My buddy Nanute dropped by to say 'I told you so' on BAC. Like I told him though, he's been a bear for how many years on BAC? So he was bound to be right eventually.
http://diaryofarepublicanhater.blogspot.com/2014/04/when-you-know-its-gotten-bad-for-bank.html
No doubt, though that I was wrong on BAC now-though was my position unreasonable based on what I knew prior to the latest revelations about it having to reverse itself on the buyback and dividend increase? I don't think so. I agree though now that this something that you want to stay away from-today I see it fell under $15.
Still, I'll admit that I still find it intriguing here-surely it can at least get back to $16 again as it was before today if only temporarily? I have to fight the impulse to buy up dirt cheap $16 calls on the theory that it at least will have a dead cat bounce or a little short covering and I could make a quick buck on the bounce.
At this point maybe it would make more sense to go short and load up on $14 puts? Yet I'm not sure about this strategy. The problem is that while I now have to admit that the fundamental story of BAC is very poor at present-though it may change in the future-on a purely technical basis going for the call makes some sense as does resisting the put.
This is a problem you often run into in playing the market-a stock's fundamental story can be somewhat different than its technical story. I've now loaded up on 'value'-Microsoft and Wells Fargo. On a fundamental basis there is every reason to like both of these stocks-both heat the lining off the ball on earnings, MSFT is now putting the heat on Netflix
http://www.thestreet.com/story/12685146/1/how-microsoft-is-taking-netflix-head-on.html?puc=CNBC&cm_ven=CNBC
while WFC is clearly best of breed among the financials-with BAC now its designated Sick Man-wresting this designation at least for now from Citi.
I have loaded up on calls on both WFC and MSFT. I have 20 May 17 MSFT $41 calls and 60 May 17 WFC $49.50 calls. Still I'm wary, and, the reason is technicals-both these stocks tend to get range bound and consolidate. Neither has very much volatility. In both I am very close to strike price-$.57 cents from WFC, only $.12 cents from MSFT-only $.4 if you count after hours trading.
However, there are three weeks till expiration and I don't really care about the strike price per se-I'm just speculating on the value on the options to accrue in value sufficiently for me to 'ring the register.' So if MSFT does hit $41.30 this morning-it hit about that at its peak yesterday prior to me getting in I should probably get out at least going by historical price movements.
http://finance.yahoo.com/q/hp?s=MSFT+Historical+Prices
Ditto with WFC-if it can get in the $49.50 range early. This would give me a healthy profit in each. Of course, bot h may be ready to break out-can WFC finally get over $50. Like JNJ did. I bought that at $99 and it got to $101 this morning at which point I was able t ring the register for a 75 percent profit. Or maybe I should play the historical numbers. When MSFT hits $41.30 get out. When it dips back under $40 get back in. With WFC do I get out after it gets to about $49.70 or so and then get back in after it falls beneath $49 again?
These are the kind of questions I'll hopefully have some answers for by the time the market opens tomorrow.
P.S. The one trouble I have with Nanute's-and for that matter Greg's-bearishness is I suspect it's political rather than based on market analysis. Basically neither of my fellow liberals like the banks and so don't really even want to see them do well. I doubt when you play the market you can always put your money where your politics lies.
The fact is that if you put your money in the banks in March, 2009 you'd have had a very good last 5 years. I think Greg is right about playing the currencies-I know there's money to be made there. However, there is money to be made in stocks as well, as commodities, etc. In the market I want to make money-hopefully then I can use it to fund my political agenda but that's another post.
http://diaryofarepublicanhater.blogspot.com/2014/04/when-you-know-its-gotten-bad-for-bank.html
No doubt, though that I was wrong on BAC now-though was my position unreasonable based on what I knew prior to the latest revelations about it having to reverse itself on the buyback and dividend increase? I don't think so. I agree though now that this something that you want to stay away from-today I see it fell under $15.
Still, I'll admit that I still find it intriguing here-surely it can at least get back to $16 again as it was before today if only temporarily? I have to fight the impulse to buy up dirt cheap $16 calls on the theory that it at least will have a dead cat bounce or a little short covering and I could make a quick buck on the bounce.
At this point maybe it would make more sense to go short and load up on $14 puts? Yet I'm not sure about this strategy. The problem is that while I now have to admit that the fundamental story of BAC is very poor at present-though it may change in the future-on a purely technical basis going for the call makes some sense as does resisting the put.
