For those who are paying attention, every crisis can also produce opportunity. If you are a serious preferred stock investor looking for an opportunity to invest in the highest quality preferred stocks, the unique constellation of events stemming from this credit crisis has created just such an opportunity.

Make no mistake here- there is unlikely to be another set of circumstances like this again in our lifetimes. While I am as weary as anyone else of writing and reading about banks, the fact is that the Treasury's $250 preferred stock purchase program has created an opportunity for preferred stock investors that is unlikely to ever be seen again.

How's That? The U.S. Treasury has essentially protected specific financial institutions for the next several years (at least three years but probably five years - read why). But the best part is, unlike prior practice, Treasury has told us, the investing public, who these banks are (see 12/29/08 list).

For the last two months, I have been applying the ten CDx3 Selection Criteria (Chapter 1, Preferred Stock Investing) to this list of "protected" banks and their currently trading preferred stocks. The result is a list of just sixteen banks, The Protected Sixteen (see list), and 26 CDx3 Preferred Stocks*.

Up 29% In Three Months: Since these banks entered the TARP program on October 7, 2008 the market prices of their 26 CDx3 Preferred Stocks* has gone up by over 29% (in less than three months):

Because of the special relationship these banks, and therefore these 26 preferred stocks, have with the U.S. Treasury, these 26 CDx3 Preferred Stocks* are the highest quality preferred stocks trading today. No other company, and no other preferred stocks, can claim to be in the enviable position of these 26 issues.

Subscribers to the CDx3 Notification Service know that the CDx3 Selection Criteria have had a perfect track record throughout this credit crisis. The CDx3 Selection Criteria have successfully filtered out every financial institution that has failed during this credit crisis. CDx3 Investors knew to stay away from Washington Mutual, IndyMac, Freddie Mac, Fannie Mae, Bear Stearns, New Century and Lehman Brothers from the beginning. Those who invest in CDx3 Preferred Stocks haven’t missed a single dividend - ever.

Might there be exceptions down the road, especially during this historic credit crisis? Sure. But, to date, there has not been. How many investment methods can make that claim?

If you are looking for a way to ride the recovery wave in financials, the research is very clear; you should consider the 26 CDx3 Preferred Stocks* issued by The Protected Sixteen banks.

Market Price Still Discounted: And their average market price is still heavily discounted at $19 per share, well below their $25 par value, so there is lots of open field ahead as the recovery continues.

My book, Preferred Stock Investing, teaches you how to select, buy and sell the highest quality preferred stocks and provides you with the methods needed to do so.

For those who would rather receive a simple email message when there is a buying or selling opportunity coming up, we offer the CDx3 Notification Service.

Subscribers to the CDx3 Notification Service receive their own exclusive newsletter, called CDx3 Research Notes, every month. The January 2009 issue of CDx3 Research Notes provides subscribers with the trading symbols of the 26 CDx3 Preferred Stocks issued by The Protected Sixteen banks.

In a recent article for Fortune magazine, Bill Gross, founder of bond giant Pimco, one of the world's most successful investors and wealthiest individuals, put it this way:

"...Perhaps the most lucrative pockets of value are in preferred stocks of banks and financial institutions that have partnered with the government in programs such as the Troubled Assets Relief Program (TARP). While their profitability may be restricted, their ability to pay interest and preferred dividends should be unhampered."

But That's Not All: These 26 CDx3 Preferred Stocks are also currently providing an annual yield over 10%.

Like I said- every crisis can also produce opportunity. This is an extremely rare set of circumstances; the highest quality preferred stocks, yielding north of 10%, available at heavily discounted prices enjoying implied protection from the U.S. government for the next several years.

It's Your Call: If you decide that this opportunity is not in your best interest, great. It's your call. But I would hate for you to pass this opportunity by because I had not made it clear enough to you. Not being familiar with your financial resources, goals and risk tolerance, I cannot say what is best for you; only you can do that.

But when you think of the historic and extreme collection of events that it has taken for this to occur, I think it is fair to say that the 26 CDx3 Preferred Stocks offered by The Protected Sixteen banks present a unique opportunity that we are unlikely to see again in our lifetimes.

If you would like to start adding CDx3 Preferred Stocks from The Protected Sixteen banks to your portfolio, please consider subscribing to the CDx3 Notification Service. The trading symbols are on page 6 of the current issue of the subscriber's newsletter CDx3 Research Notes.

* CDx3 Preferred Stocks: CDx3 Investors are only interested in the highest quality preferred stocks and there are lots of pretenders to weed out. Applying the CDx3 Selection Criteria (Preferred Stock Investing, Chapter 1) will eliminate about 90% of the regular preferred stocks trading on today's stock market.

For example, here are three of the ten CDx3 Selection Criteria that regular preferred stocks must meet to be considered "CDx3 Preferred Stocks:"

1. be issued by a company with a perfect record of never having suspended a dividend on a preferred stock;

2.  have the "cumulative" dividend requirement, which means that in the unlikely event that the issuing company misses a dividend payment to you (which I have never seen happen with a CDx3 Preferred Stock), they have to make it up to you later; they still owe you the money; and

3.  be rated "investment grade" by Moodys Investors Service.

Having specific and consistently applied selection criteria takes the emotion out of your investing decisions and leaves you with the highest quality preferred stocks - "CDx3 Preferred Stocks."

Well, here we go again. Time to settle up with Uncle Sam for 2008.

After many years of researching preferred stocks I can tell you a couple of things to look out for when filing your tax return. Remember that I am an investment researcher, not a tax advisor. But when you take your shoe box into your accountant's office this year, be sure to discuss these two items regarding your preferred stock investing activities:

Avoid An Amended Return: Readers who have been with me a while will remember this one. There are several layers of information needed when it comes to your broker's preparation of your 1099 form at the end of the year. The primary issue swirls around the difference between dividend income and interest income and how those definitions pertain to the income you received throughout the year from each of your preferred stocks.

By law, your broker has to provide you with a 1099 form (1099-DIV and/or 1099-INT) by January 31. The problem is that in order make the proper classification of your income, your broker has to sync up with the issuers of the preferred shares that you bought and sold throughout the year, other brokers who handled the other side of your buy and sell trades not to mention the Internal Revenue Service and any rulings they may have outstanding regarding your specific preferreds.

Typically, in order to comply with the law, your broker will provide you with a 1099 by January 31 but, just as typically, you will receive a revised 1099 (corrected) a few weeks later, usually before the end of February.

So do not be too quick to file your tax return based on the first 1099 that your broker provides to you. While there can always be exceptions, the first 1099 that I receive each year has never been the final version. If you have already filed with the incorrect form, you will have to re-file an amended return when your broker issues you a corrected 1099 (usually in late February).

Subscription Fee May Be Tax Deductible: IRS Publication 550, Chapter 3 titled Investment Expenses explains that, subject to certain limitations, many expenses that you incur in order to further your investment income are tax deductible. Specifically, the section titled "Expenses Of Producing Income" (see 2007 section) states:

"You can deduct fees you pay for counsel and advice about investments that produce taxable income. This includes amounts you pay for investment advisory services."

If you are within the limitations specified by the IRS, the subscription fee for the CDx3 Notification Service may be tax deductible. Be sure to check this out with your tax advisor and make sure that you are receiving every allowable deduction.