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Wells Fargo, Banks Underowned And Overshorted


Playing financials on tight leash.


Greetings from New York, where I'm going to take the other side of Capitol Hill by cutting to the chase, as opposed to rambling endlessly in a self-serving manner:

  • Wells Fargo (WFC), outta nowhere! Judging by the reaction of just about all things "bank", it would seem that the financials in general are both "underowned" and "over-shorted". I remain long Goldman Sachs (GS) and am increasingly comfortable with that decision.

  • Where Caesar would ward off hubris by having a slave whisper "sic transit gloria" in his ear during parades, I just use my USO long position to keep me humble. Crude is being beaten again today. I'm sticking to a close that breaks the uptrend (which is close to this level, however thick your uptrend crayon) as my exit point. Do I wish I would have taken all the quick gains in the USO trade when I had them? Sure. And I wish I would have sold all my stocks rather than just most of them last December when stocks in general were 20% higher. In addition to the aforementioned stops, staying sane while trading requires a somewhat selective memory.

  • Speaking of memory, remember when I was long Intel (INTC)? I'm totally out as of last night and this morning. The company's quarter was fine but I was sick of lugging a partial long. A miss would have sent the stock well into the teens. A good quarter popped Intel less than 2%. That's a lousy risk/reward set-up in a slowing economy. I'd rather play financials on a tight leash.

  • Two best of breeds I keep letting run around, despite a lingering concern that I've grown just a little too fond of them: Hasbro (HAS) and Activision Blizzard (ATVID). The latter just took estimates much higher for the most recent quarter, which is the kind of behavior that could make even the most cynical fund monkey feel okay about merging with the French.
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Position in GS, USO, HAS, ATVID

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