Ultimately, the speedy actions of JPMorgan and the Treasury marked the bottom in the banking crisis and the stock market.

Wait a minute! There’s something wrong with that story… Can you figure it out?

This was the Panic of 1907! The story today is similar to 100 years ago… only it’s billions instead of millions from the government to save the financial system…

After our multiple credit crises in 2007, it all came to a head last month.

Once again, JPMorgan and the government got to together. The government provided roughly $30 billion in guarantees to JPMorgan, for Morgan to take over Bear Stearns.

Importantly for you and me, after the bailout in 1907, stocks (as measured by the Dow) doubled in two years.

I believe we’ll be able to look back on March 2008 – when the government and JPMorgan got together in secret to save the financial system – as the bottom in share prices. I could be wrong of course. But from here, I believe stocks could do very well, just as they did after the 1907 JPMorgan bailout…

Earlier this month, our current Treasury Secretary Hank Paulson released a 218-page proposal, in part arguing the Federal Reserve should be granted exceptional new powers to deal with crises.

Once again, history repeats…

I’m writing to you from the Jekyll Island Club… It is the resort in Georgia where it’s said the Federal Reserve was created, after the Panic of 1907.

Back then, a half-dozen men – supposedly representing a sixth of the world’s wealth – sneaked out of New York and headed to this nearly deserted Georgia island. They lived here for a week under such secrecy they didn’t use their real names (so the servants wouldn’t know what was going on). B.C. Forbes called it “the strangest, most secret expedition in American finance.”

Personally, I think many Jekyll Island-style meetings have been happening in the last month. I think many departments of government finally got sufficiently scared. And they’re now in hyper “fix it” mode.

I’m not a fan of government intervention in markets, as the usual result is a colossal waste of taxpayer money. The only time intervention has a chance of working is if we are close to a turning point anyway… Then sometimes a nudge from the government starts the pendulum swinging quicker and more powerfully in its new direction. That’s where I believe we are.

If this is the case, once again, we need to be looking to buy financial stocks. With the Fed now proving it’ll provide a backstop to the financial system, the argument is only getting stronger…

Financial stocks have been beaten up. Most of them deserved it. Like UBS, which announced this week its subprime writedowns are up to $37 billion, many big banks took too much risk and bought “derivatives” they didn’t fully understand. Now they’re paying for it.

I wish I could share the name of it with you… but it wouldn’t be fair to my paid subscribers. However, I can share another idea that should also do well… I like it so much, I recommended it a few months ago in my newsletter True Wealth.

It is the KBW Regional Bank exchange-traded fund. The symbol is KRE.

This is basically an index fund of smaller regional banks. The idea is, the smaller regional banks didn’t try to get as crafty as the big banks like UBS.

Instead of doing exotic, risky things, they stuck closer to the simple business of taking in deposits at a low interest rate, and making loans at a higher one.

History often rhymes in finance. It’s rhyming now. Take advantage of it.