Posts Tagged ‘short financial stocks’

Financials are Still Good Shorts

By: ispeculatornew | Date posted: 06.06.2008 (6:51 pm)

A few months ago on March 19, I wrote that financial companies still presented good shorting opportunities. However, about that same time I wrote that article there was an almost universal pump among the financial media that financial companies had reached a bottom. If you had shorted financials right after my recommendation you might have felt some short term pain as financials briefly rallied. However, most financial companies have sold off considerably since my short recommendation and I think they will continue to go down.

The same bearish catalysts that were present a few months ago are not going away any time soon and some are even getting stronger. The housing market is still far from a bottom, the economy is still on shaky ground, unemployment is rising, and commodities continue to set new record prices. Also, the Fed can no longer cut interest rates due the concern over inflation.

This means that consumers are going to have a hard time paying their bills and foreclosures and loan defaults are going to continue to increase.

I think the pain is going to continue for financials and I don’t see a bottom in the near future. I also think it is only a matter of time before some banks go under.

Here is the price of the stocks I mentioned in my last article and their current price:

                           March 19                  Today’s Closing Price            Return

LEH                       $42.24                          $32.29                              23.56%
NCC                      $9.48                            $4.95                                47.78%
UBS                      $26.65                          $23.91                              10.28%
WM                       $9.83                            $7.53                                23.40%

Disclaimer: I do not have a position in any of the companies mentioned.

Good Time to Short Financial Stocks: My Pick BAC

By: ispeculatornew | Date posted: 03.02.2008 (3:41 pm)

BAC – Bank of America (NYSE) – (Closing Price of Friday 2/29/08 – $39.74)

Financials have been one of the worst performing stock sectors over the last few months and I think the weakness in the sector is going to continue. The housing market is no where close to finding a bottom, the economy and job growth are slowing, and gasoline prices are projected to hit all time highs this summer. All of these things are going to bode ill for financial companies in the form of increasing foreclosures and overdue credit card and loan payments. Consequently, I think it is a good time to short financial companies.

Financial companies rallied earlier this year when the Federal Reserve caved into Wall Street demands and drastically cut interest rates by 1.25 points. However, the rally didn’t last long and the share prices of financial companies are once again dropping quickly. I think you can take your pick of which financial company to short but I am going to give a recommendation to short Bank of America. (more…)