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Jim Cramer recommended the regional bank ETF "KRE" during the week of 8/20/07. The portfolio included KRE plus the top 25 stocks within KRE. The performance tracker at right is on. As time passes we can check the perfromance of KRE against the performance of the component banks within KRE. I waited 5 days after Jim's recommendation before entering this portfolio. For reference we are in the middle of the August 2007 Subprime Slime Meltdown.
This is a summary of what Crmaer said from Street.com:
Calling Wall Street "a gigantic fashion show," Cramer explained that stocks regularly "come in and out of style." One area he foresees becoming "fashionable" is regional banks. These banks make money off the spread between "the short rates," the cash borrowed from the everyday customers -- the rate that Cramer expects to get cut -- and "the long rates," which is what they lend to home-buyers.

Cramer thinks the Fed's rate cut will make the difference. These banks will "go from making no money" beyond ATM fees to "making a huge amount of money" on "what they take from you and loan out to others."

Cramer's pick of the bunch was KBW Regional Banking ETF (KRE) . KBW has more than 50 holdings, and its five-year earnings growth is more than 9.4%.

It also carries a "weighted average market cap" of more than $2 billion with no mortgage problems foreseen.

While Cramer also discussed National City (NCC) and Comerica (CMA) , he said to look at KBW as the safe pick. As "ETF" implies an exchange-traded mutual fund, investors will "spread the risk." They also position themselves to benefit should there be any takeovers of regional banks.

"If you can't get a good price, wait until it settles down," cautioned Cramer about a buy-in to KBW. We're buying a sector here, not best of breed," he said, adding that this may be the "best way to play the upcoming cycle of the Fed."

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