Are Bank Stocks Ready to Rally?

Spread bets and CFDs on bank stocks should consider that they could be ready to rally. Indeed, with the accounting rules changes offered to banks, it is likely that now bank stocks could be undervalued by as much as 20%, according to BloggingStocks.

Indeed, the new move allows banks to use their own methods when setting the value of toxic assets. This is an interesting move that means that banks can -- in effect -- decide how their balance sheets will look from here on out. This decision is one of the main reasons that the U.S. stock market is rallying today, lead by dramatic gains by bank stocks.

It is important to note, then, that investing owes a great deal to perception. Banks, with their ability to revalue their assets without reference to market value, will be able to put together balance sheets that offer the perception that they are valuable. The new rules don't change the fact that banks have billions in toxic assets, but they will alter how these assets are valued -- leading to the perception that banks' fortunes are improving.