How to make money from the financial sector

Bank stocks remain low and are now being outperformed by brokerages. This means there's relatively low-risk money to be made by indulging in a bit of 'pairs trading'.

The troubles continued in the financial sector last week as Lehman Brothers (NYSE:LEH) was forced to raise $6bn in capital ($4bn in shares and $2bn in convertible stock) just to keep its head above water. This increased the firm's shares outstanding by 25%.

The stock, issued at $28 a share, quickly dropped below $22 before rebounding on Friday to close at $25.81. This is just another sign that investors remain very concerned about the financial sector. What's interesting, however, is that more banks made new lows last week than brokerages.

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