Warren Buffett once said: “Be fearful when others are greedy and greedy when others are fearful”, as I explained in chapter I the irrational Mr. Market, sometimes the estimations of companies are just irrational and do not reflect the true value of a company. This is because the people are too greedy when the price levels are high, because they also want to benefit however they are also too fearful when price levels are low because they already lost money or heared that others did that.

After the fall of Lehman there were a lot of stocks which had been terrible cheap just because the people were fearful that the company could also fall under chapter 11. One of these stocks for example was Las Vegas Sands NYSE:LVS. Sands had to stop their projects in Macao because they ran out of liquidity. The stock felled from 138 $ and a market capitalization of 91 BN $ in the year 2007 to a terrible low value of 1.77 $ and a market capitalization of 1.16 BN in 2008. Although Sands had big losses it was really not very sound that the worth of a company collapsed from 91 BN to 1.16 BN within one year. Today the sands stock has recovered to 15 $ again which is a plus of nearly 900 % from the low of 2007.

But the question I ask myself is are there sill any hot deals we can profit from ? To answer this question we should take a look at the sector the crisis rampaged best. The financial sector.

I took a look at this sector and found 4 stocks which could be interesting.

1. AIG Current Price 40.05

2. Fannie Mae Current Price 1.77 $

3. Freddie Mac Current Price 1.97 $

4. AMBAC Current Price 1.64 $

All of these stocks have nearly lost more than 90 % of their former market capitalization. The first 3 of them received a lot of help from the government and the net asset value of these companies is horrible. This is one side, but the other side is that the risk of a insolvency of one of this companies is not as high as many people think ( except Ambac perhaps ) and the bargains of these companies are still working. So I would recommend to have an eye on these stocks because in my opinion they are cheap enough to be the pearls of the month.