This is a problem you often run into in playing the market-a stock's fundamental story can be somewhat different than its technical story. I've now loaded up on 'value'-Microsoft and Wells Fargo. On a fundamental basis there is every reason to like both of these stocks-both heat the lining off the ball on earnings, MSFT is now putting the heat on Netflix
http://www.thestreet.com/story/12685146/1/how-microsoft-is-taking-netflix-head-on.html?puc=CNBC&cm_ven=CNBC
while WFC is clearly best of breed among the financials-with BAC now its designated Sick Man-wresting this designation at least for now from Citi.
I have loaded up on calls on both WFC and MSFT. I have 20 May 17 MSFT $41 calls and 60 May 17 WFC $49.50 calls. Still I'm wary, and, the reason is technicals-both these stocks tend to get range bound and consolidate. Neither has very much volatility. In both I am very close to strike price-$.57 cents from WFC, only $.12 cents from MSFT-only $.4 if you count after hours trading.
However, there are three weeks till expiration and I don't really care about the strike price per se-I'm just speculating on the value on the options to accrue in value sufficiently for me to 'ring the register.' So if MSFT does hit $41.30 this morning-it hit about that at its peak yesterday prior to me getting in I should probably get out at least going by historical price movements.
http://finance.yahoo.com/q/hp?s=MSFT+Historical+Prices
Ditto with WFC-if it can get in the $49.50 range early. This would give me a healthy profit in each. Of course, bot h may be ready to break out-can WFC finally get over $50. Like JNJ did. I bought that at $99 and it got to $101 this morning at which point I was able t ring the register for a 75 percent profit. Or maybe I should play the historical numbers. When MSFT hits $41.30 get out. When it dips back under $40 get back in. With WFC do I get out after it gets to about $49.70 or so and then get back in after it falls beneath $49 again?
These are the kind of questions I'll hopefully have some answers for by the time the market opens tomorrow.
P.S. The one trouble I have with Nanute's-and for that matter Greg's-bearishness is I suspect it's political rather than based on market analysis. Basically neither of my fellow liberals like the banks and so don't really even want to see them do well. I doubt when you play the market you can always put your money where your politics lies.
The fact is that if you put your money in the banks in March, 2009 you'd have had a very good last 5 years. I think Greg is right about playing the currencies-I know there's money to be made there. However, there is money to be made in stocks as well, as commodities, etc. In the market I want to make money-hopefully then I can use it to fund my political agenda but that's another post.
I think I would describe my bearish view this way;
ReplyDeleteI don't think we have fixed anything that caused our 2007/8 crash. All we did was work on the banks balance sheets under the false monetarist/supply side notion that we needed healthy banks for people to start borrowing again. So "banks" will always be a good investment because the govt will always prop them up but any particular bank may be allowed to fail...... usually with a lot of politics involved in the decision.... so I just don't want to play. And until we address the real demand side issues with our work force and our corporate structure we will have another 2008 I think.
Its going to take another 2008 like event to get us to take another step towards what needs to be done I think.
Just want to clear that up. I not staying clear of just banks Im not really invested at all. I am waiting for the next fall and am gonna pick up some good deals then with my cash.
I am a long term optimist
ReplyDeleteWe will purge this flawed thinking form our consciousness, its just taking time. I see hopeful evidence that it is happening.
As far as your interpreation of the response-nothing was learned-I don't know that I wholly agree with you. I think some things were learned but perhaps some things also weren't learned.
ReplyDeletei
Of course, according to Minsky, there's no way you can ever acchieve stability forever just for a certain amount of time. In that sense, we can never fully learn from a crisis-there will always be things we don't get.
However, all of this is a question of the fundamentals of the economy. When I discuss the market I put on my market hat-I'm just trying to predict what will happen. Right now, for instance, I think WFC will be over $50 soon, maybe today. Remember this if it does go there folks!
As to the next crisis, Greg, I don't know that it's just around the corner. I think it may be a while. After the Depression it took 80 years for another one
Don't just look at the time between depressions. Remember there was THE crash in 1929 but another one a few years later. We haven't had the second one......YET. Its the crashes in the stock market which get the big boys' attention and cause a reconsidering of things. I believe we haven't had the crash yet because the fiscal changes that came after the second one in the 30s (like FDIC and SS) have kept the middle class afloat longer this time. We did some things right before and we are benefitting now, but I fear we are still too wed to "banker think" which is monetary policy driven (combined with the anti statist leadership of neolibs and Tea Partiers) and will pay the price soon.
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