Banks will continue to bring a bigger bang for your buck.

Nothing ever stays the same in investing. You have to continue to hone your approach to figuring out what's going to work. Even if something is working for you now - that doesn't mean it will keep working for you.

This is the case in any market. Think about the various bull markets over the past decades. For instance, in the credit and housing bubbles of this decade as well as the earlier ones in the '80s, many folks made nice returns on the way up - only to see them slip away.

Successful investors continue to keep a keen eye on each of their holdings and, when conditions change - as they have and will keep doing forever - they grab more of, or sell off, the securities in their portfolios as conditions require.

This doesn't mean that just because a market, a sector or an individual stock takes a hit, that you need to dump and run. Because often, panic selling can be one of the worst things that you can do for your portfolio's health.

Take for example some of my favorite stocks over the years, especially some of the smaller market issues - even the tried and true ones that pay you to own them.

Once in a while, these can take some severe hits. When this happens, investors who simply dump and run can miss out on continued cash payments as well as renewed price gains - if they sell without understanding why they're selling. A big drop in price over a day or two shouldn't be the determining factor for your decision making process.

It Pays to Stress Test Your Investments

One stock that fits this scenario to a tee can be seen in the US banking market. When it comes to banks, I've been a big advocate of acquiring holdings alongside what Uncle Sam has been doing. And this means avoiding the common stocks and sticking with the high-yielding preferreds and mini-bonds of the banks getting Uncle Sam's cash.

Back in February I rolled out a set of bank preferreds, including one from Regions Financial, trading on the NYSE under the symbol RF Z. Those that got on board with this preferred read through my stress test of the bank both before and after the US Treasury's own rather anemic test.

As March got going, the Region's preferred got whacked by the market - falling nearly 40 percent before hitting a low on March 9th. I was right there with you as the price nosedived - poring over the financials and the Treasury reports and thinking, what was I missing?

But by looking not just at the market's dumping - but also the bank's probable direction - I continued to stick with this preferred.

And since then, the preferred has not only paid those that owned it handsomely since early February - but the overall capital gains and the income have generated a total return of 52 percent.

That's not 52 percent from the low - but 52 percent on the market price before the market went haywire on this smaller security.

Now as I said above, you can't just hold and hope. And you can't just assume that what you know about the market will continue to hold true. But right now I continue to think that the banks that have government capital and government lines of credit at near or actual zero rates of interest will continue to work out.

And as the Fed's Open Market Committee (FOMC) just announced, they will continue to provide their financing - and that's on top of what the Treasury and the FDIC are already doing.

What's Going on with FirstBanks?

This brings up another smaller preferred that's gotten the you know what kicked out of it this week. FirstBanks, headquartered in Saint Louis, is continuing to make some major changes to increase its capital base. And in the process, the preferred - paying 8.15 percent and trading under the symbol FBS A - has dropped 40 percent or more from when I began to make mention of it.

The bank's common shares were bought back from the public market years ago, so only the preferred is out in the market currently. And the ownership structure is controlled by the Dierberg Family, based right in my neighborhood. That ownership structure saw the family put in an additional 125 million dollars in the 4th quarter last year, as the bank also got nearly 300 million in Treasury cash from the TARP program.

FirstBanks - unlike some of its mega-bank peers - has continued to clean up its troubled loans, resulting in increased charges for reserves that has left the last two quarters with losses amounting to 175 million - a good deal of that going to bolster reserves.

In addition, the bank has confirmed a deal to sell 19 of its branches in Texas that, while only representing 2.8 percent of its loan book, is giving it some 50 million in additional free capital.

And while not confirmed - FirstBanks is likely to complete a sale of another branch in Illinois.

Right now, before the closing of these transactions, FirstBanks is running its portfolio with a leverage of 5.9 - above what the Fed and the Treasury considers "well capitalized" - but not far off from the ratios of bigger banks such as JP Morgan and many others.

FirstBanks - under the Dierberg family's control since 1910 - has also taken the step to temporarily defer the dividend/interest on the preferred shares in order to keep the cash on hand. And in discussions with management I was told that there isn't an immediate timetable for resumption, but that resumption is planned pending the influx of new capital raised from the above-mentioned sales - as well as some non-disclosable additional plans to raise new capital to build reserves, reduce leverage and dispose of troubled loans.

And, what most in the market haven't taken the time to research is that the preferred is a cumulative, meaning that the interest owed will be paid along with accrued interest on the deferred payments. So - while no one likes to have to wait - the checks won't be dead money if events proceed as discussed.

For now, my call is not to sell. And in fact as the details of FirstBank's plans for continuing to improve its portfolio continue to unfold in the days to come, it might well make for a great undervalued investment - similar to the Regions issue noted above. But if I'm not getting the right information - then it will be a sell and move on.

Buy This Basket of Bank Preferreds and Minibonds

This market move by one of my bank preferred issues does bring up another major tenet of my investment advice: When I look at investments, I tend to find a small and select group of securities that should be bought - rather than just one. This is particularly effective when looking at high-yielding investments that work well for retirement income investing.

Be it my group of global bond funds, or bank preferreds and minibonds - not to mention my other recommended minibonds - more is better than one when it comes to reducing the ups and downs in market pricing, while also making sure that you get paid quarter after quarter.

Right now, I continue to recommend two big bank preferreds and two big bank minibonds.

Of the preferreds, Regions Financial (NYSE: RF Z) continues to plod along, yielding just under 10 percent with a total return since February of 52 percent.

Another, US Bank (NYSE: USB E), is following in a similar fashion with a return for the same period of over 17 percent. And while yielding a bit less at just over 7.1 percent - it works with the other preferreds.

Wells Fargo's preferred (NYSE: WSF) is up over 25 percent , and while yielding about the same at 7 percent, it's now trading above its call price of 25. I believe that as the preferred goes ex-dividend on the 13th, that it will trade a bit lower. I'm watching this one, as it might make sense to take profits, sell and move the proceeds to a new preferred that I'm working on.

For the minibonds - I continue to recommend two, as I've been doing since February. First is the Goldman Sachs minibond (NYSE: JZS) that's performed well for me with a return of over 43 percent. It's yielding some 7.3 percent and still trading at a nice discount.

Second is a minibond from Bank of America (NYSE: IKM) which is up even bigger since February with a return of over 63 percent. It's yielding 7 percent and, like the Goldman Sachs minibond, is trading at a discount and should continue to be bought and owned.

So, if we add up my entire set of recommended bank minibonds and preferreds - including FirstBanks - the average return for the group is a nice 27 percent, a multiple of the S&P's performance for the same period - while the yield from my banks that pay you, at an average of over 7 percent, is also at multiples of the general stock market.