plodding attempt to return to equilibrium with the worst performing sector outperforming the overall market going forward. So far so good.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of MBI, NCT & WM.

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After the market closed last night, with the Dow Jones Industrial Average rebounding from Monday's notable drop and ending the trading day at 11,397.56, up 266.48 (+2.39%), I posted Serious Money: 10 finance stocks as the market bounces. This is the follow-up post listing the full pool of speculative stocks that as a group I believe will beat the overall market in the next 12 months.

The prediction business is thankless and the speculative business is even worse; it is often painful. I usually refrain from this activity but today I play the contrarian in a Sir John Templeton (RIP) sort of way, jumping into the stock market's worst performing sector with both feet. I believe the market is at or near a bottom and this summer is the time to buy.

Looking for a break in the clouds, yesterday I started choosing ten stocks knowing that three or four may go to zero, a few more will survive with modest gains, and three or four will rise, not returning to their old glory soon but more than covering the ones that fail. The first four picks have been bleeding all over Wall Street for a year now and the blood-letting is not done yet.

Initially I was looking for stocks that had fallen at least 70%. After reviewing my figures, I have compromised and changed that to 63% so that I could include some of the major companies like Citigroup Inc. (NYSE: C) that are broadly held and have strong reader interest. Prices are as of July 29, 2008.

• Citigroup Inc. (NYSE: C) -- $18.45 down 63% from its 52 week high of $49.90.
• Lehman Br Holdings (NYSE: LEH) -- $16.88 down 75% from its 52 week high of $67.73.
• Merrill Lynch (NYSE: MER) -- $26.25 down 67% from its 52 week high of $79.72.
• MBIA Inc (NYSE: MBI) -- $4.92 down 93% from its 52 week high of $68.98.

As previously stated, I am not recommending any single one of these dismal performers, but I am suggesting the pool of ten as an index of sorts. The following six stocks round out the group:

• E*TRADE (NASDAQ: ETFC) -- $3.06 down 84% from its 52 week high of $19.39.
• East West Bancorp (NASDAQ: EWBC) -- $12.46 down 67% from its 52 week high of $20.88.
• Gramercy Capital (NYSE: GKK) -- $6.72 down 77% from its 52 week high of $29.45.
• Newcastle Investment (NYSE: NCT) -- $5.88 down 72% from its 52 week high of $20.88.
• Wachovia Corp. (NYSE: WB) -- $15.70 down 70% from its 52 week high of $53.10.
• Washington Mutual (NYSE: WM) -- $4.43 down 89% from its 52 week high of $39.48.

These companies have lost billions of dollars over the last year in cash and shareholder equity. I do not see any quick fixes or turnarounds, just a slow plodding attempt to return to some sort of equilibrium. As that happens, I expect the worst performing sector to outperform the overall market going forward.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of MBI, NCT & WM.

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Every once in a while I run a stock screen to see if anything passes some very stringent criteria, only to find nothing passes through. Yesterday something did come up: Gramercy Capital Corp. (NYSE: GKK). Here was my criteria on the screen, along with Gramercy's numbers:

• One year sales growth had to be at least 20% (65%)
• Minimum profit margin of 20% (49%)
• Maximum Price-to-sales ratio under 3 (2)
• Stock price between $10 ad $25 ($17)
• Market capitalization under $1 billion ($900 million)

I could have added more criteria because to my pleasant surprise Gramercy is paying over a 14% yield, has a very low trailing P/E of of 3.34 and forward looking guess of 5.7. Furthermore, it has Return on Equity (ROE) Per Share of 29.84% and a Price-to-book of 1.26. So everything is looking good, but is it a value or value trap?

Gramercy Capital, a real estate investment trust (REIT), invests in commercial real estate and real estate loans secured by commercial properties in 38 states. It owns more than 1,000 properties primarily leased to banks and other financial institutions; Bank of America and Wachovia are its largest tenants and together account for about half of all rental revenues -- recurring revenues!

Today I am bringing this stock to your attention so that others might add something to the breath of information in consideration of a potential buying opportunity while the stock is 50% off its 52 week high. I will be studying this one further and making personal inquiries today to find out more, and report back in another post.

Do you have any light to shine on this company?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares of GKK.

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