Random Thoughts: Financials Again Set the Pace
A good rule of thumb: always respect the banks.
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.
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!
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.
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!
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 firstname.lastname@example.org.
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