When the cycle is right, you can make hundreds of percent returns in virtual banks. After many years of the cycle being wrong, the cycle is now right... once again. Last week, Steve made a bold call... He raised his earnings estimates on the four safe virtual banks he follows. If his estimates come true, he's talking about an average of 28% in total dividend payments over the next two years. That's just the tip of the iceberg as well. Once investors figure out these companies and see these dividends are really coming true, they'll bid the share prices up dramatically. You can count on it. It's already starting... The four stocks Delaney follows are up more than 50% on average in the last four months. But they're still extremely cheap. Even better, I actually believe Delaney's seemingly outrageous "28% over two years" estimate is conservative. Here's why... Virtual banks, at their core, are simple businesses. No storefront or employees needed. Virtual banks simply borrow money at a low rate and invest it at a higher one. They make a profit from that spread – the difference between the rate they borrow at and the rate they earn on their 100%-safe investments. All things equal, the crucial factor for the virtual banks is what the Fed is doing... If the Fed is lowering interest rates, it's Virtual Bank Nirvana. Guess what... The Fed is cutting interest rates. In Steve Delaney's calculations, he assumes the Fed will stop lowering interest rates at 3.75%. It's a cautious guess. The Bond King, Bill Gross, is bolder... Bill Gross says the Fed could cut interest rates to 3% – or lower – in 2008. And Steve Leuthold – one of my favorite money managers – recently did a compelling study that agrees with Gross. If the studies these guys have done are right – and the Fed cuts to 3%, virtual banks will make you triple-digit returns. Safely. In my newsletters True Wealth and Sjuggerud Confidential, I recommend three out of four of these virtual banks. Subscribers are already enjoying nice gains so far. We have bigger gains to look forward to. Again, I think Delaney's new bold estimates could turn out to be conservative. And chances are great that we'll make much more money in capital gains than in dividends over the next two years anyway. If you're not in virtual banks yet, get in now. If you don't know a whole lot about them yet, come on board as a subscriber. Your dividends alone in the next two years will more than cover your subscription cost... Good investing, Steve
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