Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

How to Play the Goldman Sachs News


Morgan Stanley is likely to be the biggest winner, but also look at Google, Apple, and Baidu.

Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial).

Market corrections come out of left field on unforeseen events like today's news on Goldman Sachs (GS).

As for Goldman Sachs, I briefly looked at buying some OTM puts but they were too juiced already. Also, I've been a Goldman Sachs bull. But I would view this news as something similar to an accounting problem and I generally steer clear of that sort of issue no matter the company.

In fact, the only way I would enter a long on Goldman Sachs in the near term would be a bull put spread with defined downside. If the stock were to get to $135 or lower I'd possibly consider going long the common, but this is certainly disturbing news.

However, the biggest winner here will likely be Morgan Stanley (MS). My lone finance position at the moment. And I will add on any material selling in sympathy. It's down about 5% and another 5% will get me much more active. This stock is already insanely cheap on a relative basis and it's getting even cheaper on this news.

As Buzz readers know, I've been largely out of finance stocks for a couple weeks while fearing a renewed mark-to-market push from FASB and I didn't want to stand in front of a shock to the finance space. So that position today is clearly an example of being lucky rather than good -- as this Goldman Sachs news is clearly a shock of a different sort to the finance sector.

Here's how I'm playing and I've articulated some of this already.

1. Buy Google (GOOG)
2. Add back Apple (AAPL) exposure in $230s
3. Buy Google
4. Add Morgan Stanley another 5% lower than current print. This could really ignite to upside within days to weeks.
5. Short Baidu (BIDU)
6. Buy UltraShort QQQ ProShares (QID)
7. Add more solars, but waiting until next Tuesday/Wednesday
8. Review all the Comm chip plays mid next week
9. Review all regional bank plays mid next week
10. Did I say buy Google yet?!

BONUS: I'm also looking at some May GS 155 puts if they cheapen up a couple points.

Buzz & Banter: Trading ideas & insights from 30 professional traders. 14 day FREE trial.
< Previous
  • 1
Next >
Position in GOOG, BIDU, MS, QID, AAPL, and various chip names

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.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos