Take a look at the chart below if you want to see just how silly investors can get. I've deleted the title bar so that you can speculate on what it shows. Note in particular the bottle-rocket action of the last two price bars. Is this the chart of a company that has found a way to extract gold from seawater? To cure cancer�or baldness? To neutralize radioactive waste with a laser? (Click on image to enlarge) Nothing so exotic. Here's a hint: It's where the money is. And if you still can't guess, this is a chart of the Philadelphia Stock Exchange's Bank Sector Index (BKX) with three years of price action. Lately, shares in the two dozen bank stocks that comprise the BKX have provided one of the hottest games in town -- especially since last October, when the index began an almost vertical climb. What this reflects more than anything else is the attractiveness of a business where entry barriers are formidable, regulations tilted to favor the behemoths, and ' here's the clincher ' the cost of 'raw materials' approaches zero. Why would anyone choose to farm, or to manufacture autos, or to smelt ore, when hundreds of billions of dollars can be made with seed money that comes almost free from the central bank? Banks Last to Fall I've always said the bank stocks would be the last to fall, but I never imagined their final fling would be so spectacular, or that it would occur even as the industries they used to serve were locked in a death rattle. Clearly, the financial shell game that has sustained America's economy continues apace, nothwithstanding $70 oil, mounting real estate foreclosures, world-ending threats from Iran, bird flu and a few other negatives that would creep out even Nostradamus.
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