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Freaky Friday Potpourri: The Eye of the Tiger

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Looking for profits in this economic twister.

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We've been talking about the perfect storm brewing on the financial horizon for a mighty long time. In fact, when we first started handing umbrellas to ye faithful, most folks still had sunscreen on their nose.

Fast forward two years and 80%. Lehman Brothers? Gone. Fannie Mae (FNM)? Fini. AIG (AIG)? MIA. Merrill, Wachovia, Bear Stearns, Freddie Mac (FRE)... you know the deal.

The government invented fingers as fast as they could to plug the holes in the proverbial dike but their efforts fell short. In the process, unintended consequences continued to manifest as social mood shifted and risk appetites abated.

It started with moral hazard, continued with Martial Law, changed the face of capitalism and forever altered the global socioeconomic landscape.

It's no shocker that the fundamental landscape has softened from Microsoft (MSFT) to Nokia (NOK) to General Electric (GE). And while select companies put on a brave face-Apple (AAPL) and IBM (IBM) come to mind-the universal view is that things are bad and they're getting worse.

While we loudly rang the "socioeconomic malaise entirely more depressing than a recession" bell in August 2006, we understand that the destination we arrive at pales in comparison to the path that we take to get there. Therein lies to trick to my trades and the nuts and guts where I spend my days.

A few days ago, I asked Will The Banking Industry Will Survive? The most obvious answer is "not in an iteration anything close to what it was" but the devils are in the details. As discussed in that column, nationalization, while perhaps warranted in select situations, poses grave risks in terms of motivating human capital to fix the system.

I believe there are potential stopgap solutions, including but not limited to issuing employees equity options at current levels as an incentive to stick around, but make no mistake that there are many moving parts.

My current effort in buying select banks-adding Bank America (BAC), Citigroup (C), Wells Fargo (WFC) this morning (as well as some SSO with a tight trailing stop) is the definition of a pure trade or, in other words, an honest attempt to capture the disconnect between perception and reality.

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Positions in C, BAC, SSO, WFC
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