Why Goldman Sacks Wells Fargo
Minyan Thomas Lacacour asks how I could dump the Ragin’ Wagin’ (Wells Fargo (WFC)) while still holding Goldman Sachs (GS). Specifically, he channels his inner Young Frankenstein and inquires:
"Isn’t it vierd that you sold your Wells Fargo but still like Goldman? I like Wells Fargo still, and stop me if I’m wrong, but Wells seems to have a much heftier margin between its close and its Purple Crayon uptrend line than Goldman.
"Shtop me qvickly if I’m wrong, but why toss the Western Wonder in favor of Goldman? Was it because slacks wear better on the Street than dusters?"
Thomas, stocks are subjective, but your final statement is not: As we approach summer, the relative comfort level of chaps versus wool pants depends entirely on the kind of chaps you’re talking about. If you mean full leather riding gear, then yes - leather pants are simply terrible for hot summer days in Manhattan. Then again, so are wool trousers.
That’s why this cat, who is lucky enough to have a job where he’s only seen from the waist up, goes with either shorts or a customized codpiece from Memorial to Labor Day. Those who don’t agree that a customized codpiece is the most comfortable item of clothing yet designed by man has simply never worn one.
Aggressive? Maybe. But let those who haven’t worked in mid-town during the summer months scoff at my personalized, custom-fit one piece.
But I digress. Why did I like Goldman more than Wells yesterday? Precisely because of the gap Thomas mentioned between Wells’ price and its uptrend line. I don’t know a lot but I am certain of 2 things: 1) You better be sporting a healthy, if not oversized, sense of self-esteem when you don the codpiece in midtown, no matter how hot it is, and 2) stocks that run away from their trendline either regress back to it or go utterly parabolic. Playing for the second smacks of hope. Taking profits then waiting for the regression allows you to keep (your non-taxed) profits and re-enter the stock with a clear head and a well-defined risk/reward set-up.
For what it’s worth on the bank names, this morning I’ve done nothing but watch Goldman, and re-entered about a half a position in the Wells Fargo I dumped yesterday about $4 lower than where I sold it. My stops remain $130 in Goldman and $20 in the Wagon. The latter is a little loose, which is why I only did half a lot. I’ll build it up to full size if/when WFC meanders lower, then drop it all like a bad habit if the stock closes in the teens (which, judging by his (past) dating life, is where Todd-O will get interested).
In other news:
- Am I always right? I wouldn’t even want to be if it were possible. Always being anything is simply terrifyingly dull sounding. If that’s not enough, and just so Mr. Market doesn’t take it upon himself to humble me, I would note that my Agrium (AGU) play is working less than Liz Taylor for me and causing me considerably more embarrassment.
- Robert Reich is on television asserting that the stress test is a whole bunch of bunk. For the first time since the Clinton administration, I’m proud to share an undergrad degree (albeit in a much, much easier field of study on my behalf) with Mr. Reich.
A dear friend refers to all politics as a “Magic Act.” He adds that Obama is the best he’d ever seen at the art of drawing attention from the real problem to that which is either fake or easily solved. To those who think this is a political statement at all, let alone an anti-Obama sentiment, let me add this: A largely fake swine-flu pandemic the same week your administration threw out hundreds of years of securities laws was nothing short of genius. You think General Motors (GM) debt-holders were more worried about catching a cold or getting 2-bits on every dollar to which they were legally entitled? You think the public cared about the debt plight? Genius, no matter which side of the aisle you call home.- Another day, another blow-up from Toyota Motors (TM) - this time for the entire 2009-2010 period. Call me bitter because I mulled, but still missed, buying Toyota at $60, but an auto company so self-consciously “green” would seem to be wasting paper and ink by warning every month. Far easier and earth-friendly (for those of you who buy into global warming, the longitudinal version of swine flu), would be for Toyota to simply issue one warning: “We’re going to miss forecasts until further notice. Get over it.”
- Maybe I just care a little more about Mother Nature than they do...
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Although your prior post gave no hint, I should have realized that The Lone Wolf was in fact a Cat playing with the Stagecoach: grab it, worry it a little, let it go so it THINKS it might escape, and then POUNCE!
A teachable moment, taking profit when the trade is too much in the black - a kind of Black Crayon above the Purple, up there where the Black Helicopters rain money.
"Elevate me!" "Vhat, here Doktor?"
And catch it (next day!!) nearer the Purple stop-loss. A fine lesson, many thanks. Almost as if you had shared some of your brain...
"I know zat during ze transference, Doktor, zat ze Monster got some of your wonderful brain, but vhat did you get in return?"
"RRRR. MMRRRR!!"
"Ah, sweet mystery of life at last I've found you!"
http://www.youtube.com/ watch?v=o3oZO-r_xR8&feature=related
