This Isn't Another Panic in Financials

This time it's just profit-taking. That's how I feel about the financial selloff. It was bound to happen. Too many traders got in, and too many shorts now feel it is OK to put some out, although with the idea of borrowing first.

The optimal thing that could happen here is that the JPMorgans (JPM - commentary - Cramer's Take) and the Bank of Americas (BAC - commentary - Cramer's Take) trade down and the BB&Ts (BBT - commentary - Cramer's Take) and the Zions (ZION - commentary - Cramer's Take), the conservative regionals that have taken the hit, stabilize.

Forgotten in the big morass that has been the financials is that they do have earnings power. There is a deposit base that is worth a great deal, maybe not as much as Barron's said it was worth this weekend, but worth something to someone.

Nevertheless, if you caught a 50% move in the banks, can you truly just sit on it? Can you just say "OK, that was the beginning, and I am going to take no profits"?

Obviously, if you are a value investor, yes, because you only know one thing; once the decision is made to buy, it is rarely if ever re-evaluated, because you are so smart you don't have to think about it again. (That's the thesis behind many of the critics of my "radical" buy-and-homework philosophy.)

Obviously, the stocks to avoid here are the ones that desperately need more capital, Fannie (FNM - commentary - Cramer's Take) and Freddie (FRE - commentary - Cramer's Take) as well as, I believe because of newfound European problems, Lehman (LEH - commentary - Cramer's Take). If Lehman hadn't been so pantsed by those who doubted the financials and if it had kept its mouth shut instead of saying all is well, it would be at $18 going to $25 and not $18 going back to where it was.

On another note, I would point out that Citigroup (C - commentary - Cramer's Take) and AIG (AIG - commentary - Cramer's Take) are in a rare moments of equilibrium, because I believe they have substantial assets that can be sold off to fund their ongoing businesses.

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