Investors Grapple with Housing Concerns

As investors grapple with what to do ahead of pending economic data–particularly, second-quarter GDP estimates and June's employment report–the focus is still on financials. Wall Street's top concerns are still whether the housing market has bottomed out, and if we should expect further damage to banks.

I've told you repeatedly that you shouldn't expect to see a major turnaround in the financial sector any time soon. Don't take my word for it: PortfolioGrader Pro, my FREE stock ranking tool, continues to blacklist financials, even after major banks and brokerages reported better-than-expected second-quarter earnings. There was a pint-sized rally in financials over the last few weeks, but now the storm clouds have returned. This is exactly why I've told you and subscribers to all four of my services to steer clear from financial stocks.

Meanwhile, the debate between the Fed and the SEC over which agency will regulate investment banks rages on…

Christopher Cox, the head of the Securities and Exchange Commission (SEC), said last Thursday that his agency should oversee investment banks under a reformed regulatory system to avert another credit crisis. He and Timothy Geithner, president of New York's Federal Reserve Bank, joined forces and told a Congressional committee that the current web of regulatory agencies–most of which were established soon after the Great Depression–is outdated and largely to blame for the prolonged turmoil in financial markets.

So who will regulate investment banks? That's the $64,000 question. Where the power will rest is still undecided. The U.S. Treasury Department has proposed merging the SEC and the Commodity Futures Trading Commission, while simultaneously broadening the scope of the Fed's oversight.

Cox, however, remains adamant that Congress should give the SEC direct regulatory authority over investment banks, since the agency is already responsible for monitoring the securities business and the markets within which they trade. The most recent SEC action came about two weeks ago, when it issued an emergency order restricting the unlawful practice of "naked" short-selling.

How will this debate affect investors? It may be too soon to tell. One thing, however, is for certain: The battle between regulatory agencies is further proof that there's no end in sight to the crisis in financials. The very grey nature of this mess is exactly why we've turned our backs on financial companies. All four of my Buy Lists are insulated from the bad news streaming out of the housing sector, banks and brokerages.

So, what stocks do I pick? Those that are fundamentally sound! Earnings are everything, and my services only include stocks with strong sales and positive earnings reports–because these are companies that can profit in any market! You should know by now that financial stocks are the ones you shouldn't buy. The stocks I pick are the ones you need to buy! Sign up for one of my services today and find which fundamentally superior stocks are going to profit from the earnings run-up!