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joelbow7 (31.15)

A "Bear" of a day and $1000 gold!



March 14, 2008 – Comments (1) | RELATED TICKERS: CEF , SKF , DSL.DL2

Fasten your seatbelts!!  The roller coaster ride is getting wilder! 

I have to admit that today was quite exciting from so many perspectives!  I will first state that no I didn't manage to make a lot of money from the Bear Stearns near death experience today.  The main message from this debacle is that the credit crisis is by no means over at this time.  (In other words it is NOT time to go long on the financials yet!)  It seems to me that there are a number of ways to make money during this time.  The most obvious (which I have done in recent months) is to load up on gold and silver as a permanent store of value ( CEF is my way to do this )  The inflationary Fed is pumping untold billions of dollars into the banks which over time will raise gold, silver and a host of other commodity prices.  The second way is to bet on the financial crisis continuing by buying SKF the double-short financials ETF.  If this crisis peaks on 3/31/08 I will win my 3rd Caps contest!  (the Acura contest!)  The final and most risky way to play this is to buy some short term (3 months or so) in the money puts on some of the big financials such as Merill Lynch, WaMu, Citi, Fannie Mae, Indy Mac, or even Downey Savings (DSL) just to name a few.  There are going to be some big bank failures in the next 6 months so you could do quite well on this bet.  Of course if the financials tank you can be assured that the homebuilders are also going to be in a world of hurt as well (ask FloridaBuilder for the details there).  Whew!  If you like excitement and huge swings this market is not going to disappoint you over the the next few months.  With the Fed manipulating things whenever they can you just have to hang on until all the dead wood is cleared out before expecting the eventual turnaround where bargains will abound.   That is still a number of months away though.  Have a wonderful woo hoo weekend everyone!

1 Comments – Post Your Own

#1) On March 16, 2008 at 2:54 PM, leohaas (29.35) wrote:

"The final and most risky way to play this is to buy some short term (3 months or so) in the money puts on some of the big financials"

I would go for near the money puts. And the most risky but with the best possible percentage pay-off is a put that is significantly out of the money, counting on a BSC-like drop!

Disclosure: I own puts on IMB and XLF. 

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