The last - but not the least - sector in this series concerns portfolio holdings in financial businesses. These equity holdings would include those in commercial, savings and investment banks, brokerage firms, asset management firms, and venture capital firms.

Our money is an asset, and a necessity to live in this society. It helps us meet basic needs, and can provide safety. Beyond this, we can buy education and social status, if we want them. Money, as it moves in and out of our hands, has to go somewhere. Unless you keep your money under your mattress, this "somewhere" is usually a business intent on profits as they help us move our assets from one place to another. Many of these businesses are traded on the markets, and it helps to include this sector in your portfolio for diversification purposes.

Every time we move money, whether in withdrawals or deposits, or in purchases and sales of equities and other financial tools, the business we choose to trade with charges us a fee. They also use our money for their own investments. These fees and investments, hopefully, help keep the financial institution rolling.

These financial businesses are just like any other business, because they need to make profits, pay employees, and market their services. They also operate in acquisitions, sales, and other changes in holdings. Some of the 'name brand' chains consist of franchises. Others operate solely online, with no brick-and-mortar other than offices for their employees. Other business names operate only on local and regional levels, and others are national or international. Some operate as their own separate entities, and others do business under an umbrella of a larger corporation.

And, just like any other business, bigger may not mean better, and newer may not mean riskier. We need to decipher these businesses based on our own personal mode of research. One way to peer into financial sector possibilities is through SEC filings. The SEC, or U.S. Securities and Exchange Commission, has a tutorial section to help us decipher financial papers filed with the government. This site also contains litigations, updated news and regulatory actions proposed and enacted by the SEC and others. This SEC information is good, especially for information regarding regulations governing this sector.

Financial institutions all need to comply with federal regulations. This, hopefully, keeps our money in a safe environment. Safe environments tend to trigger trust; but we can't let this safety-triggered trust blind us to the bottom line.

Even though federal regulations are heavily applied and guarded in this country's financial institutions, there are other factors that can alter this sector's mood with dramatic consequences. These factors may make our investments in financial equities seem like a theme park ride from the dark side.

• Politics plays a heavy hand in how this sector moves. Sometimes, politics can affect this sector for several years running, either on the positive or negative side. Mostly, these runs last in four-year cycles.
• War, or threat of war, deals cards in the financial sector, too. It seems the financial sector reflects our opinions and motivations during these times.
• The state of the country's economy is a very decisive factor in this sector. The trends seem to follow public confidence and employment polls.
• A government decision on financial regulation can move this sector into peaks and valleys.

We usually don't need a wizard's hat to follow these trends. Most trends are obvious in daily news stories. However, it seems analysts can't decipher the whys and wherefores of this sector's movements lately, as we flail through a weakening economy, war, and unstable situations.

One would think these financial businesses would do well during uncertainty. During these times, people usually sell heavily, buy sporadically, and move finances from one portfolio to another. For instance: lower mortgage rates have some people rushing to banks to refinance their homes. Each transaction is processed with fees. Therefore, it would seem logical that the financial institution would be riding high on profits right now, based on home refinancing.

However, this same economy can make it more costly for the financial institution to complete these transactions. Paper, printing, mailings, employees to work the figures out for you, filing, etc. all cost more these days. Undoubtedly, there are very few pennies left for profit in the long run.

On the other hand, these institutions are part of the American and global economic structure. It would take a complete overhaul of global markets to change the financial sector environment. Just about everyone who lives within the construct of capitalism uses banks and other financial institutions on a daily or weekly basis. Businesses can't run without these institutions, and other businesses can't hope to get off the ground without the use of financial help provided by these same institutions.

This sector is as worthy of scrutiny as any other sector in our portfolios, and perhaps more so, because money is such a personal item. Money plays part in how we're born and how we live. It's a factor in just about everything we do in this country.

On this factor alone, the strength is apparent in the longevity of this sector. The same can't be said for each individual business within this sector. This is where our own strategies go into action. We decide which business deserves our money for any monetary transaction, whether it's stocks, bonds, savings, loans, or other needs. If we can find happiness in any of these institutions for our daily personal and business transactions, they may be worth investing in for the long haul.

Until next week,
Linda Goin