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A safer way to buy banks?

It may be “the best news since learning that chocolate and red wine are good for you,” said Daren Fonda in SmartMoney. After near-annihilation, financial stocks seem to be making a comeback. “Of course, the key is choosing top-quality picks and enjoying them in moderation.” One way to do that is through an exchange-traded fund that specializes in preferred stocks, which offer fatter dividends and fewer price swings than common stocks. The three “preferred ETFs” on the market—two from PowerShares and one from iShares—each hold a hefty stake in financial stocks and recently looked “deeply discounted.” Once banks “shore up” their finances, the stocks could bounce. Just be warned: “With so much uncertainty in the sector, investing in bank stocks is still a bit dicey.”

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