Getting Back Into The Market
I finally got back in the market today. The panic selling in Countrywide is silly overdone. The uptick in delinquencies will be really short lived, and the notion of bankruptcy here is a spook story. And if additional capital is needed, do you really think Bank Of America wouldn’t use this opportunity to double down on their investment in Countrywide? Or that any other cash-rich major would hesitate? This may have finally hit bottom.
The Merrill Shares I have are upside down, but after today not as badly as before. But the best news is that Merrill’s stock held at the levels the overseas investors got in their pricing. When the overseas money came into Merrill last month, the investors received the right to purchase the stock at $48. The stock got as low as $47.50 and then bounced higher. Take this in contrast to BofA’s right to buy Countrywide at $18, and how Countrywide plummeted through that floor. If you owned Countrywide above $18, this was an obvious signal to sell and wait for another opportunity. Likewise, an investor in Merrill can use $47.50 as a bottom, and that any meaningful move below this level as a sign to sell and reset. So now that you can see the downside, we all know that the upside is huge. It’s going to take some time, but I am staying in… that is, so long as it holds above the floor. Expect more volatility around their earnings announcement next week, and then things to calm down, and a nice slow steady progression upward.
I jumped into AAPL today, but my stay was brief. It went up $5 in the hour after I bought in, so I took it off the table and will reset tomorrow. It has just been so volatile in the mornings I just didn’t want to hold it. It wasn’t hard to convince myself to take the fast buck.
If you’re like so many I know who are looking at Citi, anytime now is a good time to get in, doubly so if your horizon is longer than 12 months. Goldman looks good at these levels, but like AAPL it is really volatile. So does YRCW, and Bear Stearns… I mean, exactly how much more carnage can their be in these names?
Disclosure: As of publication, I am long MER and CFC, though positions are subject to change at any moment. I am not a professional, but I am trying this at home. It is highly recommended that you consult a licensed financial advisor or broker before making any and all investment decisions.
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