No. of Recommendations: 1
I would think that mortgage funds would be a good investment once rates have bottomed out and the refinancing slows. But who knows where the bottom is?

I won't guess where the bottom is, but if you buy mortgage funds at the bottom, rising interest rates will make the NAV go down (interest rate risk in action). When you want to buy is at the top (wherever that is).

If being a creditor is good during deflation, how do bank stocks sound? They're fairly beaten down, and some, such as Fleet Boston Financial, are paying dividends close to %5.

I don't claim to know much about bank stocks, but my understanding has been that low interest rates are good for bank profits and that bank stocks do poorly as interest rates go up. Of course, in the current market, the relevance of old truths may be even less than usual. (With investment banks/brokerages, there are other things going on that are hurting current profits, notably the lack of investment banking and stock businesses—you should look at a small bank that just does loans to see whether its profits are up with low interest rates.)
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