Look before you leap! All year long rumors have been swirling around that E*TRADE (ETFC) was on the auction block being prepared for an acquisition by a bigger fish interested in its customers and superior trading platform. I have not used E-TRADE so I do not have first hand experience. However, this has been acknowledged broadly and I have received very positive comments from regular users when I have written about it.

The leading suitor seems to be TD AmeriTrade Holding (AMTD), with Charles Schwab Corp (SCHW) mentioned as perhaps having similar but less conspicuous interest. For Schwab it may be as much about keeping E-TRADE out of a competitors hands as chasing the business.

Fourteen stocks have been reviewed so far with eight of them potential contenders for 2010. These include some picks from 2009, some old dependables and a few more on the speculative side.

During the year I have written on occasion about selling put options (naked puts) because the premiums offered were very generous and from my perspective assumed market collapse. This was reflected in my July post Serious Money: The world's dumbest market

Today I am considering four naked puts and two more stocks. The options are all based on stocks now in review.

The clock is ticking away the time before the year ends and I have only begun to sort out the possibilities. In Part 1 of this series, I discussed breaking up my potential picks into three categories: contender, on the fence, and out of the running until the 10 stocks have been identified.

Four contenders have been considered so far: American Eagle Outfitters (AEO), Anadarko Petroleum (APC), Anglo American ADR (AAUKY) and Diageo plc (DEO).

Six more are included in today's review: EZCorp Inc. (EZPW), General Electric Company (GE), Wells Fargo & Company (WFC), Annaly Capital Management ( NLY), Intuitive Surgical Inc (ISRG) plus Berkshire Hathaway (BRK.B). These include the remaining five from 2009 and one more familiar to most investors.

The market continues to befuddle the bears as the third quarter earnings and stock prices continued to move in a positive direction.

During this period Washington has taken charge of the auto industry and helped prop it up with the "cash-for-clunkers" program. They continue to subsidize the real estate market with first-time home buyers incentives, and very low interest rates. The banks are being refueled by the Federal Reserve with interest rates as low as zero, while all the time currency stability has been sacrificed. This has driven gold prices to new highs.

This is the third review of my 2009 stock picks through September 30 (see: Chasing Value: 9 picks for 2009 -- APC, GE, ISRG, WFC and more). This years picks have annihilated index comparisons, so much so that I must attribute some of my good fortune to luck. However, I do believe the original reasoning was sound and the outlier nature of the gains certainly a result of an oversold market living in fear.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Altria Group Inc. (NYSE: MO) Q3 earnings beat by a penny but sales fell short of expectations; shares fell.
• AMR Corp. (NYSE: AMR) reported a Q3 net loss and plunging revenue but also raised $4 billion in cash.
• BB&T Corp. (NYSE: BBT) topped Q3 earnings expectations but said bad-loan provisions nearly doubled.
• Boeing Co. (NYSE: BA) missed estimates and posted a Q3 loss due to delays for a couple of jet products.
• Capital One Financial Corp. (NYSE: COF) shares rose after it reported better-than-expected Q3 numbers.
• Coca-Cola Co. (NYSE: KO) posted a better-than-expected Q3 profit but sales fell short, and shares fell.

Wednesday morning kicked off with news that Wells Fargo (NYSE: WFC) saw third-quarter earnings rise to $3.24 billion (56 cents per share) from $1.64 billion (49 cents per share) last year. The results handily trounced the consensus estimate of 37 cents per share.

Wells Fargo also reported revenue of $22.47 billion , which was better than both a year ago and the consensus estimate. The company stated that net charge-offs for the quarter came in at $5.1 billion (2.5% of average loans), compared to $4.4 billion (2.11% of average loans) in the second quarter. The bank did note that it expects credit losses to continue increasing, but at a slower pace thanks to a slowing of the pace of deterioration.

"Banks had taken a brutal beating over the last two years was brutal; the S&P Sector SPDR Financials dropped 72.0% from its high last September to its low in March," notes Brandon Clay.

In his Invest with an Edge, he explains, "One bank in particular is exerting itself again as a dominant player: Wells Fargo & Company (NYSE: WFC)." Here's his review.

"The painful declines in bank stocks appear to have stopped for now, as bank stocks have exploded off the March lows. As we've observed, financials have 'friends in high places.'

"Banks in general are showing promise as credit becomes easier. There's still a long way to go for complete recovery, but the trend is pointing up.

Monday morning has greeted the Street on an optimistic note toward large banks, as Goldman Sachs (NYSE: GS) has upped its coverage on the banking sector to "attractive" from "neutral." Goldman went as far as to name some specific banks, including Wells Fargo (NYSE: WFC), which it upped to "buy."

