"The financial crisis is over! Hurray! Two years after Warren Buffett declared the Great Recession "over" -- and just a little more than a year after the National Bureau of Economic Research made it official -- investors are finally getting comfortable returning to the market.
The Dow Jones Industrial Average (INDEX: ^DJI ) , while still pretty erratic, seems intent on ending the year with a small gain, for one thing. For another, Citigroup-nag Meredith Whitney appears to have been wrong (or at least very early) in predicting "hundreds of billions" worth of defaults by U.S. state, county, and local governments. To top it all off, yesterday, one big investor argued that it's finally safe for investors to venture back into the market for guaranteeing municipal bonds.
Everybody, back in the pool! Actually, more than just safe. If you ask New York-based institutional broker BTIG, investing in bond insurers like Assured Guaranty (NYSE: AGO ) and MBIA (NYSE: MBI ) could be downright profitable. Initiating coverage of Assured Guaranty on Monday, BTIG argued that the stock is "deeply undervalued at current trading levels."
According to the analyst, "fears" -- such as the losses Whitney predicted -- "have depressed [Assured Guaranty's] share price." But over time, these fears will "abate and the viability of its business model [will become] more apparent." Just as soon as investors "appreciate that Assured's risk profile is overstated, and that its ability to generate profitable new business is understated," the chance to "realize outsized returns" will return."