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Random Thoughts: Financials Again Set the Pace

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A good rule of thumb: always respect the banks.

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I'll tell ya, if it weren't for the traction in the stubbornly sticky financials, the tape would be in alotta trouble right now. Breadth is 2:1 negative, Beta is breathing heavy (even Apple (AAPL) is pretty in pink!) and the commodity complex is playing whack-a-mole in the face of a frisky dollar (asset class deflation vs. dollar devaluation).

Here's what I'm watching, in no particular order:

  • Myself. I mean, hey, it could be worse!

  • Yahoo! (YHOO). If this deal falls apart, there will be alotta blood in the risk-arb space.

  • Gannett (GCI) (+4%), McClatchy (MNI) (+9%) and the New York Times (NYT) (+1%) as the newspaper plays start to perk up.

  • Goldman (GS) and the banks, for they are Hoofy's Cliff Branch. Would that make Hoofy Ken Stabler? Either way, respect (don't defer) the tenor of that sector.

  • Big Ben. Why? That JT song about the Fed in a Box could come back in vogue as we eyeball next week's FOMC meeting. The perception that a pause--or a less aggressive FOMC--is a nod to 'the tied hands of stagflation' rather than a wink to the firming economy could bring our seemingly obvious conundrum to bear.

  • If I ever find that table I left all the money on (Schlumberger (SLB), FXI), I'd be as happy as a clam!


Minyan Mailbag!

Toddo,

Regarding your purchase of calls in GCI, is this a position you would be willing to look at for a long term investment (3-5 years) if that was your objective, or is this a short term investment for you?

I don't invest for the short term (not saying that it doesn't happen every once in a while), and I have been eying GCI for a long term investment given the consensus on the company and the feeing that when everyone has thrown in the towel it may be the best time to buy. But I am a touch gun shy on this name.

Thanks,
Minyan Dave

Minyan D,

I have January 30 calls, as discussed on MV and TV, so my horizon is early '09 with defined risk (cost basis is roughly $1.60). That, of course, doesn't mean it cant work 3-5 years out. Remember, it's down from $90 (for good reason, which is the migration of advertising online) but I think the catalyst could shift.

The portal pipes-or the spigots of centrally served content-needs just that, content. There are risks (what portal wants to deal with the Teamsters?) but with the analyst community hating 'em and a viable potential catalyst ahead-even if the perception of the value of assets is subjective-it fit my mold for an upside try.

Thanks, and good luck!
Toddo

R.P.

Positions in GCI, GS

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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