Goldman believes that Wells Fargo's capital position is improving, with it eventually benefiting from its takeover of Wachovia. The brokerage stated that Wells Fargo purchased Wachovia at a "distressed price" and that will help its assets increase 70% from the second quarter of 2007 to the second quarter of 2009.

We're wrapping up the third quarter soon. Earnings will be out in October for most companies, certainly the largest names. They should look very good ... when compared to the third quarter of last year. And the fourth quarter will most likely look even better when comparisons are made.

There's the rub. The percentage increase in earnings will be strong for most companies as many of them wrote down assets, especially in the financials, last year at this time. Mortgages that weren't paying, loans that were way past due, they were losses. Every kind of asset a bank or thrift owned was under scrutiny. Many financials bit the bullet and wrote off large numbers, to get the bad news out of the way. Others nibbled at it, stretching out the pain over several quarters. By now many of those write offs have been taken, and those kinds of losses will be lighter, making earnings much better.

Wells Fargo (NYSE: WFC) announced on Thursday that it will eliminate fees on customer overdrafts of $5 or less and is going to limit overdraft charges to a maximum for four per day.

This move follows similar moves from other large banks, prompting some to ask what took so long. In addition, Wells Fargo customers will be allowed to opt out of automatic overdraft coverage. Doing so would mean that debit card and ATM transactions would not be allowed to go through if your account is overdrawn.

Canadian banks are scheduled to step into the earnings spotlight this week, with third-quarter reports coming from Bank of Montreal (NYSE: BMO), Bank of Nova Scotia (NYSE: BNS), Canadian Imperial Bank of Commerce (NYSE: CM), Royal Bank of Canada (NYSE: RY), and Toronto-Dominion Bank (NYSE: TD). While Canadian banks on the whole held up better than their U.S. counterparts during the financial crisis, these five are expected to report that their earnings are still declining in the most recent quarter.

Analysts surveyed by Thomson Reuters are looking for EPS for these banks to have fallen from 15% to 25% from a year ago. Their long-term EPS growth forecast is for between 10% and 12%, which is in the same range as U.S. rivals JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC), but better than Bank of America Corp. (NYSE: BAC) and Citigroup Inc. (NYSE: C). Earnings multiples for these Canadian banks are 10x to 12x, but none of them have a First Call consensus recommendation is to buy. The Motley Fool, though, considers TD as a value stock and RY a stock poised to pop. All of them are trading much closer to their 52-week highs than lows, and shares of all are up more than 100% since March lows.

Money market accounts and certificates of deposit are safe, but they provide very little return on your investment. This fact, and the invigorated stock market, provoked one of my bankers, Dobrinka, at the local Santa Monica Wells Fargo branch, to ask for advice on how I would invest $25,000 if I was just starting out.

This is a common question although the starting point in terms of cash varies. It certainly makes a difference how old the person is, their general knowledge about investing and finance, and the particulars of their financial statement.

Here is what I suggested sticking to regular themes I have written about before and broadly speaking would be a conservative approach emphasizing safety, diversity, liquidity, dividends and the potential for growth far exceeding cash in the mattress or in a money market account. I also think that it is important for beginners to educate themselves so my suggestions include an educational aspect.

Where on earth can you buy things on sale for less than bargain prices?

Imagine that you were shopping for a nice shirt, or watch, or bicycle and you have been tracking the prices all year (or ten) and the thing finally goes on sale. You drive to the store and while you are in transit, unknown to you, the store manager puts a half price sticker on the item. You would be overjoyed with glee! To buy something at half the price you already thought was a bargain -- that would be amazing!

The fact is that this year the stock market has provided that opportunity. This year for the first time in most of our lives, you were able to do that to a degree that we have not witnessed before and have only read about.

In order to acclimate to this new, post-"too big to fail" era of banking, Bank of America Corp. (NYSE: BAC) is reportedly planning to close down some branches. However, the blue chip bank doesn't intend to shut down 10% of its branches, as reported earlier. Instead, said company spokesman James Mahoney, the size of the network "will come down modestly" in size during the next three- to five-year period.

At the end of June, BAC boasted 6,109 branches throughout the U.S., second only to Wells Fargo & Co. (NYSE: WFC). Mahoney clarified that the bank is not being pressured by regulators to reduce its scope, and it will continue to add new branches strategically, even as it shutters some outlets.

Listen up! Listen up to what Fed Chairman Bernanke has to say about commercial real estate. He said that the market for securities backed by commercial mortgages had "completely shut down." This is a serious if not devastating statement. Can we infer that the market for credit default swaps (CDSs) has shut down? If so we are at the brink of a new financial situation.

Mr Bernanke also stated that continued deterioration in commercial property with defaults rising sharply would present a "difficult" challenge for the economy. Prices for commercial real estate have fallen 35% since the market's peak.